Government security prices recovered today despite the political uncertainty. Call rates, too, rose topping the 8 per cent barrier in early trade, but slipped in the afternoon to wind up in the 6.80-7 per cent range.
Today, the government security prices opened 30-35 paise lower compared with yesterday's closing.
The gilts, however, recovered to end 20-25 paise higher, after the Prime Minister Atal Bihari Vajpayee negated the possibility of an immediate crossborder attack in his statement to the Parliament.
A dealer with a private sector bank said the market remained cautious and there was selling at different price bands, despite the prime minister's assurance.
Call rates moved in a band of 7.50-8 per cent in the morning, with a few deals reportedly executed around 8.10-8.15 per cent.
A section of dealers said the high call rates early in the day pulled down government security prices.
According to a primary dealer, call was high in the morning as many of the big lenders were absent. "But the State Bank of India lent in the afternoon and that helped the overnight rates to drop below the 7 per cent level," he said.
There was only a single bid of Rs 60 crore in the repo auction today. The bid, however, was rejected by the Reserve Bank of India (RBI).
There was no bid for the one-day reverse repo auction. Meanwhile, dealers believe the prices of gilts are likely to remain stable amid cautious trading due to the ongoing political uncertainty.
The advance tax outflows are also expected to keep pressure on the prices, they said. They see the call rates remaining in the 6.50-7.50 per cent band tomorrow.
