Soft bias continues

Trading Desk

 DEBT MARKET REVIEW BY CRISIL: Liquidity props up market sentiment but the pace of fall in interest rates will be measured

 The new financial year started on a cheerful note bringing the US-Iraq war to an end. All eyes were hooked upon the Credit Policy, 2003, and usual liquidity infusion measures.

 The announcement of a fresh borrowing calendar in the new fiscal resulted in most participants making fresh allocations of their portfolios. The domestic market was awash with liquidity.

 On the global scenario, oil prices that soared on the eve of the war to $34 per barrel dropped. Rupee and other major currencies were on an upward swing against the dollar.

 Subsequently on June 5, the European Central Bank cut its prime interest rate by 50 basis points and in the end of June the US Federal Reserve cut the Fed rate by 25 basis points. This led to an expectation of the rate cuts feeding into domestic markets.

 Liquidity, the driving force of yesteryear's rally, has been abundant in the system