MONEY MARKET REPORT
Interest rates in the inter-bank overnight money market ruled in the region of 8.50 per cent and 9.50 per cent, while most of the deals were struck in the band of 8.75 per cent to nine per cent, money market dealers said. During the past few days the overnight interest rates have remained tight on account of a host of factors like redemption of FCNR(A) deposits, outflow of over Rs 50 billion last week and the decision by the LIC to deploy its temporary surpluses by buying securities aggressively in the money market instead of lending in the call money market. Generally the State Bank of India, LIC and Unit Trust of India are the big lenders in the market. Uncertainty in the market coupled with high interest rates has ensured that activity in both the dated securities and treasury bills segment remained dull.
Prices held their ground yesterday morning, since there were neither any desperate sellers nor any eager buyers. The reason is that most of the players have built up sizeable positions and preferred to adopt a wait-and-watch policy.
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The 11.19 per cent 2005 and the 10.85 per cent 2001 were commanding premiums of 40 and 60 paise respectively.
The 12.14 per cent 2000 was traded in the region of Rs 104.25, while the 12.59 per cent 2004 was traded in the region of Rs 107.
But by evening there was selling pressure especially with some of the foreign banks opting to sell in the market, thereby nudging the prices downwards. The price of the securities consequently came down by 10 paise to 20 paise.