Calls Firm, Heavy Trading In Gilts

The inter-bank call rates continued to move in a narrow groove of 10.60 per cent to 10.75 per cent yesterday.

That apart, DFHI and STCI had a strong presence in the market.

Trading activity in the debt market picked up even as call rates remained on the higher side. With yields on government securities quoting in the region of 13 per cent, they are providing to be a better avenue to deploy funds vis a vis the call money market. "We want to book profits on the government securities," an official with a foreign bank said.

Meanwhile, the government announced a Rs 2,000-crore zero-coupon security which will mature in 2000. The security has been priced at Rs 60.66 and the yield works out to 13.72 per cent, similar to the zero-coupon paper issued in July.

 

"The government took into account the issue price and the accrued interest on the July paper and priced it," a banker said.

He, however, added that the new issue is likely to devolve as banks have never shown much interest in zero-coupon papers. "The new CBDT guidelines apply to these securities and they are not exempt from interest tax," a banker said.