Sentiment : Brittle
* Medium-term securities fell by 10 to 12 paise after a liquidity mismatch occurred when players failed to exit from long papers.
* Call rates tightened to 5.75-80 levels on the back of advance tax outflows.
* Yields on the 10-year benchmark 2012 paper rose by 10 basis points to 7.18-19 per cent as traders tried to adjust their over-extended positions in medium-term gilts.
* Volumes slid as players turned wary of the liquidity situation following the tax outflows of last weekend.
* Mutual funds stepped up sales to meet redemption pressure from corporates which needed cash to make advance tax payments.
* Players do not anticipate any cut in the bank rate now with inflation on the ascend.
Outlook: Gilts could rise by 7-10 paise but will fall in the latter half as players clear their overextended positions in medium-tenor issues. Traders feel that till such time bidding starts across all tenors, a price rally will not be sustainable.
Forex
Sentiment : Listless
The rupee pierced the psychological level of 48.40 per dollar and ended at a new seven-and-a-half-month high of 48.4100/4150 against Friday's close of 48.4200/4250.
Exporters sold dollars continuously due to which supplies overwhelmed demand.
State-owned banks bought greenbacks intermittently, acting on behalf of the central bank to cap the rupee's rise.
Premiums on the forward dollar edged up slightly.
Outlook: The rupee is expected to test the 48.40 mark and should trade around 48.38-48.41 per dollar. Forward premiums will edge up if call money rates ascend.
