The yield on government bonds and call rates may dip further on Monday as markets absorb the effect of the 100-basis-points cut in both repo and reverse repo rates by the Reserve Bank of India (RBI) on Friday.
RBI’s decision to lower the cash reserve ratio by 50 basis points effective January 17, releasing an additional Rs 20,000 crore into the system, would also influence the response of market players, dealers said.
The 10-year government securities may touch an all-time low of 4.80 per cent on Monday but may give up some gains later in the day on profit-booking. The interbank overnight rate could open slightly down at around 4.70 per cent. The yield on the 10-year paper ended at 5.07 per cent on Friday.
The call money rate is expected to open steady at around 4.70 per cent on liquidity. The rate could slip to around 4.50 per cent in late trade as the initial rush for funds by banks subsides.
