Gilts Inch Up; Call Ends Lower

Call rates shot up to around 12.50 per cent in intra-day trades today, but closed lower at 10.50 per cent. Government security prices moved up marginally in comparison with Wednesday's closing.

Call rates opened in the range of 11.25-11.50 per cent as against Wednesday's opening range of 10.30-10.40 per cent. Overnight rates, however, shot up to 12.50 per cent in early trades.

A dealer said, "There was a shortage of liquidity following Monday's auction and due to the open market operations by the Reserve Bank of India (RBI)."

Overnight rates came down to close at 10.50 per cent. According to dealers, nationalised banks were net lenders, while private sector banks were net borrowers.

The apex bank lent Rs 5,880 crore through the one-day reverse repo auction at a cut-off rate of 10 per cent, which was higher than Wednesday's amount of Rs 3,445 crore. The central bank did not receive any bid for its one-day as well as five-day repo auctions.

Government security prices opened lower in the morning and went up during the course of trading. "Prices opened 10-15 paise lower. As the bullish sentiment continued, prices went up," a dealer said. According to dealers, prices closed 5-10 paise higher in comparison with Wednesday's closing level.

Call rates are likely to remain high tomorrow. The treasury head of a private sector bank said, "There is some shortage of liquidity, which is likely to be corrected once the India Millennium Deposit inflows come through." Dealers are expecting call rates to be in the 10.5-11.5 per cent range.

The upward trend in the government security market is likely to continue. A dealer with a private sector bank said, "The sentiment is still bullish. We expect a 15-20 paise movement across all maturities tomorrow."