Money

Sentiment : Cautious after OMO announcement

Call money was comfortable in the 5.65-5.75 per cent groove amid abundant liquidity in the banking system.

There were 11 bids aggregating Rs 16,070 crore at the three-day repo auction, which were accepted at 5.75 per cent.

Medium-tenor gilts rallied by 25-30 paise, but the RBI's announcement of an OMO sale of the 7.40 per cent 2012 paper on Saturday for Rs 6,000 crore resulted in selling pressure which negated the gains.

The benchmark 2012 paper gained 18 paise since morning and in the process hit a lifetime-low yield of 7.11 per cent. However, post-OMO announcement, the security fell by 28 paise.

The OMO is seen as a move to suck out liquidity as Rs 11,127.50 crore is expected to flow into the banking system on account of redemption of the 11.15 per cent 2002 paper and coupon payment on the 11.40 per cent 2008 paper.

Outlook: Movement in gilts will be dictated by the cut-off that the RBI sets at the OMO auction. Call money rates will rule easy.

Forex

Sentiment : Bullish

The rupee appreciated to end at 48.50 per dollar compared with Thursday's close of 48.5250/5300.

After hovering in the 48.5075-48.5125 band for most of the day, it strengthened due to lack of demand for, and normal supply of, greenbacks.

State-owned banks restricted the rupee's rise by buying dollars at 48.50/51 levels.

The rupee has gained 0.08 per cent this week. Near-term forwards eased on account of easy call rates and receiving interest by exporters; far forwards remained flat.

Outlook for Monday: The rupee is expected to rule firm on Monday in the 48.47-48.51 band per dollar. Forward premiums will be range-bound.