Rising oil prices a concern

OUTLOOK: Goverment Securities

The key element for the market this week is the global oil prices, which are hitting new highs. The market will also look for new cues from cut-off yields at the forthcoming auctions," said V Subbaraman, managing director, Citicorp Securities.

Even though inflation will remain low due to the base effect, the impact of the rise in global oil prices will have to be translated into a rise in retail prices in India, feels a bank dealer.

This uncertainty will keep the markets on tenterhooks. The market is hopeful that the advance tax outflows will come back into the system, easing the liquidity situation.

However, if the liquidity continues at the present level, prices of government securities may come under pressure following the government auction of around Rs 5,000 crore.

In this backdrop, the yield on the ten-year benchmark gilt is expected to open in the 6.92-7.0 per cent range.

Recap: The government securities market continued to witness moderate activity following the government's decision to continue with the auctions as part of the government borrowing programme.