The government securities market ended on a bullish note last week as fears of the Reserve Bank of India (RBI) conducting an open market operation (OMO) sales to cool the rally in gilt prices eased out. The rupee, after closing at a new multi-month high of 48.3175/3200 per dollar on Wednesday, ended the week at 48.3400/3425.
On the last trading day of last week, securities prices jumped by almost 30 paise. Players, who were cautious on the previous three days on account of OMO fears, rose on Saturday as the RBI scheduled an auction (re-issue) of the 7.46 per cent 2017 for a notified amount of Rs 4,000 crore for October 16. On Saturday, in the secondary market, the 7.46 per cent paper opened at Rs 100.41 (yield: 7.41 per cent). It appreciated by nearly 30 paise to close at an yield of 7.38 per cent.
Earlier on Tuesday, the RBI set aggressive cut-offs at the twin auctions. For the 7.27 per cent 2013 paper, it set a cut-off price of Rs 100.93 (yield: 7.1444 per cent) as against the market expectation of Rs 100.90. And for the 7.95 per cent 2032 paper the cut-off was set at Rs 100.72 (yield: 7.8858 per cent as against the market expectation of Rs 100.70.
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The 11-year and 30-year papers were oversubscribed 3.8 times and 1.5 times, respectively. With this twin-auction, the central government has completed 73.51 per cent of its budgeted gross market borrowing programme of Rs 1,42,867 crore.
Call money, which ruled close to the repo level of 5.75 per cent on the first four days of the week, spiked to the six per cent level on the last two trading days.
Dealers aver that as most of the lending banks completed major part of their dealings early and parked their surplus in the three-day repo on Friday due to which call money touched 6.10 per cent levels.
In the forex market, the Indian unit traded in a broad range of 48.3175-48.3600 during last week. While supply of the greenback from exporters continued to be healthy, demand from importers was slack.
Premiums on the forward dollar edged below the four per cent level towards the close of the week. Meanwhile, India