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Call seen steady around 7 pc

Our Bureau

CHENNAI, July 10

CALL money is likely to stay near 7 per cent this week,

according to the weekly update on fixed income securities from ICICI Securities (I-Sec).

The report said that liquidity improved dramatically last week on coupon inflows. The market, which was expecting an auction announcement, was pleasantly surprised by the Rs. 3,000-crore private placement. The refinance drawn as of Friday amounted to Rs. 8,634 crores and there was sufficient cushion, I-Sec said.

The T-bills auctioned last week were fully subscribed after a long time. The 14-day, 91-day and 182-day treasury bills cut off at 6.80 per cent, 8.85 per cent and 9.21 per cent respectively. Following large devolvements over the last month, many primary dealers would be looking to improve their success ratios in the current period of comfortable liquidity, I-Sec said. It added that bidding in treasury bill auctions this week was likely to be aggressive.

I-Sec expects the next auction of Rs. 3,000 crores to receive a favourable response, considering that it is a relatively short-tenor paper (5 years) and the liquidity position is comfortable.

Inflows this week are concentrated on the reporting Friday when a zero coupon security matures. Inflows on this count are estimated to be about Rs. 3,500 crores (after adjusting for holdings of RBI).

I-Sec said the next reporting fortnight also has strong redemption inflows with three securities _ 11.64 per cent 2000, zero coupon 2000 and 13.25 per cent 2000 _ maturing on July 26, July 27 and July 28 respectively. Gross inflows during the fortnight a re estimated to be about Rs. 8,400 crores.

I-Sec continues to maintain its defensive stance despite the comfortable liquidity conditions. It points out that only 35 per cent of the budgeted gross borrowing programme has been completed compared to 54 per cent in the corresponding period in the las t fiscal.

Also, the amount monetised till date is about Rs. 7,500 crores compared to Rs. 3,800 crores by the same date last year.

I-Sec expects RBI to announce a series of auctions this month, which is likely to cap any upside. It recommends a portfolio concentrated below four years, with some exposure in the seven-year security.