Rs 11,000 crore OMO today to suck out excess liquidity

 The rally in the gilts market is expected to halt as up to Rs 11,000 crore surplus liquidity will be sucked out through the OMO.

 Driven by ample liquidity and rate cut expectations, the benchmark 10-year (7.27 per cent 2013) gilt edged up today to close at 5.0522 per cent, off an intra-day lifetime low of 5.0217 per cent hit before the OMO announcement.

 On Wednesday, the 10 year gilt finished at 5.0562 per cent. The rupee closed at a new three-year high of 45.26/27 against the dollar.

 That liquidity is ample in the banking system was underscored by the fact that the central bank received and accepted 40 bids aggregating Rs 27,160 crore at the one-day repo auction.

 The excess liquidity is attributable to the RBI