Psb Offer Cools Call; Medium-, Long-Gilts Rise

Call money rates today cooled off to close in the 7-7.10 per cent range after opening firm at around 8 per cent. The tight opening of call rates was primarily due to the lenders quoting higher despite easy liquidity. Government securities at the medium end were up by 15-20 paise, while those at the long-end edged up by 10 paise.

Call rates, though opened higher at 8 per cent compared with the previous close of 7-7.50 per cent, slid to 7.3-7.4 per cent level when a large public sector bank started lending at 7.50 per cent.

"Call rates opened higher, despite the fact it had come down on Saturday as the Reserve Bank of India (RBI) closed the open market sale of the 2011 and 2021 government securities, due to some covering demand from borrowers and lenders quoting higher," a dealer with a private sector bank said.

The apex bank today received one bid for Rs 3,500 crore at the one-day repo auction conducted under the liquidity adjustment facility. It partially accepted the bid for Rs 1,500 crore at a cut-off rate of 6.50 per cent. In the reverse repo auction, also conducted under the LAF, the RBI received and accepted one bid for Rs 100 crore at a cut-off rate of 8.50 per cent.

Inflows were estimated at Rs 1,198.275 crore, while outflows were put at Rs 1,850 crore. The net inflows were estimated at Rs 651.725 crore.

In the government securities market, the short-term paper stayed flat, while the medium term papers appreciated by around 15-20 paise. The long-term papers were up by around 10 paise.

Call money rates are expected to be range-bound at 7.10-7.25 per cent tomorrow, due to easy liquidity. Gilts in the long end should go up by 10-15 paise, while those at the medium-end should appreciate by 15-20 paise.