Calls Firm, Crr Talks Boost Gilt Trading

Rates in the inter-bank call money markets vacillated between 10.75 per cent and 10.9 per cent yesterday.

Talks centring around the possibility of a massive cut in the cash reserve ratio(CRR) spurred active buying interest in the gilts market. The trading was spread over dated securities as well as the treasury bills. The private and foreign banks were the predominant players which picked up papers in a big way. A 0.5 percentage point cut in CRR would unlock approximately Rs 2,000 crore into the system.

However, the hardening was largely witnessed in the one, two, three and four-year papers. The yield on the 364-day treasury bills fell from the previous day's figure of 12.75 per cent to 12.65 per cent.

 

Dealers said the forthcoming zero-coupon bond could be subscribed fully. There were reports of the RBI urging banks to ensure that the paper is subscribed fully.

The zero-coupon bond, which is offering a yield of 14-per cent, is unlikely to catch the fancy of bankers.

The primary dealers have, however, been offering a hefty commission on the paper, making it attractive for banks to pick up the paper in the auctions.