Sentiment : Choppy
Gilts rose by 30 paise, then fell 10 paise in the afternoon on talk of border tension, and then rebounded. It wound up 10-15 paise higher from Thursday's close.
The high volatility was not reflected in the volumes, which were lower at Rs 4,000 crore, of which non-SLR securities accounted for Rs 400 crore.
There was no impact of the announcement of Rs 7,000 crore auction (slated for Tuesday) as the market remained highly liquid.
The yield on the actively dealt 10.18 per cent 2026 bond eased to 7.898 per cent from 7.914 per cent.
Bond yields fell following buying interest. Spreads between corporate paper and gilts narrowed further. A number of big deals were struck in IPCL and GE Shipping paper.
Despite it being reporting Friday, markets remained highly liquid with call rates steady at 5.60-70, and Rs 11,185 crore going out of the system through the repo.
Outlook: Market will remain rangebound on the back of political uncertainty following the border tension. Greater activity is expected to take place in the short and long term papers in the coming week.
Forex
Sentiment : Brittle
The rupee ended at 48.54/55 against the dollar compared with yesterday's close of 48.5275/50, after opening at 48.53/54.
It rose to Rs 48.52 after the Reserve Bank of India (RBI) governor said the RBI is not concerned about the gains made by the local currency.
Corporates indulged in dollar sales in the morning, which the state-owned banks picked up.
Reports that India had launched an air attack on Pakistan pulled the rupee down to 48.5650/57. At this point, corporates started buying greenbacks and state-owned banks began selling them. And importers started booking near forwards.
The six-month annualised premium closed at 4.11 per cent compared with Thursday's 4.09 per cent.
Outlook: Border tension is expected to spawn caution. The rupee is likely to move between 48.52 and 48.63 on Monday. Forwards are seen tracking the rupee, and moving in a range of 4.10-4.25 per cent.
