Liquidity tightness to continue, influencing high yields for want of buying support
The availability of funds in the banking system is expected to reduce further this week, on the back of heavy outflows.
The second tranche of the sale of state loans for Rs 5,753 crore on March 12, and tax outflows of around Rs 8,000 crore will suck out considerable funds from an already tight market.
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Scheduled inflows and outflows in this week already point to a net outflow of Rs 4,336.7 crore. The tightness on the liquidity front has been reflected in the low average daily repo amounts last week at Rs 6,086 crore.
On reporting Friday last week, the inflow into the Reserve Bank of India (RBI) repo window fell to Rs 1,875 crore from Rs 11,585 crore on Thursday.
Despite the lacklustre interest in the bond market, some banks failed to cover their positions till the last day. This has also resulted in the call rates tightening and a mismatch in product coverage. With falling government security prices triggering various banks
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