MONEY MARKET REPORT
Interest rates in the inter bank overnight money market opened in the region of 7.5-8 per cent and then went up to touch 8.75 per cent by the end of the day. According to money market dealers, most of the transactions were conducted in the region of 8 per cent.
One reason cited for the call rates climbing up towards the end of the day was the fact that State Bank of India was not lending in the market. There was reportedly not much action in the treasury bills segment, while the securities market continued to be bullish with the prices holding their active.
The 11.19 per cent paper maturing in 2005 was trading at a premium of 55 paise and the 10.85 per cent 2001 commanded a premium of 70 paise. Among other securities the price of the 12.59 per cent 2004 went up to Rs 107.25. In fact, the price of this paper went down by 10 to 15 paise only to revert back to the original levels.
The 11.83 per cent 2003 was traded in the region of Rs 103.70. These securities accounted for a bulk of the transactions in the securities market yesterday.
At the longer end, the 13.05 per cent 2007 was quoted at Rs 110.
The government has converted Rs 15,000 crore worth of special securities into securities with a finite tenure there by increasing the stock of marketable securities with the central bank.
Once the central bank puts these securities on its sale list as part of its open market operations the price rise should be smothered.
Market players, however, feel that the central bank might not conduct its open market operations aggressively till the government borrowing programme is complete.
