Security Prices May Gallop On Crr Fillip

Government security prices are likely to go up by 30-35 paise this week as the liquidity condition will be further eased by the first round of cut in cash reserve ratio (CRR) taking effect on November 3.

A dealer said, "There is good amount of liquidity in the market and the sentiment is upbeat after the credit policy. With the CRR cut taking effect by the end of this week, prices are expected to rally further." Dealers are expecting the yield on the 10-year government paper, which is at present around 8.90 per cent, to touch 8.50 per cent by the end of the week.

 

Though money market dealers foresee an auction announcement this week, they expect the auction amount to be small -- below Rs 5,000 crore -- which will keep the market sentiment unaffected.

Dealers, however, are expecting some amount of resistance and profit-booking once the prices increase. A primary dealer said, "Prices are already at a high level and, after a steady increase during the initial part of the week, there will be some amount of profit-booking."

Government security prices went by 10-15 paise on Saturday with excess liquidity in the market. A primary dealer said, "The trading volume was low, but the sentiment was good. Prices continued to rally helped by the liquidity in the market."