NSE REPORT
Security prices continued to crash for a third consecutive day at the debt market segment of the National Stock Exchange. Tight liquidity was considered to be the main cause, dealers said. 120 trades were clocked yesterday accounting for a volume of Rs 835 crore.
"Interest in the securities market was dull due to volatility in the call money rates. Prices of securities continuously moved downwards with long-dated gilts falling by 30 paise and short-term papers sliding of around 20 paise," a securities market dealer said.
The Reserve Bank of India has also announced an auction of two state government loans for an amount of Rs 600 crore on August 19, 1999. Although the amount has not been considered to be of much significance, this announcement has come at a time when liquidity was already tight.
According to dealers cash outflows to the tune of Rs 5,000 crore last week was taking effect now and, as adequate product covering had not been done by banks in the expectations of lower call money rates towards the end of the fortnight, the overnight rates shot up. Forward premia in the forex market, too, were showing volatility which led to arbitraging, thereby reducing rupee liquidity in the system. <
