Reddy-Speak Lifts Gilts, Call Ranged

Government security prices ended 15-20 paise higher today against Saturday's closing levels amid thin trading volume. Call rates stayed in the 6.40-6.65 per cent band on the back of high demand in the overnight market.

Government security prices opened slightly lower on concerns over advance tax outflows starting from March 15. Prices went up by 50-60 paise after a news agency reported that the Reserve Bank of India (RBI) deputy governor Y V Reddy said that there can be a bank rate cut any time.

Prices dipped later due to profit-booking but closed higher than Saturday's closing.

A primary dealer said: "Trading was lacklustre in the market as many of the players were virtually absent. Reddy's statement boosted the sentiment, but as market participants were not ready to hold huge positions before the financial year end, they booked profits later on."

 

Call rates opened in the 6.50-6.60 per cent range. Money market dealers said that the current week being the first of the reporting fortnight, demand for overnight money was high. They also said that tomorrow being a bank holiday, most of the participants have covered their positions for two days. This also increased demand a bit. The demand, however, came down during the day and closed around 6.40 per cent.

At the two-day repo auction, the RBI received two bids worth Rs 3,055 crore. The central bank accepted both the bids at a cut-off rate of six per cent. The central bank did not receive any bids at the two-day reverse repo auction.

Government security prices are likely to remain stable on Wednesday. According to money market dealers, trading volume will continue to remain low and prices will move in a range of 15-20 paise around the current levels.

In the call money market, demand is likely to be slightly on the higher side and overnight rates will be in the 6.40-6.65 per cent range.