Mmmfs On Sebi Turf

Interest rates in the overnight inter-bank call money market are expected to remain easy throughout the week on account of ample liquidity for the rest of the month. Dealers said call money rates were likely to be in the range of 8-8.25 per cent during the week even though there would be a three-day call market today.

"There are ample funds in the system and with Rs 4,700 crore move flowing in on Saturday, liquidity has been further eased. The auction of the 15-year paper is likely to sail through as there are more major inflows expected after that as well," said a money market dealer.

Inflows to the extent of Rs 1,150.62 crore are expected this week on account of coupon payments and redemption of treasury bills. On Tuesday, an interest payment of Rs 230 crore on the 11.5 per cent 2004 paper would be made. An inflow of Rs 190.35 crore due to the coupon payment on the 12.69 per cent three-year paper would be flowing in on Wednesday.

Following this on November 11, Rs 162.36 crore as interest payment on the 11 per cent 2002 gilt is expected.

There would be an aggregate inflow of Rs 367.91 crore on November 12 largely due to Rs 302.42 crore as coupon payment on the 11.5 per cent 2006 government paper. Added to this, would be coupon payments on the 7.5 per cent 2010 and 5.75 per cent 2003 gilts of Rs 54.61 crore and Rs 10.88 crore, respectively. Redemption of the 14-day and 91-day treasury bills would bring an inflow of Rs 100 crore each on November 13.

Outflows of Rs 3,800 crore would take place within the week. This would largely be due to the auction amount of Rs 3,500 crore of the 15-year paper on November 11. Also Rs 300 crore would possibly flow out on account of the redemption of the 182-, 91- and 14-day treasury bills.

Although call money rates have fallen to comfortable levels of 8 per cent, there is little chance for them to fall below these levels as primary dealers and banks have yet to pay their full refinance amounts borrowed at 8 per cent.

"There are, in fact, no definite signs that banks intend to pay their refinance at 8 per cent as it is a reasonably cheap source of funds," said a dealer in a private bank.