Good Run Presaged After Ecb & #8217;S Rate Cut

Government securities are expected to have a good run this week, fuelled by abundant liquidity in the banking system and positive sentiment backed by the European Central Bank rate cut.

The rate cut by European Central Bank further reinforced the soft interest rate outlook of the market.

Even though the Reserve Bank clarified that there is no repo rate cut expected either now or for quite some time, market players feel that sooner or later there has to be a repo rate cut given the fact that fundamentals support it.

Trading interest is likely to be the most this week in long tenor papers of 15-23 year maturity, followed by medium tenor papers.

 

The state government paper to be put on tap sale by the apex bank is likely to get a good response from selected corners.

All states will float a10- year paper carrying 6.35 per cent coupon on tap sale to raise Rs 7000 crore as part of the Centre-state debt swap programme.

Apart from abundant liquidity, inflation