Call rates seen at 8.75- 9%: Ketan Shah, Altius Finserv

The end of first fortnight after the CRR cut marked a distinct improvement in system liquidity as the average LAF number was down to Rs 1.18 trillion and call rate trade below the 9% mark.

For the week, however, the LAF number, which in the previous week for multiple times had slipped below Rs 1 trillion, is unlikely to follow the trend in the non-reporting week as we anticipate the average borrowing from the Reserve Bank of India to be above Rs 1.2 trillion.

The implication of this will also be witnessed by the overnight money market as the same is expected to witness some hardening in one-day lending cost; call rates are expected around 8.75- 9%.

The inflation number is slated to be released on Monday. Our internal estimate is a sub-7% number at 6.5%, which will act as a positive trigger for the bond market. With the liquidity anticipated to be comparatively tighter, possibility of announcement of an open market operation is also elevated.