Weekly Money Market Report :  Dec 11th - 15th

The call rates were almost flat through out the week. The rates opened at 8-8.05% and ended at 8.1-8.5%. The response to the Reserve Bank of India's (RBI) daily repos was lackluster in the week. RBI is expected to re-issue the 11.3 per cent '10 bond through a price-based for a notified amount of Rs.3,000 crore. Security prices had risen through the previous week, buoyed by inflows from the State Bank of India's India Millennium Deposit scheme. Selling was more pronounced in the long-term instruments. Borrowings rose in the week on liquidity concerns after outflows towards payment of advance tax. Around 4,000 - 5,000 crore was expected to flow out of the system for these payments. The detailed report follows:

Friday, 15th December, 2000

Call rates ended higher at 8.1-8.5 per cent following heavy demand for funds ahead of the advance tax outflows for the third quarter. The overnight rates opened at 8-8.1 per cent on the reporting day, as against the previous close of 8-8.05 per cent.  Borrowings rose on Friday on liquidity concerns after outflows towards payment of advance tax. Around 4,000 - 5,000 crore is expected to flow out of the system for these payments. Call rates touched an intra-day high of 9 per cent, but declined during the afternoon session, on good supplies. Three-day funds was dealt around 8.25 per cent, but were quoted at 8-8.05 per cent towards the close of trading.  Bond prices were range-bound during the day, but rose by around 10-15 paise before close of trading.  The rupee's stability in the foreign exchange market provided players with the comfort level to buy securities.

Thursday, 14th December, 2000

Call money rates ended lower at 8-8.05 per cent on Thursday, amid nominal demand for funds. The overnight rates opened at 8-8.20 per cent, lower compared to the previous close of 8.25 - 8.5 per cent. Borrowing demand was less, on account of players covering their product requirements. Most trades took place at around 8-8.1 per cent levels. Bond prices were range-bound during the day, but rose by around 5-10 paise before close. The rupee ended at 46.765/7 per dollar, as against previous close of 46.76/765. Security prices closely tracked the rupee for most part of the trading session.  Bonds rose on improved supplies. Buying was mostly confined to the long tenor bonds. Bond prices rose throughout the previous week, with the inflows from the State Bank of India's India Millennium Deposit (IMD) scheme. 

Wednesday, 13th December, 2000

Call money rates ended at 8.25-8.5 per cent. The overnight rates opened at 8.2-8.4 per cent, unchanged from the previous close. Players were covering product requirements, which led the call rates to firm to 8.5-8.75 per cent. The call rates rose in response to outflows for the 10-year bond sold by the Reserve Bank of India (RBI) on Tuesday. RBI auctioned the 11.3 per cent'10 bond for a notified amount of Rs.3,000 crore. RBI fixed a cut-off price of Rs.101.11, corresponding to an yield of 11.1 per cent. Call money rates ruled around 8.2-8.4 per cent levels for most of the trading. Bond prices ended around 5-10 paise lower compared to their previous close.

Tuesday, 12th December, 2000

Call money rates ended at 8.2-8.4 per cent, ahead of the 10-year bond auction. The interest rates opened at 8.1-8.25 per cent, against Monday's close of 8-8.2 per cent. RBI rejected the single bid for Rs.300 crore received for the one-day repo auction. RBI auctioned the 11.3 per cent'10 bond for a notified amount of Rs.3,000 crore.  Call money rates ruled around 8.2-8.4 per cent levels for most of the trading session. Security prices tracked a steady rupee, and ended little changed from the previous closing levels. Bond prices rose through previous week, buoyed by inflows from the State Bank of India's India Millennium Deposit (IMD) scheme. The 11.03 per cent'12 bond closed at Rs.98.16 (98.15), the 11.4 per cent'08 at Rs.102.67 (102.65), the 11.5 per cent'11 security at Rs.101.68 (101.7).

Monday, 11th December, 2000

Call money rates ended higher at 8-8.2 per cent, amid liquidity concerns among players, ahead of a 10-year government security auction this week. The overnight interest rates opened at 8-8.05 per cent, as compared to its previous close of 7.95 - 8.05 per cent. The response to the Reserve Bank of India's (RBI) daily repos was lackluster, with the central bank receiving a single bid for Rs.100 crore. RBI accepted the bid at a cut-off rate of 8 per cent. Security prices declined by 20-30 paise, on off-loading by players to stay liquid with the auction. RBI is expected to re-issue the 11.3 per cent'10 bond through a price-based for a notified amount of Rs.3,000 crore.  Most deals in the market were struck in the 8-8.15 per cent range. Bond prices were pulled down, due to profit- booking by players. Security prices had risen through the previous week, buoyed by inflows from the State Bank of India's India Millennium Deposit scheme.  Selling was more pronounced in the long-end. The 11.03 per cent'12 bond closed at Rs.98.15 (98.3).

K.Venu Babu