Government security prices are likely remain range-bound this week on the back of comfortable liquidity. Dealers feel prices should move in a range of 15-30 paise.
A dealer said: "There is no problem with the liquidity in the system. But, players are concerned about a possible auction during the week, which will keep trading lackluster."
Dealers expect the auction to be in the 5-10 year maturity and for an amount between Rs 5,000 and Rs 8,000 crore.
A dealer said: "The long end of the market is oversupplied with securities. There is very little appetite left at that segment. As the last auction conducted by the Reserve Bank of India (RBI) was of a 10-year paper, it seems the next auction will also be of a short- or medium-term paper."
Dealers, however, are expecting the auction to be oversubscribed as banks are flooded with liquidity. The chief dealer of a private sector bank said: "As banks and primary dealers have been expecting an auction during the week, they have already set aside funds for that. Hence, the auction should receive a good response."
On Saturday, government security prices went up by 20-25 paise for securities with more than 10 years maturity. A dealer said: "It was a liquidity-driven rally which is not likely to continue this week."
