Rally after auction

GOVERMENT SECURITIES

The government is expected to conclude its borrowing programme for the current fiscal with the auction of Rs 5,000 crore worth government securities in the first week of January.

After the auction, the market is expecting a rally in the prices of securities as there is comfort from factors such as the inflation rate and oil prices.

The inflation for the week ended January 15 stood at 5.42 per cent and is expected to go down further due to the base effect.

The ten-year benchmark 7.38 per cent 2015 is likely to rule in the range of 6.65-75 per dollar. Since there are no borrowing programmes due, dealers said the ten-year benchmark yield may breach 6.65 per cent.

Recap: Gilt prices ruled in the range of 5-20 paise during the week as interest rate signals were contingent upon the US Federal Reserve's open market committee meeting and the government securities auction.