Gilt Prices May Inch Up 10-15 Paisa

Gilt prices on Monday moved up marginally 5-10 paisa. Volumes was, however, very thin and trading was concentrated at the short and medium end. "The prices of government security prices moved up marginally following the dip in the call rate," said a primary dealer.

The sentiment in government security prices is expected to get a boost following some dollar inflows from the exchange earner's foreign currency (EEFC) account in the next week. Though players are skeptical about the amount that will actually come, they are expecting the central bank to take fresh measures to curb volatility in the forex market. "As the Reserve Bank of India is likely to review the EEFC scheme, one can expect some fresh measures to bring back more dollars from these accounts", said a dealer with a private sector bank.

 

With less volatile forex market, repo rates too are expected to come down. "Drastic cuts in repo rates are quite unlikely as the RBI will watch the situation cautiously even if the forex market strengthen," said a dealer. "Hence, the government security prices are not expected rise substantially over the week," he said. The long end of the market is expected to remain dull. "Any movement at the long end will happen only after the call market will remains steady for a long time," said the treasury head of a private sector bank.