Overnight Rates, Securities Move In A Groove

Call money rates stayed in the range of 6.70 per cent to 7 per cent today because of ample liquidity in the system, while the prices of government securities remained range-bound with the announcement of twin auction to be conducted tomorrow.

Call rates opened in the range of 6.70 per cent to 6.80 cent and inched up to close in the 6.90-7 per cent band. A dealer said: "The liquidity condition was good. However, because of tomorrow's auction, some lenders were not in the market and this pushed up the overnight rates." Market players said most of the deals were in the range of 6.85 per cent to 6.95 per cent.

 

The Reserve Bank of India did not receive any bid to for the repo and reverse repo auctions. Dealers said the auction announcement has prevented the banks and primary dealers from putting money in the repo window.

The trading in the government securities market was lacklustre due to the auction announcement. The treasury head of a private sector bank said, "Nobody wanted to take a fresh position. Though there was a bit of trading of short- and medium-term securities, there was virtually no trading of longer-term papers." Players said the prices of short- and medium- term papers went up by 5-10 paise.

A dealer said, "The expectations about the tenure of the paper, which is to be auctioned tomorrow, has also hampered the sentiment in the market. Participants are expecting the tenor in the range of 5-10 years as the long-term segment is oversupplied. Contrary to that, auctions are of long-term and the prices were stable at that end."

Call money rates are expected to remain in the range of 6.70 per cent to 6.90 per cent tomorrow, while the prices of government securities may remain range-bound.