Call Rates Slip, Gilt Prices Harden

"There was less demand, as it was reporting Friday most players have covered their positions and thus rates fell to 7-8 per cent," said a primary dealer.

Gilt prices moved in tandem with the rupee. "In the morning session as the rupee fell to a new low of 46.07, gilt prices fell by 30-40 paise," said a dealer at a financial institution.

"With the strengthening of rupee in the later hours, gilt prices made up the earlier losses," he added. Total traded volume in the government securities market has gone up to Rs 982.67 crore.

However, the trading was mainly concentrated in the short and medium end. The 12.50 per cent paper maturing in 2004 was traded for a volume amounting to Rs 350 crore.

The Reserve Bank of India (RBI) has sucked out a total amount of Rs 4,490 crore through the three-day and five-day repo auctions at a cut-off rate of 14 per cent each.

The apex bank mopped up Rs 3,210 crore through the three-day repo, while the amount was Rs 1,280 crore in case of the five-day repo. The central bank conducted the reverse repo auction and received one bid for Rs 60 crore which was not accepted.

The market is expected to remain volatile on Monday. "Call rates are expected to open around the 13 per cent level today," said a dealer. "If RBI softens the repo rate, call rates will come down," he continued.

Prices of government securities will move in line with the forex market today. "If rupee stabilises, there will be some rise in government security prices," said a dealer at a private sector bank.