Weekly Money Market Report : Sep 25th - Sep 29th
The call rates were firm and were around 10% the whole week. The call rates in the week opened at around 9.75-10 % and ended at the same level of 9.75-10%. The players expected RBI to slash the repo rate. However, as this did not happen, there was demand to cover positions taken ahead of the auction. Loans of 11 sates were oversubscribed. For the state loan auction, the central bank received Rs.4712 crore as subscriptions as against the notified amount of Rs.2107 crore. The bonds also had closely tracked the rupee. The detailed report follows:
Friday, 29th September
Call rates ended lower at 9.75-10% amid redemption inflows of Rs.6342 crore entering the system. The rates opened at 10-10.25% unchanged from its previous close. Low acceptances at the daily repo auction also allowed the call rates to rule lower. RBI redeemed the 11.4% 2008 bond making a principal repayment of Rs.6000 crore and interest payment of Rs.342 crore. RBI slashed the cut off rate for four day repos by 200 basis points to 10%. It accepted all the 5 bids received for Rs.1780 crore. For six day repos, it received two bids for Rs.210 crore which were rejected. Prices of government bonds moved in a narrow range and ended lower after the RBI in its auction of the 11.4% 2008 bond on Thursday, set the cut off price lower compared to the ruling price. The bond ended at 10 paise lower at Rs.99.7(99.8). RBI had fixed a cut off price of Rs.99.5, implying an yield of 11.49%.
Thursday, 28th September
Call money rates ended lower at 10-10.15%
with a nominal demand for funds and hopes of enhanced liquidity ahead of redemption inflows of Rs.6342 crore. The rates opened at 10.1-10.2% as against the previous close of 10-10.25%. RBI maintained the cut off rates for the six day repos at 10% and accepted all the five bids for Rs.4450 crore. RBI rejected the two bids for Rs.35 crore received for one day auction. There were concerns about the liquidity levels in the system after outflows for the 11.4% 2008 bond of Rs.3000 crore and state loan of Rs.2107 crore which concluded on Wednesday. RBI said that it retained excess subscriptions received for some states. The state issue loan garnered subscription of Rs.4710 crore. Prices of government bond tracked a steady rupee to end marginally higher. The 11.4% 2008 bond ended at Rs.99.98 as against Wednesday's close of Rs.99.75. The 12.5% 2004 bond ended at Rs.104.85.(104.75).Wednesday, 27th September
Call rates ended higher at 10-10.25% as outflows towards the state loans weighed on the market. The rates opened at 9.8-10.2% as against Tuesday's close of 9.9-10.2%. Reports about RBI retaining a part of the over-subscription for state loans had an impact with rates firming immediately after the news. The RBI slashed the six day repo rate by 400 basis points to 10%, while maintaining the one day repo at the same level. For one day repos,it received 8 bids for Rs.500 crore out of which it accepted 7 bids for Rs.490 crore. For six day repos, it accepted all the five bids received for Rs.495 crore. For the state loan auction, the central bank received Rs.4712 crore as subscriptions as against the notified amount of Rs.2107 crore. Loans of 11 sates were oversubscribed. Bond prices in the medium end fell by 5-10 paise amid liquidity concerns among players. Bonds on the short end were steady as trading remained dull.
Tuesday, 26th September
Call rates ended marginally higher at
9.90-10 per cent amid hectic covering for funds by players. The overnight rates opened at
9.80-10.10 per cent, against the previous close of 9.90-10.20 per cent. For one-day repos,
the RBI accepted 9 bids for Rs 1,115 crore out of 10 bids for Rs 1,140 crore. For
three-day repos, the central bank accepted all the 11 bids received for Rs.3,675 crore.
The players expected the RBI to slash the repo rate. As this did not happen, there was
demand to cover positions taken ahead of the auction. The bonds closely tracked the rupee,
which ended little changed from Monday’s close. Prices of government securities moved
in a narrow range, and ended almost at the previous levels.
Monday, 25th September
Call rates ended lower at 9.75-10 percent amid nominal demand for funds at the start of the new reporting period. RBI maintained the repo rates at 10% for both one and three day repos. The rates opened at 9.75-10%, as against Saturday's close of 9.5-10%. There was an outflow of Rs.6,800 crore towards the central bank repos. For one day repos, RBI accepted all the 15 bids received for Rs.1345 crore. For three day repos, the central bank accepted all the 13 bids for Rs.5450 crore. Government bonds ended little changed amid dull trading interest from players. The 11.4% 2008 bond ended at Rs.99.98 as against the previous close of Rs.100. The 12.5% 2004 bond ended at Rs.104.97 as against Saturday's close of Rs.105.
K.Venu Babu