Volumes May Dip

The gilt and the bond market is likely to witness a dip in trading volumes this week because of apprehensions over the behaviour of call rates.

Bankers expect the prices of securities to go up on account of fresh demand, as calls are expected to remain between 2 and 3 per cent.

With uncertainty prevailing in the money markets, and the reporting Friday coming up, buyers are likely to express more interest in short and the medium-term securities. Hence, this week should find increased demand for treasury bills and government papers maturing in 1997 or 1998.

In the last week, a lot of interest was expressed in long-term securities. The zero coupon 2000 paper, and the recent 13.55 per cent 2001 saw active trading. A number of taxable and tax-free public sector bonds were also traded. This has caused their prices to rise.

Also, last week, banks started purchasing tap treasury bills, which. These bills, which give a yield of over four per cent, are attractive option given that money is available at low costs. Since calls are likely to remain low for most of this week, more banks may go in for these bills this week too.