Turnover Zooms Past Rs 200 Crore

Foreign banks have turned speculators in gilts due to which the secondary debt market trading on the National Stock Exchange crossed the Rs 200-crore mark to reach Rs 218.84 crore.

As a result of the growing demand for short-term paper, the prices have continued to go up. The price of the 13.50 per cent gilt maturing in 1997 went up by 10 paise and was traded for Rs 35 crore at Rs 100.64. The deal is to be settled the same day.

With most of the nationalised banks turning sellers, their foreign counterparts have stepped into the debt market to make quick profits as a result of which, debt market activity has picked up.

 

Treasury heads in foreign banks said that they are not lending money to the corporate sector, and are instead deploying funds in short-term securities. "We are able to secure a better spread by investing in gilts than via lending to the corporates," said a banker with leading foreign bank.

Domestic bankers are of the view that the foreign banks are entering the debt market with the intention of speculating. "They want to book profits as they are expecting a(CRR) cut in the busy season credit policy.

The foreign banks are of the view that a cut in the CRR will see a jump in the prices of securities and they will be able to book good profits.