Call money low at 6.70/6.80 per cent, Bond easy

Mumbai, Nov 8 (UNI) Call rates closed at 6.70-6.80 per cent today, easing from their previous close of 6.90-7.00 per cent due to heavy bull liquidation by banks, dealers said.

Money market rates traded lower amid tapering demand for funds as the banks have already covered in excess to meet the mandatory reserve ratios.

Call rates edged down also due to easing liquidity crunch following RBI's attempts on Wednesday to infuse liquidity in the system.

At the LAF window, RBI accepted 13 bids worth Rs 10,795 crore at the one-day reverse repo auction against Wednesday's 11 bids worth Rs 7,930 crore. No bid was received at the one-day repo auction.

At the CBLO segment, 376 bids worth Rs 20,335 crore were transacted in the range of 6.00-6.40 per cent.

Call rates are likely to soften on account of improving liquidity, dealers said.

Meanwhile, corporate bonds traded lacklustre with yields staying at the levels at which it closed yesterday.

The rally witnessed in the US treasuries was the main sentiment driving the gilts market. Also the fact that liquidity is expected to be comfortable for atleast a month now (by way of government spending) added to the upbeat mood.

The mood, however, was not good enough to drive the corporate bond market which continued to remain bearish.

The AAA five year benchmark yield stood at 8.60 per cent while the spread over comparable gilt widened by a basis point to end at 104 bps.

The primary market continued to fare better than the secondary section. After the oil bonds that were issued yesterday by BPCL, HUDCO came out with three year and five year bonds. They intend to raise Rs 250 crore through the issue and it has a greenshoe option attached to it.

The corporate bonds are expected to trade choppy in the days ahead, bankers added.

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