Short-Term Securities Hog Limelight

MONEY MARKET REPORT

The government securities market remained stable-to-soft yesterday despite active trading in short and medium-term papers. Call money rates were traded in the 6.90-7.05 per cent range for most part of the day.

The long-term securities market was dull and slightly bearish, closing 25-30 paise lower. "There are talks about a devolvement at the auction today and it is possible that it will not be fully underwritten," said a dealer from a private bank.

Primary dealers were reportedly selling long-dated securities heavily during the day. "They were probably making room for the 12.25 per cent paper maturing in 2010 to be auctioned today," said a dealer at a private sector bank.

 

The medium-term securities market witnessed active buying. "People are switching from long-term securities to medium-term ones," said a primary dealer. Medium-term papers closed 5-10 paise lower.

Short-term securities saw little action though there was lot of bidding in the one-year and two-year papers. It closed a little lower than its opening level yesterday. "The short-term securities did not come down as much as long-term securities," said a dealer from a private bank.

The call rates did not fluctuate much yesterday, trading in a very narrow intra-day range of 6.90-7.10 per cent. "Liquidity is ample in the system and one does not see the call fluctuating too much in the coming days," said a primary dealer.

Money market operations

* Call/Notice money markets

Banks Primary Non-bank Total Weighted

deelers institutions avg.rate(%)

Borrowings 6913 7625 0 14538 6.96

Lendings 9799 2341 1172 13312 7.04

* Term money market Volume Rate

1133 7.75-11.50

* Liquiduty support availed from RBI

Tier-I 6301 7%

Tier-II 0 9%

* RBI's open market operations Nil

* Outstanding RBI repos 3000 5.00