Search the Internet          Tips  Sites: Finance, Investment

Gilts unroll in Credit Policy countdown

BS Banking Bureau

The government securities market should be flat in the week in the run up to the Reserve Bank of India's Monetary and Credit Policy.

"The market is seeking a direction on the cash reserve ratio and bank rate fronts. The quantum of cut in these two rates is now engaging the interest of the players," said a dealer with a public sector bank.

He pointed out that the disinterest is underscored by the fact that daily trading volumes have come down to Rs 10-Rs 15 billion in the last few days compared with Rs 40-50 billion earlier.

"In the current market, foreign banks and primary dealers are selling at the current levels only with the intention of buying at lower levels. Public sector banks, however, are not taking any risk at this point and sitting tight with their positions," said another dealer.

Liquidity is going to get tighter in view of the fact that the refinance availed, at Rs 48.247 billion, has almost reached the upper limit and in the last repo auction only Rs 5.25 billion was placed with the RBI.

Dealers are not expecting any auction as the ways and means advances availed by the central government stands at Rs 95.99 billion against the limit of Rs 100 billion.

On Saturday, the government security prices moved in a three paise range. The 11.50 per cent 2011 benchmark paper was dealt at Rs 128.71 (yield: 7.285 per cent) to Rs 128.73 (yield: 7.283 per cent levels).

This paper was dealt at Rs 128.81 (yield: 7.27 per cent) on Friday morning and closed at Rs 128.70 (yield: 7.28 per cent).

Powered by

ALSO READ:
The RBI Credit Policy 2001-02
The Rediff Budget Special
The Rediff-Business Standard Special
Money

Tell us what you think of this report