Gilt Rush May Continue

The rush for buying Government of India securities and treasury bills which was witnessed last week is expected to continue. This is largely on account of continued speculation of a possible reduction in cash reserve ratio (CRR) requirements of the banks.

The prices of most of the short dated securities which perked up by 5-10 paise during the last week are expected to stabilise. Rates in the inter bank money markets are expected to hover at levels between 10-10.5 per cent, which shows a slightly easier trend than the last week.

Hectic trading activity was seen in most of the one, two and three-year securities. Transactions were also witnessed in the zero coupon bond 2000. However, dealers said the four-year zero coupon bond worth Rs 2,000 crore, which is coming up for sale on October 7, is unlikely to receive full subscription.

 

This is largely on account of the current zero coupon paper being available at much lower prices in the secondary market. While the second tranche of the four year paper was being offered at Rs 60.66, the paper was available in the secondary market at Rs 60.20 on Saturday.