Sentiment : Bullish
Call rates hovered around the repo rate of 5.75 per cent on the back ample funds in the system.
At the one-day repo auction the central bank received eight bids aggregating Rs 17,410 crore and accepted bids partially for Rs 15,669 crore at 5.75 per cent.
The banking system is awash with funds. This Saturday there will be inflows of Rs 10557.50 crore following redemption of the 11.15 per cent 2002 paper and coupon payment worth Rs 570 crore on account of the 11.40 per cent 2008 paper.
Medium-tenor gilts saw a liquidity-based rally of 20-30 paise driven by attractive yields.
The 10-year paper yield softened three basis points to 7.14 per cent. The market expects yield on this paper to touch 7 per cent next week.
Outlook: Government papers at the medium end will see a rally of 20-25 paise, which will be followed by profit-booking. Call rates will rule easy around the repo rate.
Forex
Sentiment : Bullish
The rupee ended weaker today at 48.5250/5300 against the dollar compared to yesterday's close of 48.4825/4875.
Opening at 48.49/50 to a dollar, the rupee hit a high of 48.4825 before buying by nationalised banks and month-end corporate demand, especially from oil companies, pulled it lower.
There was a fair amount of inter-bank activity. Banks, which had gone short on dollars yesterday to take advantage of the swap differential, bought dollars to cover their positions.
Spot market was active today with demand outstripping supply. Once the rupee hit a low of 48.54, banks started selling dollars to stem the volatility.
Far forwards edged up a tad as the spot dollar weakened and corporates squared up their forward positions. The six-month annualised premium stayed flat.
Outlook: The rupee is expected to stay around 48.51-48.55 to a dollar tomorrow; forward premiums will be ranged.
