Trade Lull Snips Gilts, Call Suffers Reporting Day Blues

Government securities prices declined by 20-30 paise today amid low trading volume. Call rates remained soft in the 6.30-6.65 per cent range as the demand for overnight money was low on the reporting Friday today.

Government security prices opened around the same level as yesterday's closing. Prices, however, started going down immediately as market participants resorted to profit-booking.

A dealer with a new private sector bank said, "The trading volume was very thin as most of the market participants remained inactive. Moreover, many of the active players were off-loading their security as the financial year end is approaching. This made the price to go down marginally."

In the call money market, overnight rates were quoted around 6.50-6.65 per cent in the early hours. However, as the demand was low, by 12 PM the rates slipped to 6.30-6.45 per cent range remained for the rest of the day.

A primary dealer said, "Today was a reporting Friday and most of the market participants have covered their cash reserve requirement well in advance and hence the demand for call money was low."

In the three-day repo auction, the Reserve Bank of India (RBI) received five bids worth Rs 1,510 crore. All the bids were accepted at a cut-off rate of six per cent. There was no bid in the three-day reverse repo auction.

Government security prices are likely to remain stable with prices hovering in a 15-20 paise range around the current level. A dealer with a public sector bank said, "We expect the trading to remain low because most of the banks do not want to book huge position before the fiscal end." In the call money market, the demand is likely to be slightly high on the very first day of the reporting fortnight. According to the dealers this will keep call rates around 6.40-6.75 per cent.