Call money flat at 6.90-7 per cent, Bonds sluggish

Mumbai, Nov 7 (UNI) The Interbank call money rates today closed steady at 6.90-7.00 per cent, a dealer said.

Money market witnessed good trading amid substantial demand for funds even as banks covered initially in the reporting cycle.

A rise in the domestic currency also bolstered sentiment.

Strain on liquidity was observed to be easing in the second half of the session, despite reports of state-run-banks having resorted to dollar buying.

At the LAF window, RBI accepted 11 bids worth Rs 7,930 crore at the 1-day reverse repo auction while no bid was received at the 1-day repo auction.

At the CBLO segment, 409 bids worth Rs 24,969 crore were transacted in the range of 5.96-6.75 per cent.

Call rates are expected to ease from the current levels amid signs of improving liquidity and expectations of a receding demand as the reporting day nears.

The trend of corporate bonds remaining sluggish continued at the trading session with yields across most segments staying unmoved.

Even as the liquidity situations shows signs of revival, a few concerns over the same persisted. As a result, trading remained lacklustre.

Even the mutual funds who are amongst the biggest players in the market preferred to stay away from the market during the day.

The AAA 5 year benchmark yield closed the day flat at 8.6 per cent while the spreads over comparable gilt widened by 5 bps to close the day at 103 bps. The spreads widened due to a rally seen in the G-Sec market on the back of rising US treasuries and comfortable oil prices.

Activity in the primary market though picked up today. HUDCO is likely to come out with the 10 year bond issue in the week ahead.

Moreover, the oil bonds that were issued by BPCL was received well by the market. In all, it garnered over Rs 800 crore with LIC said to have been the major investor in the same.

The corporate bond market is expected to remain dull in the near future, dealers added.

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