Money

Sentiment : Lacklustre

Holiday mood in the south saw volumes take a hit. Prices of gilts fell marginally by four paise marked by the late entry of key south-based trading banks.

Players did not build up positions as they were awaiting clarification on the auction next week.

Gilt volumes dropped from yesterday's Rs 4,200 crore to Rs 3,700 crore.

Spreads between gilts and corporate papers have narrowed from 150 basis points to 125 basis points on 5-year papers.

Despite the narrowing of spreads, interest has picked up in corporate bonds; and volumes have doubled to Rs 220 crore as traders took advantage of arbitrage opportunities.

Call rates stayed around the repo rate despite the Reserve Bank of India (RBI) fully accepting all the 15 bids made worth Rs 17,825 crore.

Outlook: The market will continue to be range bound till the RBI gives an indication on the cut-off rate for the coming auction of 15-year and 20-year papers to raise Rs 8,000 crore. Interest is expected to be limited to liquid stocks of eight to 13 years maturity.

Forex

Sentiment : Dull

The rupee closed at a seven-month high of 48.5375/5425 per dollar, its highest since February 1 It had opened at 48.56/70.

Exporters were seen selling dollars, but the overall inflows were moderate as some of the smaller centres were closed on account of Onam and Parsi New Year.

State-owned banks were seen active on the buy side and but for their presence the rupee would have strengthened further.

Forward premiums closed lower due to soft call money conditions.

Outlook: The outlook on the rupee is bullish. The currency is likely to open at 48.56 per dollar, rise to 48.50 in intra-day deals, and then may trade in band of 48.50- 48.55. Forward premiums are likely to dip, but the six-month annualised premium may remain in the 4.20-4.30 per cent range.