Sentiment : Stable
Prices of gilts, after opening weaker by 25-30 paise, recovered to close at Thursday's levels.
The market overcame initial jitters on account of the downgrade of local debt when it realised that Standard & Poor's premise for the decision was old hat.
Ample liquidity coupled with buying by state-owned banks and primary dealers helped gilts recoup initial losses.
Yields eased further due to finance secretary's remarks that the downgrade was unlikely to hurt growth or foreign capital inflows.
The benchmark 7.40 per cent 2012 paper opened at Rs 101.30 (yield: 7.20 per cent) and closed at Rs 101.58 (7.17 per cent).
With some banks overcovering for the reporting fortnight, excess liquidity surfaced, which pulled down call rates to 5.30-5.60 per cent against Friday's 5.65-5.74 per cent.
Outlook: Government securities will move in a narrow five paise range. Call money will hover around the repo rate of 5.75 per cent.
Forex
Sentiment : Bullish on rupee
The rupee today closed unchanged at 48.41/42 per dollar, after opening weaker.
As in the money market, the early angst over the downgrade of local debt to junk was soon overcome.
State-owned banks, apparently at the behest of the Reserve Bank of India, along with exporters sold dollars heavily at 48.45/46 levels.
Importers kept out.
Forward premiums opened higher but closed lower compared with Thursday.
Outlook: The rupee is expected to trade in the 48.40-48.43 band per dollar on the back of good supplies of greenbacks. Premiums on the forward dollar will rule easy.
