Auction Subdues Securities, Call Softens

MONEY MARKET REPORT

Security prices remained subdued ahead of the 12.25 per cent 2010 auction, with prices moving downward as dealers stayed on the sidelines.

Call money rates moved in the 6.70-7.05 per cent range for the day.

Opening around 7.05 per cent, call softened during the day to 6.70 per cent levels, with most of the deals being done at 7 per cent.

Security prices opened flat and were bearish throughout the day as dealers remained apprehensive ahead of the auction where most expect a devolvement.

"There was some buying interest at the shorter end, while selling was predominant at the longer maturities. However, overall prices moved down," said a primary dealer.

 

Dealers expect call money rates to remain around current levels today, while prices in the securities market will move in tandem with the decision taken by Reserve Bank of India on the cut-off yield.

Although the day saw an inflow of Rs 3,000 crore due to repo maturing, it is expected to be sucked out by the Rs 6,000-crore dated government auction, said dealers. In securities market, the 12.32 per cent loan maturing in 2011 was in demand at the National Stock Exchange. Witnessing volumes of Rs 155 crore, it closed at Rs 111.12 against the opening level of Rs 111.07.

Dealers say that there is adequate liquidity in the system.

Besides, good inflows in the form of coupon payments are expected over the next week.