Call Hovers Over 10%, Gilts Stay Calm

Call money rates hovered just over 10 per cent, while government security prices remained stable yesterday.

Call rates opened slightly high in the 10.15 to 10.25 per cent range and remained almost at the same level. Some deals were reported at 10 per cent level. A dealer said, "Traders were not active before the auction of eight-year paper."

"There was mixed expectation in the market, while a section of the market expected the paper to devolve fully on the Reserve Bank of India (RBI), a section expected it to be fully subscribed," he said. However, dealers said that liquidity situation continued to remain good.

 

RBI yesterday mopped up Rs 4,450 crore through the five-day repo auction. The cut-off rate was unchanged at 10 per cent level. The apex bank, however, did not accept any of the two bids of Rs 35 crore for its one-day repo auction.

The government security market, like the overnight market was rangebound yesterday. The treasury head of a private sector bank said, "Two things were acting together, the slightly higher call rate and the news that all the underwriting bids were canceled." "The higher call rate while had pushed down the sentiment, the news on underwriting pulled it up," he added.

A senior dealer said, "Because of half-yearly ending on September 30, banks are not taking any fresh positions in the market."

The call money rate is likely to be in the range of 9.75 per cent to 10.25 per cent. "Though the result of auction will have an impact on the overnight market, the rates are neither going to fall or rise substantially as the repo rates are likely to be same," the treasury head of a private-sector bank said.

Government security market is likely to remain subdued. A dealer said, "even the auction turns out to be good, the sentiment is not likely to be improved drastically before the half-yearly closing." "Some impact will be observed in the next week only," he added.