Sentiment : Nervous
The trend was range bound, with players nervously awaiting hints from the Reserve Bank of India on the cut-off rate for the upcoming auction of 15-year and 20-year papers to raise Rs 8,000 crore.
Gilt prices saw a correction today after the marginal fall on Wednesday. The yield on the benchmark 10-year gilt ended higher at 7.1789 per cent, from Wednesday's close of 7.1689 per cent.
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Yields are expected to rise further due to the size of the impending auction of long-term papers.
Trading was thin as interest was restricted to buying of short-term paper by foreign banks
Ample liquidity in the banking system and negligible opportunities in the gilts mart continue to spur interest in corporate debt paper.
Spreads between gilts and corporate paper continue to narrow. IRFC's 8.40 per cent 2007 bond was traded at 7.83 per cent from yesterday's 7.85 per cent. Five-year gilts are quoting at 6.61 per cent.
High liquidity kept call rates steady even as Rs 13,630 crore went out of the system through the repo auction route.
Outlook: Despite tomorrow being reporting Friday, there's no pressure on call expected as banks have covered their cash reserve ratio positions. Overnight rates will remain around the floor of 5.70-75 per cent.
Forex
Sentiment : Bullish
The rupee ended at a new seven-month high of 48.5275/50 per dollar, compared with 48.5385/5425 on Wednesday, after opening at 58.5325/54.
Some big corporates and exporters sold dollars, and the inflows were seen at around $100 million. On the back of this, the rupee touched an intra-day high of 48.5225.
The Reserve Bank of India had been continuously mopping up dollars through state-run banks. Some private sector banks also bought on behalf of their corporate clients.
Import cancellations by some of the corporates and ample liquidity in the banking system saw the six-month forward dipping by Re 1 and the annualised premium closing at 4.10 per cent.
Outlook: The rupee could test 48.50 levels tomorrow and is likely to trade in a band of 48.50-55. Forwards are also seen going down. The six-month annualised premium could touch a new low of 4 per cent.