Govt Papers Likely To Spiral Down 20 Paise

The prices of government securities are likely to dip by 15-20 paise this week due to the Rs 8,000 crore twin-auction on Monday.

Dealers, however, said the prices will later become stable because of good liquidity in the market.

A dealer said, "Though Rs 8,000 crore auction is the biggest one in the recent times, the liquidity comfort be hampered only slightly. So, even if the prices go down a bit on Monday and Tuesday, they would stabilise from that level."

Dealers are expecting the yield of 10-year paper to stabilise in the range of 9.16-9.17 per cent by the weekend.

 

The prices of government securities fell by 10-15 paise on Saturday last week on the eve of the twin-auction.

A primary dealer said, "Some of the players offloaded their holdings amidst thin volumes to keep space for the auction. But the sentiment continued to remain good with high deposit growth and disappointing credit off-take."

The treasury head of a private sector bank said, "There has been no volatility in the foreign exchange market. This had lent comfort to the securities market. Moreover, a major part of the liquidity, mopped up through earlier auctions, has come back to the system through government expenditure. This, along with the growth in deposits, will keep the liquidity comfortable. I expect the prices of long-term securities to rally a bit, if the 25-year paper receives good response."