Sentiment : Bullish
Medium-tenor gilts ended 15 paise higher, while short and long issues edged up three to five paise.
The cash glut and the comment of a senior Reserve Bank of India official on bank rate cut drove gilt prices up.
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Abundance of the 7.40 per cent 2012 paper is restraining the prices of other gilts.
Funds continue to keep call rates easy in the 5.65-5.75 per cent band.
There were 13 bids for Rs 18,235 crore in the one-day repo auction, all of which were accepted for Rs 16,412 crore at 5.75 per cent.
Outlook: Gilt prices should open higher and selling could come in after prices appreciate by 10 paise. Call money will hover around the repo rate of 5.75 per cent.
Forex
Sentiment : Bullish on rupee
The rupee ended at 48.4650/4700 per dollar compared with Monday's 48.4750.
Corporates and exporters sold dollars at 48.4650-48.4725 levels, and state-owned banks kept picking these up.
A senior Reserve Bank of India (RBI) official's comment that there would be a 50 basis point cut in the bank rate led to far forwards falling by 13 basis points.
Players feel the RBI will not allow the rupee to move more than 2-3 paise on either side of spot.
Outlook: The rupee is expected to maintain its appreciating trend and trade in the 48.45-48.49 band per dollar. Forward premiums could come down a touch.