Gilts Trade To Remain Dull

The gilt prices on Saturday closed around the same level as on Friday. "The prices shot up by 15-20 paise in the morning hours but the hike in the prices were corrected in the afternoon trade," said a dealer.

The movement in the government security prices will remain in line with the movement of Indian currency against the dollar. A dealer said: "the market is not sure whether the rupee will stabilise or will fall further."

"If the situation in forex market remains weak, RBI is going to continue with a high repo rates and that will keep the trading in government security prices very thin," said a treasury head at a nationalised bank.

 

Some dealers even think the trading in the government securitties market is not going to pick up even if the rupee strengthens during the week. "The rupee has to remain stable for at least a fortnight to improve the sentiment in the securities market," a dealer said.

Dealers feel that trading at the longer end will take even longer time. However, the news that the apex bank is not going to hike the bank rate or take some further actions on exchange earner foreign currency (EEFC) account in the near future, has improved market sentiments a bit. But as the treasury head of a private sector bank said, "the securities is dead, the news did not have enough power to boost it substantially."