Gilts Decline Afresh On Inflation Data

MONEY MARKET REPORT

Call rates fell yesterday due to the beginning of a new reporting fortnight, while security prices fell sharply due to renewed pessimism in the debt markets.

Call rates are expected to continue to ease off while security prices are seen to be rangebound.

Call rates opened high at levels of 8.25 per cent before trailing off to levels of 7.95 per cent at the close of trade. Most deals were done at levels of 8.15 per cent.

The easing is on account of the start of a new reporting fortnight. Call rates are expected to ease further over the next few days due to heavy inflows into the market on account of coupons on dated government securities.

 

However, call rates are not expected to ease back to any great degree since by next week an auction is expected which will counterbalance a big inflow due to a redemption of dated government securities.

In the securities market, prices fell by as much as 10 paise across the board yesterday. Data released over the weekend showed that inflation had hit a 73-week high and this was one of the causes of the depressed sentiment.

Security prices are expected to remain range bound for today while sentiment is expected to stay dull.

In the term money markets, one month National Stock Exchange Mibid levels was at 8.28 per cent, while Mibor was at 8.99 per cent. Three-month Mibid was at 8.90 per cent, while Mibor was at 9.60 per cent.