Call money ended higher today at 6.70-6.90 per cent compared with the previous close of 6.55-6.70 per cent amid slight tightness in liquidity, while the long-term government security prices fell by 20 to 30 paise reflecting the tight trend in the money market.
A dealer with a private sector bank said uncertainty about announcement of OMO auction by the Reserve Bank of India weighed on the trading sentiment.
The sentiment has been weighed down in the last couple of weeks as there were two OMO auctions aggregating Rs 14,000 crore that have drained the liquidity.
More From This Section
Call money rates opened at 6.60-6.80 per cent and touched 7 per cent in the some afternoon trades, the dealer said and added that a few stray deals were also reported at 7.15 per cent levels.
At the one-day repo auction, held under the liquidity adjustment facility (LAF), the central bank received three bids totaling Rs 75 crore and accepted all of them at a cut-off rate of 6.50 per cent.
Under this facility, the apex bank had received bids totaling Rs 5,365 crore on Friday and Rs 9,575 crore on Thursday.
Dealers expect call rates to tighten further on account of advance tax outflows, which should begin from the middle of this week.
The government security market mirrored the tight trend in the money market. The prices of long-term papers fell by 20 to 30 paise.
The 9.85 per cent 2015 paper opened at Rs 113.00/10 and slid to close at Rs 112.71. A dealer pointed out that the price of this security had not yet stabilised and could fall further.
The benchmark 11.50 per cent 2011 paper opened at Rs 123.20/26 and slid to end at Rs 123.05. Yield on this paper currently stands at 8.06 per cent.
A dealer said, "There will be value-picking in the securities market and selling pressure will come at every point rise."
Call money is expected to rule in the 6.60-6.70 per cent range tomorrow, while the government security prices could rally if the US Fed cuts the Funds rate.