Fluctuations Seen

GILTS & BONDS Market

The price movement in the wholesale debt market (WDM) will depend on the revised price list of government securities that will be issued by the Reserve Bank of India (RBI) during the week.

Traders expect prices to move up if the apex bank continues bringing down yields on the price list of securities as has been the case since the last few days.

The coming fortnight will also witness the RBI announcing the 10-year YTM for the accounting year 1997-98 which the trading community expects to be in the range of 12 per cent to 12.10 per cent.

There will also be some uncertainty among the market players about the interest rate movement.

Experts are of the view that the Indian economy is heading towards a high regime interest rate resulting from huge government borrowing programme and offtake of the infrastructure projects.

Consequently the prices of the securities may see wide fluctuation, said traders.

However, the market is expected to remain volatile till the monetary policy is announced which will give an indication of the liquidity position in the system, they added.

With the beginning of the new financial year fresh deals will be reported with brokers taking new positions for the next fiscal.

There will be large inflow of funds on account of cut in CRR which was effective from March 28 and maturing of treasury bills and interest payment, which, however, has been nullified due to the open market operation of the RBI which has sucked out huge amount of funds from the market.

Brokers said the week will see high trading volume for the coming Friday is not a reporting Friday for bank products. Last week witnessed a volume of Rs 2281.35 crore against Rs 2189.77 crore the previous trading week. The highest trading volume was reported on Tuesday at Rs 608.95 crore and the lowest was on Wednesday at Rs 329.08 crores.

The average traded volume of last week stood at Rs 456.27 crore as against Rs 364.96 crore in the previous trading week. The government securities were actively traded for Rs 1,771.12 crore contributing to a share of 77.64 per cent. The treasury bill segment witnessed a traded volume of Rs 307.50 crore.