Calls Continue Downward Trend

MONEY MARKET REPORT

The decrease in the overnight interest rates spurred the increase in the prices of securities. The price of the 12.69 per cent went up to touch Rs 100.48, an increase of 13 paise. The price of the 10-year paper auctioned this year i.e. the 13.05 per cent 2007 also rose by around 25 paise to Rs 101.

Yesterday, the activity in the securities market was concentrated principally around these two securities. Volumes could recover if the call rates rule in the region of five per cent.

Call money rates continued their downward trend.They opened in the region of 6.5 per cent, ruled in the band of 5.5 per cent to six per cent during the day and closed in the five per cent to 5.5 per cent range. Reduction in the calls was the principal factor that fuelled the increase in prices. There was some activity in the treasury bills segment. The 364-day treasury bills maturing in April and May next year were quoted in the band of 9.25 per cent to 9.40 per cent.

 

The decline in call rates will make it easier for the banks to fund their portfolio of treasury bills by borrowing from the market. This could ensure that the quantum of trade in the treasury bills could pick up.