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| While Rs 1500 crore will go out of the system through treasury bill auctions, inflows are pegged to the tune of around Rs 2063 crore. |
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| Foreign exchange inflows, on the other hand, are continuing to grow, owing to the attractiveness of the Indian equity market. Forex inflows have grown by $698 million over the week as on November 28. |
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| However, forex inflows are likely to go down from middle of this month as the overseas market usually leaves on a yearly vacation. |
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| Liquidity, however, might not be a sufficient trigger for the market as there are other factors which may play spoilsport. |
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| Inflation for this week has been higher at 5.2 per cent, though repeated statements from the ministry have been assuring the market of a low inflation rate. |
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| Moreover interest rates globally are going up as is witnessed from the rates on the long-term bonds across markets, although except for Bank of England and Bank of Australia, all other central banks have left the key rates unchanged. |
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| In India as well, central bank has stated hinting at stiffening interest rates by announcing higher cut off rates on long-term papers at the auction held last week. Swap rates at the long ends have widened sufficiently, said dealers. |
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Call rates seen staying soft amid ample liquidity
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| Interbank call rates will remain soft, with liquidity abundant in the system. Last week saw call rates ruling very low as is evident from the repo subscriptions. |
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| In fact, the report on liquidity adjustment facility has created a standing deposit facility to help banks park their surplus funds. |
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| Interbank call rates are likely to remain soft for some time as there are no major outflows slated for the next two weeks except for advance tax outflows in mid December. |
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| In addition to this, there are inflows coming into the market. Moreover, the liquidity is being added with the intervention of the central bank to suck out dollars to regulate the spot rupee. |
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| However, in order to tackle the problem of direct sterilisation, the Reserve Bank of India has announced standing deposit facility below repo rate and elongation of the tenor of the repos as two possibilities for indirect intervention. |
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| In fact, this was taken as a positive cue for the market as players believed open market operations are going to be avoided in future. |
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Rs 1500 cr T-Bill auctions this week
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There are two auctions of treasury bills - Rs 500 crore worth 91-day T-Bill and Rs 1000 crore of 364 day T-Bill
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