Government security prices went up by 30-40 paise at the medium to short end of the market in a dull trade today. Call rates ruled mostly in the range of 6.50-6.75 per cent.
Government security prices opened around yesterday's closing levels and moved up a bit after the announcement of the calendar for government borrowing. However, the trading volume was low as most of the market participants declined to book heavy position ahead of the fiscal end.
A dealer said, "As from the calendar it seems that there may not be much pressure on the liquidity front, so the prices went up. But it came down a bit later due to year-end consideration."
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Call rates opened in the 6.60-6.80 per cent range. Dealers said that there were stray deals even at more than seven per cent. However, State Bank of India (SBI) lend money and it helped overnight rates to close around 6.40-6.60 per cent.
A primary dealer said, "In the morning, most of the nationalised banks were not lending. This created temporary shortage of liquidity. However, the situation improved as the SBI came to rescue the market."
Money market dealers also said the demand was high because of a short trading week. In the one-day repo auction, the RBI received three bids worth Rs 5,070 crore. The central bank accepted all the bids at a cut-off rate of six per cent.
Call rates are expected to hover around 6.50-7 per cent tomorrow as the market participants will have to cover for two days with Friday being a public holiday. In the government security market, the prices are likely to remain stable, however, there will be marginal upward movement at the short and medium end.