Weekly Money Market Report : Sep 11th - Sep 15th
The call rates were firm and were around 10% all the days except for the last day, Friday. The call rates in the week opened at around 10.5-11.5% and ended at 8-8.5%. Almost all the repos faced the slashing of yield rates The RBI removed one of the bonds - 11.4% 2008 - placed on the OMO list on Monday. But the government bonds were traded weak almost the whole week. Around Rs.6,000 crore was expected to leave the system by September 19, on account of tax outflows. The detailed report follows:
Friday, 15th September
Call rates ended lower 8-8.5 percent, amid reduction in three day repo yield, and inflows from repo reversals and treasury bill redemption. The rates opened at 9.75-10.25%, unchanged from Thursday's close. The call rates declined as higher liquidity entered the system. The RBI slashed the three day repo rate by 50 basis points to 10%. It maintained the cut off rate for the five day repos at 10%. Lower amount of bids for the auctions kept the existing liquidity intact. For three day repos, the RBI accepted all the 7 bids received for Rs.390 crore. For the five day repos, the apex bank accepted 6 bids received for Rs.390 crore. Total inflows from repo reversals and treasury bills redemption was Rs.5,845 crore. Government bonds ended 15-20 paise lower amid liquidity concerns ahead of outflows of Rs.6000 crore towards payment of advance tax by corporates. The 12.5% 2004 bond ended at Rs.104.78.
Thursday, 14th September
Call money rates ended steady at 9.75-10.25 per cent amid a 25 basis points cut in the 5-day repo yield. The overnight interest rates opened at 10-10.5 per cent, against Wednesday’s close of 9.75-10.25 per cent. The Reserve Bank of India slashed the cut-off rate for 5-day repos to 10 per cent, against 10.25 per cent in the previous auction. The RBI accepted 13 bids for Rs.2,260 crore out of 14 bids for Rs 2,335 crore. RBI accepted no bids for the one-day repos. The market expected cut in five-day repo rate, thus the amount of bids were lesser compared to Wednesday. The call rates were quoted around 10 per cent for most part of the day, as demand for funds was low.Call rates ended lower at 9.75-10.25% amid a 75 basis points cut in the 5 day repo yield. The rates opened at 10-11% as against the previous close of 10.5-11%. The RBI slashed the cut off rate for 5 day repos to 10.25% as against 11 percent in the previous auction. The RBI mobilized Rs.1800 crore by accepting 13 bids out of 20 bids for Rs.2215 crore. For one day repos, the central bank rejected the single bid received for Rs.200 crore. Government bonds ended at 10-20 paise lower, as players attempted to stay liquid ahead of the advance tax outflows. Around Rs.6000 crore would leave the system by September 19, on account of tax outflows. The selling pressure was also on account of profit booking. The 12.5% 2004 bond ended at Rs.105, as against the previous close of Rs.105.10. The 11.4% 2008 security ended at 100.05 as against the previous close of 100.2
Tuesday, 12th September
Call rates ended firm at 10.5-11 percent amid higher outflows towards the three day repo auction. The rates opened at 9.5-10.5%, as against the previous close of 10-10.5%. The RBI slashed the three day repo rate by 50 basis points to 10.5 %. It rejected the single bid received for one day repos. For 3 day repos, the RBI accepted 32 bids of Rs.5745 crore out of 35 bids for Rs.5895 crore. The call rates hovered around 9.5-10% in the early trades but rose on demand for funds. There were liquidity concerns among players as there were high outflows of repos. Govt bonds ended steady amid poor trading interest among players. The RBI removed one of the bonds - 11.4% 2008 - placed on the OMO list on Monday. The security ended at Rs.100.20 as against previous close of 100.18. The other securities on the sale list was the 11.75% 2004 bond (Rs.102.9). The 12.5% 2004 bond ended at Rs.105.10, unchanged from its previous close.
Monday, 11th September
Call rates ended lower at 10-10.5 percent after touching an intra day low of 9.75%. The overnight interest rates opened at 10.5-11.5%, unchanged from Saturday's closing levels. The call rates touched single digit during the day on low demand for funds coupled with slashing of repo yields by the RBI. The RBI slashed the 1 day repo rate by 50 basis points to 10%. Besides repo reversals of Rs.14,500 crore, the market drew that the government would hold back its borrowing programme till the third week of this month. For one day repos, the RBI accepted 3 bids of Rs.1675 crore out of 5 bids of Rs.1785 crore. For three day repos, the central bank accepted 26 bids for Rs.4,380 crore out of 29 bids for Rs. 4540 crore. Government bonds rallied by 5-10 paise, amid good buying extended by the market. The 12.5% 2004 bond ended at Rs.105.13 as against previous close of Rs.105.1, while the 11.4% 2008 bond ended at Rs.100.16 (100.09).
K.Venu Babu