The call money rate is seen firm at 13 per cent on Monday because of tight liquidity conditions. However, the call rate may not inch up above 13 per cent, as most banks will prefer to borrow from RBI’s repo tender.
The government bond prices are expected to rise further on Monday following a fall in the headline inflation data. On Monday, gilt prices may rise further because investors may buy, drawing comfort from the lower-than-estimated inflation.
But a sharp rise in gilt prices may not be seen because investors may be wary of taking on board new risks eyeing a slew of auctions in the week. On Tuesday, RBI will sell Rs 2,000 crore of bonds of three states. The yield on the 10-year 8.24 per cent, 2018 bond is likely to be in a band of 8.10-8.30 per cent. It had ended at 8.29 per cent on Friday.
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