The medium and long-term government security prices went up by 15-20 paise today compared with yesterday's closing. Call rates closed in the 6.50-6.90 per cent range.
Government security prices opened 10-15 paise higher on the back of easy liquidity and reduction in border tension. The prices rallied by another 10-15 paise later on, but slipped in the afternoon because of profit-booking.
A primary dealer said, "Liquidity was ample and the sentiment was also good. But the market participants took a cautious approach as the Reserve Bank of India (RBI) may step in to arrest the rise in price as it did earlier."
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Another dealer said, "the price of government paper are once again very close to their historic highs. Hence the market participants felt that it may not go up too much now and resorted to booking profits."
Call rates opened higher around 7-7.50 per cent. Dealers said that there were huge gaps between the borrowers' and lenders' quote and deals were ultimately struck around 7.25 per cent level. The rates, however, dipped during the day to close in the 6.50-6.90 per cent range.
The treasury head of a private sector bank said, "liquidity was good in the market as the advance tax outflows have started coming back to the system through government spending. This has pushed overnight rates below the seven per cent level."
Government security prices are expected to stage mild rally tomorrow. Dealers said though there may not be any sharp rally, a 15-20 paise rally at the medium and long end of the market is on cards. In the overnight market, call rates will hover in the 6.60-7.20 per cent band as the liquidity condition is expect to remain comfortable.