Weekly Money Market Report : Jan 15th - 19th

The call money rates witnessed a volatile trend though ended with a marginal rise in the week. The rates opened at 9.8 -10 percent and ended at 10-10.1 percent. The government had re-issued two dated securities for a total amount of Rs.4,000 crore - the 12.25 per cent, 2010 for Rs.2,500 crore and the 12.30 per cent, 2016 for Rs.1,500 crore. This twin bond auction weighed on market sentiments. The RBI announcements of liquidity adjustment facility results (LAF) and their statement that the bank may not resort to open market operations to suck out excess liquidity had influenced the call rates. The rupee's firmness in the foreign exchange market aided the sentiments in the bond market. The buying was more pronounced in the long-end, with good activity witnessed in the 16 year paper. The detailed report follows:

Friday, 19th January, 2001

Call rates ended steady at 10-10.1% amid infusion of around Rs.4000 crore by the RBI through reverse repos. The call rates opened at 10-10.15% as against the previous close of 10-10.2% and ruled around 10.1-10.2% for most part of the day but came down wit the inflows of Rs.3,925 crore through reverse repo auction. The call rates touched an intra day high of 10.2%, but declined after results for the liquidity adjustment facility were announced. Bond prices also came down in early trading but recouped losses on a statement by an RBI official that the central bank may not resort to open market operations to suck out excess liquidity. Bonds showed a net gain of 10 paise. The 11.3% 2010 bond ended at Rs.104.57 (104.55), the 11.03% 2012 bond at Rs.102.35 (101.25), the 11.4% 2008 bond was unchanged at 105.05 and the 12.3% 2016 bond at 109.95 (109.92). The rupee firmness in the foreign market also aided the sentiments in the bond market.

Thursday, 18th January, 2001

Call rates ended marginally firmer at 9.90 - 10.20 per cent amid higher demand for funds. The overnight interest rates opened at 10-10.10 per cent, as against the previous close of 9-9.-10.10 per cent. The Reserve Bank of India (RBI) infused Rs.2,550 crore through its reverse repo auction. The call rates rose as there was some mismatch in demand and supply for funds and touched an intra-day high of 10.25 per cent, but declined after results for the liquidity adjustment facility (LAF) were announced. Bond prices staged at 40-50 paise rally on renewed hopes of a cut in the cash reserve ratio (CRR) by RBI. The yield on the 10 year bond fell to an 8 month low of 10.55 per cent, compared to 10.61 per cent on Wednesday. The rupee's firmness in the foreign exchange market also aided the sentiments in the bond market. The 11.3 per cent '10 bond ended at Rs.104.38 (104.06), the 11.03 per cent'12 bond at Rs.102.10 (101.70), the 11.4 per cent '08 bond at Rs.105.38 (105.05) and the 12.3 per cent '16 bond at Rs.109.93 (109.37). The buying was more pronounced in the long-end, with good activity witnessed in the 16 year paper.

Wednesday, 17th January, 2001

Call rates ended marginally lower at 9.90 - 10.10 per cent amid infusion of Rs.2,685 crore by the Reserve Bank of India (RBI) through reserve repos. The overnight rates opened at 9.95 - 10.15 per cent, as against the Tuesday's close of 10-10.20 per cent. The call rates were range-bound around the 10 per cent levels for most part of trading. Comments by RBI's deputy governor indicating easing of interest rates aided the sentiment. The call rates touched an intra-day high of 10.15 per cent but declined after the RBI announced results for the liquidity adjustment facility (LAF). The RBI received 27 bids for Rs.2,695 crore, but accepted 26 bids for Rs.2,685 crore.  There was some demand on account of tighter liquidity following outflows for the twin bond auction. Bond prices rose by 10-15 paise, amid buying following the RBI comments. The 11.3 per cent 2010 bond ended at Rs.104.06 (103.97), the 11.03 per cent 2012 bond at Rs.101.70 (101.58) and the 11.4 per cent 2008 bond at Rs.105.05 (104.97). 

Tuesday, 16th January, 2001

Call money rates ended lower at 10-10.20 per cent amid infusion of Rs.1,855 crore by the Reserve Bank of India through reverse repos. The overnight rates opened at 10-10.20 per cent, compared to Monday's close of 9.75 - 10 per cent amid outflows for payment towards the twin bond issue. The RBI on Monday re-issued the 12.25 per cent, 2010 for Rs.2,500 crore and the 12.30 per cent, 2016 for Rs.1,500 crore. The call rates touched an intra-day high of 10.20 per cent, on higher demand for funds. Call rates came down, after the RBI accepted most of the bids at the one-day repos auction. The RBI received 18 bids for Rs.1,865 crore and accepted 17 bids for Rs.1,855 crore at the cut off rate of 10 per cent. Bond prices came down by 5-10 paise, amid concerns over liquidity after outflows towards the bond auction. The 11.3 per cent'10 bond ended at Rs.103.97 (104.03), the 11.03 per cent'12 bond at Rs.101.58 (101.62) and the 11.4 per cent '08 bond at Rs.104.97 (105.03). Selling was more pronounced in the long-end. Prices of short tenor bonds also eased slightly. The rupee's firmness in the foreign exchange market, did not impact sentiments in bond market.

Monday, 15th January, 2001

Call money rates ended steady at 9.75 - 10 per cent amid liquidity concerns among players. The call money rates opened at 9.8 - 10 per cent, as against Saturday's close of 9.75 - 10 per cent and touched an intra-day high of 10.15 per cent, on higher borrowing by players ahead of the twin bond auction. The government has announced re-issue of two dated securities for a total amount of Rs.4,000 crore - the 12.25 per cent, 2010 for Rs.2,500 crore and the 12.30 per cent, 2016 for Rs.1,500 crore. The call rates came down marginally after the Reserve Bank of India (RBI) infused Rs.430 crore through one-day reverse repos. The RBI received seven bids for Rs.480 crore and accepted six bids for Rs.430 crore. The announcement of twin bond auction also weighed on market sentiments. The call rates also rose on customary demand for funds. Bond prices rose by 25-30 paise amid the rupee's firmness in the foreign exchange market. The 11.3 per cent'10 bond ended at Rs.104.35 (103.85), the 11.03 per cent'12 bond at Rs.105.25 (105.04) and the 11.4 per cent'08 bond at Rs.105.05 (104.75).

K.Venu Babu