Weekly Money Market Report : 13th Nov - 17th Nov

The call rates have opened high compared and relaxed towards the end of the week. The rates opened at around 10.75-11.5 percent and ended at 8.25-8.75 percent. The infusion of funds through reverse repos brought down the rates. The bank strike called by bank unions on Wednesday brought trading in the money markets to a standstill. There were no quotes in call money, as public sector banks, which are major players were absent from trading. The strike hit the clearing operations of the Reserve Bank of India (RBI) also, which forced banks to quote prices of government securities (G-Secs) which ended 10 - 15 paise higher compared to previous close. Private and foreign banks, which participated in both call and G-Sec market, could not make a sufficient impact to generate quotes. There were some quotes from financial institutions and insurance companies, which were trying hard to lend, but found no borrowers. The detailed report follows:

Friday, 17th November

Call money rates ended slightly firmer at 8.25 - 8.75 per cent on Friday, on demand for funds from players to cover residual positions on reporting day. The overnight interest rates opened at 8 - 8.1 per cent, as against Thursday's close of 8 - 8.25 per cent.  The call rates rose in the morning session of higher demand to cover positions and touched an intra-day high of 8.75 percent. RBI rejected the single bid for Rs.25 crore received for the reverse repo auction. The outflows for the 11.19 per cent '05 bond, which was auctioned on Thursday, did not have any impact, since the response to the auction was poor, with the RBI receiving bids worth Rs.1,330 crore, as against a notified amount of Rs.3,500 crore. Bond prices ended lower by 5 - 10 paise, amid expectations of outflows of funds from the system to OMO sales by RBI.

Thursday, 16th November, 2000

Call rates ended lower at 8 - 8.25 per cent on Thursday on dull demand for funds ahead of reporting day for banks. The overnight rates opened at 8.6 - 9 per cent, as against the previous close of 8.25 - 8.5 per cent. For one-day repos, the Reserve Bank of India (RBI) accepted the single bid received for Rs.500 crore, at a cut-off rate of 8 per cent. There were also liquidity concerns due to the auction of 11.19 per cent'05 bond. The OMO auction conducted by RBI was for a notified amount of Rs.3,500 crore. The RBI replaced the 11.75 per cent'06 and 11.9 per cent'07 from its OMO window, with the 12.15 per cent'08 bond at a sale price of Rs.105.7.  

Wednesday, 15th November, 2000

The bank strike called by bank unions on Wednesday brought trading in the money markets to a standstill. There were no quotes in call money, as public sector banks, which are major players were absent from trading. The strike hit the clearing operations of the Reserve Bank of India (RBI) also, which forced banks to quote prices of government securities (G-Secs).  G-Sec prices ended 10 - 15 paise higher compared to previous close. Private and foreign banks, which participated in both call and G-Sec market, could not make a sufficient impact to generate quotes. There were some quotes from financial institutions and insurance companies, which were trying hard to lend, but found no borrowers. Most banks already covered their product requirement ahead of reporting Friday.  So, the demand for funds was also lower. RBI accepted the single bid received for Rs.130 crore at a cut-off rate of 8 per cent. For reverse repos, it received 19 bids for Rs.1,500 crore and accepted 17 bids for Rs.1,480 crore, at a rate of 10 per cent. The 11.4 per cent'08 bond ended at Rs.101.65 (101.60). The 11.03 per cent'12 bond closed at Rs.97.23 (97.14), while the 12.5 per cent'04 bond ended at Rs.105.55 (105.5). Treasury bills were in focus in thin trade as a liquid money market revived interest in short dated securities. The 364-day T-bill maturing on August 23, 2001 was dealt at an yield of 10.15 per cent.

Tuesday, 14th November, 2000

Call rates ended lower at 8.25 - 8.5 per cent, amid inflows of Rs.3,195 crore through the reverse repo auction of the RBI.    The rates opened at 10.5 - 11 per cent, as against the previous close of 9.25 - 9.75 per cent. The call rates ruled around 11 per cent levels, on heavy demand for funds from players to cover positions ahead of reporting day. The infusion of funds through reverse repos brought down the rates. There were liquidity concerns among players following outflows for the 11.03 per cent'12 bond, which was auctioned for a notified amount of Rs.4,000 crore. RBI accepted 31 bids for Rs.3,195 crore at the cut-off rate of 10 per cent out of 32 bids for Rs.3,205 crore. For the 3-day repo auction, it rejected the single bid for Rs.4,500 crore. Bond prices ended higher by 10 - 20 paise on hectic buying support from players.  The 11.4 per cent'08 bond ended at Rs.101.60 (Rs.101.47). The 11.03 per cent'12 bond closed at Rs.97.24 (Rs.97.22), while the 12.5 per cent'04 bond ended at 105.5 (105.45).

Monday, 13th November, 2000

Call Money rates ended lower at 9.25 - 9.75 per cent on Monday, amid inflows of Rs.4,355 crore from reverse repos by the Reserve Bank of India (RBI). The rates opened at 10.75 - 11.5 per cent, as against the previous close of 10 - 10.25 per cent.  Call rates ruled higher in the morning session, as players expected tighter liquidity conditions. The RBI auctioned the 11.03 per cent'12 bond for a notified amount of Rs.4,000 crore on Monday. For the reverse repos, the RBI accepted all the 38 bids received for Rs.4,355 crore. It maintained the cut-off rate at 10 per cent. Following the infusion of fresh funds, the call rates came down and touched an intra-day low of 9.25 per cent. Bond prices ended tracked the rupee and ended lower by 5-10 paise. The 11.4 per cent'08 bond ended at Rs.101.47 (101.52).  The 11.03 per cent'12 bond ended unchanged at Rs.97.24 (97.35), while the 12.5 per cent'04 bond ended at 105.45 (105.52).

K.Venu Babu