Call Range-Bound, Gilt Prices Slip

Call rates opened around 14.25 per cent and rates remained there for most part of the day. A primary dealer said, "It is the same old story of repo rates that made the call money rates to hover in the 14-15 per cent range."

"Players expected that Reserve Bank of India (RBI) would lower the repo rate which, however, did not happen," he added.

The apex bank continued with the same cut-off rates of 14.5 per cent and 15 per cent at its one-day and six-day repo auctions. The central bank has mopped up Rs 2,750 crore through its one-day and six-day repo auctions.

The Reserve Bank of India (RBI) sucked out Rs 385 crore through the one-day repo auction, while Rs 2,365 crore has been taken out through the six-day repo auction.

Government security prices fell marginally following the announcement of the auction of the eight-year government paper today. Gilt prices moved up a bit after the RBI announced that the bank rate and the cash reserve ratio are not going to be hiked. Some of the dealers have said that yesterday's fall in prices was a correction to the rise.

The junior finance minister yesterday made a statement that the interest rates are not likely to increase. Dealers, however, said that the statement had minimal impact on the government security market.

"The sentiment in the security market has improved, but still weak enough," said a dealer at a private sector bank. Dealers expect some major movements in the market if the current stability in the forex market continues for some time.

Dealers expect call rates to come down a bit today with the expectation that the central bank will reduce cut-off rates at the repo auctions.

"The RBI is expected to slash cut-off rates as the rupee seems to have stabilised against the greenback," said the treasury head of a private sector bank.