The liquidity tightness seen in the last couple of weeks on the back of heavy outflows following sale of state loans will ease this week.
However, there are some apprehensions on account of advance tax outflows. The sum in question stands in the region of Rs 8,000-10,000 crore.
The tightness in the funds position in the banking system was reflected in the low daily average repo inflows last week at Rs 702.5 crore, against an average of Rs 6,086 crore in the preceding week.
The low daily average comes on the back of the second tranche of state loan auctions of Rs 5,753 crore, with the Reserve Bank of India receiving only a couple of bids.
The participants are expecting greater buying interest this week, as nationalised banks are no longer booking profits and have started taking position.
This will see demand for funds, and could mean average repo levels will remain low.
