Money Market Report

Sentiment : Bullish

Call money rates ruled easy and hovered in the 5.65-5.75 per cent band amid moderate demand for funds and an abundance of cash in the banking system.

Despite the on-tap sale of the 7.80 per cent 10-year state paper for raising Rs 4,478 crore, the Reserve Bank of India (RBI) received eight bids aggregating Rs 11,560 crore at the one-day repo auction. It accepted all the bids partially for Rs 8.093 crore at 5.75 per cent.

Gilts were up 10 paise in the morning due to a newsreport that the RBI planned to cut the bank rate by 50 basis points to 6 per cent.

However, gilts lost momentum after the RBI clarified that there was no immediate proposal to cut the bank rate.

There was buying throughout with the undercurrent being bullish. Players expect a paring of both the repo and the bank rate.

Outlook: Call money is expected to hover comfortably in the 5.65-5.75 per cent band amid ample fund supplies. Gilts are expected to open 5-10 paise higher over their previous close and could end 10-15 paise up.

Forex

Sentiment : Bullish

The rupee weakened by around three paise on aggressive dollar buying by state-owned banks.

It opened firm at 48.5500/5600 per dollar as against Friday's close of 48.5700/5750 amid ample greenback supplies.

Stop-loss dollar buying by banks pushed the rupee lower to 48.5900/5925.

State-owned banks were aggressively picking up greenbacks at all levels.

Forward premiums softened by around 10 basis points.

Outlook: The rupee is expected to hover around 48.55-60 per dollar on Tuesday. State-owned banks will keep absorbing the greenbacks flowing in. Forward premiums will be in a groove.