Call rates trade flat at 7.0 pc level,bond lacklustre

Mumbai, Nov 6 (UNI) Call rates today ended steady at 6.90-7.00 per cent with less activity, dealers here said.

Demand for funds stood on the higher side as banks continued to cover for the mandatory reserve targets.

Money market observed strain on liquidity due to auction outflows worth Rs 9,000 crore.

At the LAF window, RBI accepted 11 bids worth Rs 7,100 crore at the 1-day reverse repo auction while no bid was received at the 1-day repo auction.

At the CBLO segment, 438 bids worth Rs 24,762 crore were transacted in the range of 5.90-7.00 per cent.

Call rates are expected to ease from the current levels as the routine demand for funds recedes.

Corporate bonds continued to trade lacklustre during the day.

Even as the liquidity situation is expected to improve over the month, the market remained flat as it waited for fresh triggers.

Mutual funds and banks are sending out mixed signals at the moment. While most of them are holding on at the current levels, there are those who find it better to invest in the short term CPs and CDs and hence looking to exit the market.

Also a lot of them are looking to invest in the Gsec market as they find that more profitable than corporate bonds.

The AAA 5 year benchmark level closed the day at 8.60% while the spreads over comparable gilt narrowed by 1 bp to close the day at 98 bps.

Oil bonds issued by HPCL are expected to generate quite a deal of interest. The bidding process is expected to get completed by tomorrow.

On an average, the bond market is expected to remain bearish and the primary market is likely to keep the market floating.

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