MONEY MARKET REPORT
Security prices rallied across the board yesterday as market players turned bullish following the auction of the 12.25 per cent paper maturing in 2010.
Call money stayed in a 7.10-7.20 per cent range for the day with most deals being done in a 7.10-7.15 per cent band. "The market was expecting call rates to tighten because of the Rs 6,900 crore outflow due to the auction and the repo outflow of Rs 3,750 crore. However, in the event liquidity was ample and call rates remained at the current levels," said a dealer with a private bank.
Security prices fell in the morning as the market reacted to the hike in the cut-off yield of the 10-year maturity by 26 basis points at Wednesday's auction. As call rates stayed at Wednesday's level, the market took it as a signal that ample liquidity was still present in the system despite the outflows. The 12.25 per cent 2010 was traded around Rs 110.72, a jump of 12 paise.
The call rates are expected to dip today due to it being a reporting Friday. Dealers expect the current rally in the bond prices to continue. "Sentiment has turned positive and there is likely to be continued buying in both short and medium-term papers," said a dealer with a private bank.
The 12.25 per cent 2010 fetched a turnover of Rs 400 crore. It was dealt in an intra-day range of Rs 110.57 and Rs 110.72 before closing at Rs 110.68, underscoring an implicit yield-to-maturity of 10.51 per cent. The 11.99 per cent 2009 saw a turnover of Rs 300 crore and closed at Rs 109.24.
