Georgespeak Props Gilts, Calls Fall On Lack In Demand

Government security prices went up by 45-55 paise across maturity as the war tension receded a bit today. Call money rates fell below the six per cent level as the demand for overnight money dipped on the reporting Friday.

The government security market received a boost today as the defence minister George Fernandes said the border condition is stable. According to money market dealers, the liquidity condition is good enough to support the rally.

A dealer with a private sector bank said: "There was no problem with the liquidity in the market. It was only the poor sentiment that drove down the prices yesterday. However, it improved today and is reflected in the prices of the government papers."

 

Amid good liquidity, the Reserve Bank of India (RBI) continued to receive good subscription to its repo auction. The central bank, today in its three-day repo auction, received two bids of Rs 12,285 crore. The central bank accepted all the bids at a cut-off rate of six per cent. There was no bid in the three-day revere repo auction.

In the call money market, demand for the overnight money was low as most of the players have covered their cash reserve requirement well in advance. This, coupled with the comfortable liquidity condition, helped the overnight rates to close in the range of 5.80 per cent to six per cent. The rates opened in the range of 6.20 per cent to 6.40 per cent and according to dealers, there were even stray deals at 5.70 per cent.

Call money rates are likely to remain in a range of 6.40 per cent to 6.75 per cent tomorrow. Dealers said the demand will be slightly higher on the very first day of the reporting fortnight.

Government security prices are likely to go up by 20-25 paise on the back of easy liquidity condition in the market. There could be profit-booking at the higher levels.