Call Rates Hovers Around 6%, Gilts Static

Overnight rates opened in the range 14-14.25 per cent and stayed there for most of the day. "As long as the Reserve Bank of India (RBI) continues with repo rates over 14 per cent, the bullish behaviour of the call market will continue," said a dealer with a private sector bank.

However, after the repo auctions, rates fell below 14 per cent to close at 13.75-80 levels. "Most players have covered their positions for reporting Friday before the repo auctions and that eased call rates," said the treasury head of a private sector bank.

The apex bank mopped up Rs 5,320 crore through its repo auctions on Thursday. While the RBI sucked out Rs 3,115 crore through one-day repo at a cut-off rate of 14.50 per cent, Rs 2,205 had been taken out through five-day repo at a cut-off rate of 15 per cent.

The newly introduced facility for primary dealers to swap their long-dated securities for 364-day treasury bills, however, had no significant impact on the market.

Trading in the government securities continued to be dull with a marginal 5-10 paise fall in the morning. "Prices fell in the morning following the weakening of the rupee," said a dealer with a nationalised bank. In afternoon trades, with the Indian currency strengthening against the greenback, gilt prices stabilised. "Prices did not move up with the rupee strengthening as the sentiment was nervous in the market," said a dealer.

Call rates are likely to hover around 14 per cent today as trades in the government security market will remain thin. "The lenders are not ready to lend at a rate substantially lower than the repo rate even on reporting Friday," said a dealer. The government security prices are also likely to be range-bound. "Sentiment is bearish as the rupee is still weak and can weaken further," said the treasury head of a private sector bank.