Weekly Money Market Report : Oct 30th - Nov 03rd

The call rates have gone up in the week. The call rates opened at around 8.23-8.5 percent and ended higher at 9.5/10 percent. The week saw a cut in the repo rates across all the repos. The RBI cut the one day repo rate by 25 basis points to 8%. It had earlier reduced the three and five day repo rates to the same level. RBI received no bids for the reverse repo auctions held on Thursday. With call rates ruling above 8%, no player was interested in parking funds in repos. Bond prices rallied by amid stability of the rupee and news about favorable response to the SBI's India Millennium Deposit issue. The rupees firmness in the forex market aided the uptrend. The detailed report follows:

Friday, 3rd October

Call money rates ended higher at 9.5 / 10% amid hectic covering by players. The rates opened at 8.2 / 8.5% as against previous close of 8.3 / 8.6%. Stray deals were reported at 10.5 / 10.75%. Bond prices rallied by 40 - 50 ps on anticipation of large inflows towards the IMD. The rupees firmness in the forex market aided the uptrend.  The rupee ended at 46.59 / 60 as against previous close of 46.74/75. The 11.4% 2008 bond ended at Rs.100.80 (100.40). The 11.3% 2012 bond ended unchanged at Rs.96.15(95.95). The 12.5% 2005 bond ended at Rs.101.88 (101.75).

Thursday, 2nd November

Call money rates ended higher at 8.3 / 8.6% on hectic covering by banks and primary dealers ahead of a reporting day. The rates opened at 8.25 - 8.5% as against the previous close of 8.15 / 8.4%. The call rates touched an intra day high of 8.6% on account of borrowing pressure. The stray deals were reported at 8.75%. RBI received no bids for the reverse repo auctions held on Thursday. With call rates ruling above 8%, no player was interested in parking funds in repos.  Bond prices rallied by 20 - 25 ps amid stability of the rupee and news about favorable response to the SBI's India Millennium Deposit issue. 

Wednesday, 1st November

Call money rates ended higher at 8.15 / 8.4% amid renewed demand for funds ahead of the reporting day. The rates opened at 8.1 / 8.3% as against previous close of 8.05 / 8.25%. RBI maintained its one day repo rate at 8% and accepted the single bid received for Rs.700 crore. It rejected the single bid for Rs.20 crore received at the reverse repo auction. The rates touched an intra day high of 8.4% on high demand for funds but fell on supply of funds. Bond prices tracked the rupee and ended higher by 10 - 15 ps compared to the previous close. The 11.4% 2008 bond ended at Rs.100.15 (100.06). The 11.03% 2012 bond ended unchanged at Rs.95.75. The 12.5% 2004 bond ended at Rs.105.20 (105.15)

Tuesday, 31st October

Call money rates ended steady at 8.05 / 8.25% amid demand for funds matched with adequate supplies. The rates opened at 8.1 / 8.3% as against previous close of 8.05 / 8.25%. The RBI maintained its one and three day repo rates at 8%. For one day repos RBI accepted 2 bids received for Rs.810 crore. For 3 day repos, it accepted the single bid received for Rs.2000 crore. Bond prices ended slightly higher on buying support from players. The 11.4%, 2008 bond ended at Rs.100.06 (100.01). The 11.03%, 2012 bond ended unchanged at Rs.95.75. The 12.5% 2004 bond ended at Rs.105.15 (105.11).

Monday, 30th October

Call money rates ended lower at 8–8.25%, amid the central bank slashing one day repo rate by 25 basis points.  The overnight rates opened at 8.25 - 8.5%, unchanged from the previous close. The liquidity was good with demand easily meeting supply of funds. The RBI cut the one day repo rate by 25 basis points to 8%. It had earlier reduced the three and five day repo rates to the same level. For one day repos, RBI accepted the single bid received for Rs.2000 crore. For 3 day repos, it accepted 2 bids received for Rs.4125 crore. Bond prices ended slightly higher mirroring the trend in the forex market. The 11.4%, 2008 bond ended at Rs.110.01 (99.96). The 11.03%, 2012 bond ended at Rs.95.75 (95.72). The 12.5%, 2004 bond ended at Rs.105.11 (105.09)

K.Venu Babu