Calls Slip To 5.50%, Firm Up Towards Close

Opening higher at 6.25 per cent, the calls later dipped to 5.75 per cent during the course of the day. Towards the close of trading hours, the rates however, firmed up again and touched 6.5 per cent. This tightening of rates towards the fag end of the day's trading was ascribed to the presence a few small borrowers in the market.

The decline in rates during the early hours led to panic among a section of lenders, as the calls had fallen sharply on Saturday. The day had seen rates slipping by 1.5 percentage points, from 7.5 per cent to 6 per cent.

Fearing a similar turn of events, lenders gave away funds at low rates in the early hours. Towards end of day, however, the market looked up.

In the government securities market, trading activity was at a low key. "It was surprising that there was no rush for picking up assets," said a dealer in the securities market. Though a number of sellers were present, banks fought shy of picking up securities in a big way, as there was an outflow expected on account of advance tax payments.

"An outflow of Rs 2,500 crore is due after September 15, due to which there may be a tightening in the inter-bank money rates," said a dealer. This perhaps accounted for the lack of buying interest in securities, despite the fact that the rates in the market were at a low.

Some stray deals in the 91-day treasury bills were seen. Dealers reported that a large number of banks and financial institutions had parked their funds last week in `on tap' treasury bills for 14-days. This investment avenue fetches banks a yield of 4.6 per cent.