Call rates to trade between 6.30-6.40 pc level

Mumbai, Oct 15 (UNI) Call rates closed this week at 6.30-6.40 per cent against their last weekly close of 7.40-7.60 per cent.

Liquidity condition was seen improving with rising government expenditure. Increasing number of reverse repo bids at the RBI LAF window were reflective of the same.

Call rates are expected to trade around the current levels.

Pressure on liquidity can be expected on account of festive season.

In a holiday-shortened week, apart from early gains, gilts moved in a range as market lacked fresh positive triggers. Softer oil prices and improving liquidity propelled some buying early in the week, though the increased inflation rates on Friday forced traders to book profit. It is expected that Gilts could trade weaker next week with increased skepticism over interest rate direction.

Reduced odds that the Fed might be inclined to ease rates as soon as early next year and strong economic indicators suggesting a possible tightening in domestic interest rates are expected to weigh on sentiment.

Twin auctions, global oil prices and liquidity are other key factors to sway action in the gilts market next week.

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