Call money remains firm to end at 5.40-5.50 per cent

Mumbai, Mar 9 (UNI) Interbank Call money ended five basis points lower at 5.40-5.50 percent today compared to its previous close of 5.45-5.65, after data showed that there was just a marginal rise in inflation.

Intra-day, the call rates were trading between a low of 5.40 per cent and a high of 5.70 per cent.

India's wholesale price index rose 6.10 percent in the 12 months to February 24, little changed from the previous week's annual increase of 6.05 per cent, official data revealed today. The figure was marginally higher than the market forecast of 6.03 per cent, market analysts expalined.

The annual inflation rate was 4.18 per cent during the corresponding week of the previous year.

Also, weighing on the sentiment, is an unsettled market that has the potential to lead to large and sudden shifts in capital flows, thereby effecting the cash supply in the market, experts explained.

The Central Bank sold the 8.07 per cent bond maturing in 2017 for Rs 4,000 crore and a 29-year 8.33 per cent security for Rs 3,000 crore.

It set a cut-off price of Rs 100.05 at the auction of the 10-year bonds, slightly higher than the market forecast of Rs 100. For the 29-year bond, it set a cut-off price of Rs 99.22, traders said.

Further, it may be remembered, the Central Bank has announced that starting from last Monday it would absorb a maximum of Rs 3,000 crore per day at its reverse repurchase auction window, the lowest-yielding money market instrument.

However, this latest modification is intended to ensure that surplus liquidity is drained out via market stabilization Scheme (MSS) bills and bonds. This is expected to open the door for further Central Bank intervention in the Forex market, research analysts explained.

Meanwhile, Indian bond yields closed lower today, after the RBI auctioned the benchmark 10-year bond at a lower-than-expected cut-off yield, aiding sentiment hit by high inflation in recent weeks.

After market hours, the Central Bank said it would sell 2009 bonds under its market stabilisation scheme (MSS) for Rs 2,000 crore next Wednesday.

Earlier this week, it sold Rs 6,000 crore of MSS bonds.

Further, 10 State governments will auction Rs 2,284 crore of bonds on Tuesday, traders added.

UNI