Overnight Rates Dip To 6.50%

MONEY MARKET REPORt

The call money rate opened at 8.90 per cent against the previous days close of 8.50 per cent, and declined steadily to 6.50 per cent during the closing hours of the day. As the call money rates slipped down, the prices of securities moved up by nearly 30 paise. Dealers said that most of the deals were concluded in the range of 7 to 8 per cent.

Reserve Bank of India received only one bid worth Rs 87 crore at the three day, six per cent repo as against Rs five crore received on the previous day.

The Discount and Finance House of India (DFHI) reported extended market support of over Rs.1600 crore. The weighted average call rate of STCI was 8.07 per cent on a turnover of Rs 2,200 crore. The Reuters Mumbai Inter Bank Overnight average was 8.28 per cent during the day. It is an average rate dealt by 17 banks.

However, according to dealers, some of the public sector banks, which are traditional lenders, have turned borrowers or not lending in the market. According to the treasury head of a Mumbai based nationalised bank, they had a temporary mismatch and hence turned borrowers. Sentiment in the securities market are looking up though the prices of securities auctioned this year continued to be below par.

LIC was buying the 12 per cent 2008 paper yesterday.