Indian Stock Market

Weekly wrap up:Call rates may rise after tax outflows

The iner-bank call rates remain steady at 5.25-6.10% on Sep. 07 , 2007 supported by comfortable liquidity conditions. Comfortable liquidity was indicated by the bids received at the LAF auctions.The Reserve Bank of India (RBI) received 23 bids for a total of Rs 350.90 billion, via 3-day reverse repos .The overnight call rates were range-bound at 5.50 - 6.15% on Sep. 10, 2007, compared with 5.25 - 6.20% on the previous working day i.e September 8. Weighted average rate (WAR) was seen at 6.09% with a total turnover of the call market at Rs 121.41 billion.

The call rates remained flat at 5.25 - 6.15% on Sep. 13, 2007, compared with the previous working day, i.e September 12. Weighted average rate (WAR) was seen at 6.08% on September 13 with a total turnover of the call market at Rs 160.62 billion.Further, 1-day CBLO (collaterized borrowing and lending obligation) operations fetched Rs 319.97 billion at 5.92%, on the same day.
The amount outstanding under standing liquidity adjustment facility available with the RBI was Rs 0.91 billion at 7.75%, on September 13.The central bank received 14 bids for a total of Rs 157.10 billion via 1-day reverse repos on Sep. 14, 2007.

There are speculation that the call rates may move up between 7-8% after the corporates pay for their taxes, eroding liquidity from the system.