Call may face liquidity pressure

Call rates traded around the reverse repo rate for the most part of last week before closing marginally higher at 6.05-6.15%. Corporate tax payments and fortnightly targets kept the borrowing requirements high.

Mismatches in the demand-supply situation was well evident from the daily subscriptions at the reverse repo auction that averaged Rs 33,043 crore from Rs 42,145 crore in the previous week. Even a sole bid worth Rs 275 crore was subscribed for at the repo auction on the last day of the week.

Huge festive demand and H2 borrowing calendar, coupled with new fortnightly targets, are expected to keep the borrowings high. Thus, call rates are expected to come under pressure amid concerns over shrinking money market liquidity.