Re ends stronger at 40.39/$

MARKETS REPORT

Outlook:
The spot rupee is expected to open in the range of 40.35-40 to a dollar.

Sentiment:Bullish

Equity market ruled on a bullish note and following forex inflows into the market, the spot rupee closed higher at 40.37/39 as against an opening of 40.48/50 to a dollar.

The annualised premium for six-month and one-year forward dollars closed at 1.57 per cent and 1.66 per cent, respectively. Notes: The spread between the one-year and 10-year government security is around 100 basis points. The overnight Mumbai interbank offered rate is at 0.19 per cent. call rates : 0.10 per cent 10- year - 7.85 per cent 5- year - 7.51 per cent

Money Market

Sentiment: Bearish

The CRR hike and removal of cap on reverse repo bids have raised liquidity concerns.

The prices of government securities fell by 50-60 paise across maturities.

The yield on the 10-year benchmark paper closed at 7.85 per cent against 7.77 per cent on Monday.

The call rates continued to remain at 0.10-0.20 pr cent since the impact of the liquidity tightening measures are expected from late this week.

The CRR hike is expected to suck out around Rs 16,000 crore from the market whereas another Rs 19000 crore is the outflow towards the auction of treasury bills and government papers this week.