Call rates close low at 6.90/7.00 per cent, Bond eases

Mumbai, Nov 20 (UNI) Interbank call rates continued to ease today as it ended the day at 6.90-7.00 per cent, down from last week's close of 7.00-7.10 per cent, dealers said here.

As most of the CRR requirement covering was done in the first half of the fortnight itself, demand for funds from banks was low compared to last week. As a result, despite the liquidity still being under some strain, pressure on the call rates got eased.

Also, the fact that the government bond auction will absorb only a relatively modest Rs 5,000 crore brought relief to the traders.

The LAF window saw the RBI accepting 9 bids worth Rs 9,745 crore at the 1-day reverse repo auction.

The CBLO segment saw 430 bids worth Rs 21,070 crore being transacted in the range of 5.96-7.05 per cent.

Amidst demand that is expected to be on the softer side, inter bank rates are likely to show a downward bias in the week ahead.

Corporate bond yields registered a fall across most segments.

The day witnessed the gilts market continue with it's rally as the 10 year benchmark yield touched a 6 month low of 7.48 per cent. The buoyancy was mainly driven by the strong US treasuries and global oil prices which remained on the softer side.

Also, news regarding the government bond auction was not received with any negativity as the amount to be raised through the same read at a modest Rs 5,000 crore. Consequently, systematic liquidity, though still a matter of concern, is not likely to come under too much strain.

These positive events had an effect on the corporate bonds as well which saw decent volumes getting reported over the day.

The AAA 5 year benchmark yield closed the day at 8.58 per cent, down 2 bps from it's close last week while it's spread over comparable gilt widened by 2 bps to 107 bps.

The primary market brought cheer to the players as 2 seperate bond issues entered the market of which one was the perpetual bond issue from Oriental Bank of Commerce. The bank intends to raise Rs 125 crore through the bond issue.

Corporate bonds are likely to remain steady in the week ahead with most of the trading being restricted to the oil bonds. Primary market however, is expected to keep the traders interested, traders added.

UNI AR WD SKB1857