The debt market witnessed a bull run in government securities as the news of a cash reserve ratio (CRR) cut did the rounds with the turnover touching Rs 267.91 crore.
Dealers said the deals being struck in the market were mostly in the shorter-end securities ranging between the one, two and three-year securities.
A number of transactions were reported in the 91-day treasury bills and the 364- day paper. Apart from this, the dated securities also saw a considerable number of transactions. The 13.5-per cent 1997 security, 13.5-per cent 1998 (converted) and the 13.62-per cent 1998 saw a large number of deals being struck.
The four-year zero-coupon bond was also traded in large volumes. The yield on the four-year bond fell below 14 per cent as the prices moved up. Most of the interest in buying securities was shown by the foreign banks and the newly-set up private sector banks.
The four-year paper, which is being put up for sale on Monday is expected to devolve, as full subscription to the extent of Rs 2,000 crore is not expected.
The paper is available in the secondary market at lower rates, due to which the banks are not expected to show enthusiasm for the paper. The RBI is offering the paper at Rs 60.66 and in the secondary market the paper is available for Rs 60.17.
