MONEY MARKET REPORT
Call money rates stayed in a narrow range yesterday even as security prices weakened during the day as worries about inflation affected market sentiment.
Call money rates stayed in an intra-day range of 7 per cent to 7.10 per cent with most deals done in a range of 7 per cent to 7.05 per cent. Call rates are expected to stay in a similar range for today also.
Security prices slumped in early morning trade as the inflation data released over the weekend showed inflation hitting a 70-week high of 6.1 per cent.
Security prices moved lower by as much as 10 paise in the longer maturities while in the short to medium term maturities prices moved down by 1-2 paise over the day as a whole. Prices had recovered in the later hours of the day especially in the short- and medium-term maturities where they had been down 3-5 paise.
"There is still a lot of interest in the shorter and medium term maturities as compared with the long term," said a money market dealer.
"There is a feeling still that prices are likely to move lower. Also those who already hold longer term paper do not want to sell now and book a loss. So there is very little trading at present in longer maturities. Thus there is a continued shift in portfolio compositions from the long end to the short and medium term."
Dealers say that security prices are expected to continue to remain depressed for some time.
