Reporting Friday Clams Up Call, Gilts Rear Up

Call rates remained in the 6.95-7.10 per cent range due to the comfortable liquidity in the system. Government security prices went up by 10-15 paise at the medium to long end of the market amidst thin volume of trading.

Call rates opened around 7-7.10 per cent and came down a bit during the course of the day to close around 6.95-7 per cent.

A dealer with a private sector bank said, "On the eve of the reporting Friday, there was not much demand in the market and hence call rates hovered around the refinance rate.

Dealers said that most of the deals were done in the 7-7.05 per cent range.

The Reserve Bank of India (RBI) did not receive any bid to for its one-day repo as well as reverse repo auction.

Prices in the government security market went up marginally on the back of comfortable liquidity and stable call rates. According to dealers, prices appreciated gradually by 10-15 paise during the day.

The treasury head of a private sector bank said, "This was purely liquidity-driven rally." He said that Fed rate cut did not have any impact on the market.

Call rates are expected to remain around 6.75-7 per cent tomorrow. A senior dealer said, "On the reporting Friday, the demand in the overnight market should be very thin and hence the rates should be below the bank rate."

Government security prices are expected to remain range-bound. A dealer with a private sector bank said, "Trading volume will be low and the prices should move in a band of 10-15 paise."

Dealers said that the market sentiment is good, but as the yields of the government securities are already very low, market participants are hesitant in taking fresh positions in a big way.