Call rates end range-bound

Rates, on the inter-bank call money market, closed lower in a range of 6.05-6.15%, down from yesterday’s close of 6.10-6.20%. RBI mopped up bids worth Rs 15,995 crore under reverse repo operations in the two sessions of liquidity adjustment.

Tracking a favourable inflation data and a huge demand for the bond, which was auctioned, yields in the government bond market plummeted to a fresh 7-month low. The Centre on Friday auctioned the 8.07% 2017 paper worth Rs 5,000 crore, which was oversubscribed by over 2.5 times.

The cut-off declared by RBI on the auctioned security at 7.43% was in line with market expectations and the paper closed the day 12 paise higher than the cut-off price. Of the Rs 5,000 crore worth of bonds on offer, RBI received bids worth 13,679 crore and it set a cut-off price of Rs 104.47.

Much of the demand came from nationalised banks, apart from few traders. The yield on the benchmark 7.59% 2016 paper eased to close at 7.43%, its lowest since late April and down from the previous close of 7.45%. It was not particularly on traders’ scanner since much of the attention was centred around the actively traded security.