Government security prices closed 35-45 paise higher than yesterday's closing level while call rates dipped today on the back of easy liquidity in the system.
Government security prices opened slightly lower but went up by 50-55 paise in the first couple of hours of trading. Prices, however, came down a bit in the late hours.
"The statement by the RBI official made yesterday that there may not be any cut in the bank rate affected the market in the morning. However, it rallied later on driven by the liquidity in the system. In the dying hours it fell a bit due to the political uncertainty at the Centre caused by the difference among the different parties of ruling National Democratic Alliance," a dealer said.
Call rates opened in the 6.30-6.60 per cent range. But as the demand was low on the eve of the reporting Friday, the rates dipped to close around 6.10-6.30 per cent.
A primary dealer said, "As most of the banks had covered their cash reserve requirement, the demand for overnight fund was on the softer side. It helped overnight rates to stay soft."
In the one-day repo auction, the RBI received two bids worth of Rs 1,085 crore. The central bank accepted both the bids at a cut-off rate of six per cent. There was no bid in the reverse repo auction.
Call rates are expected to hover in the range of 6.15-6.50 per cent tomorrow. Money market dealers said that as most of the banks have covered their position already the demand will continue to be low tomorrow which is a reporting Friday. In the government security market, the prices are likely to go up. However, dealers have predicted the volume will continue to be low and there will be profit-booking at higher level.
