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Market on tenterhooks -- Re loses 15 paise

Our Bureau

MUMBAI, Dec 27

TENSION at the border continues to dampen the sentiment in the equity and forex markets. The rupee has lost around 30 paise in the past three days. On Thursday, the rupee closed weaker at 48.19/20 to a dollar compared to its previous close of 48.05, losi ng 15 paise.

Equities remained depressed with BSE Sensex falling by 44.08 points or 1.39 per cent to close at 3131.78. The S&P CNX Nifty closed at 1,020, down by 14.25 points.

Some of the PSU scrips gained on reports about the Government's decision on disinvestment of three public sector units.

Opening weak at around 48.06/08, the rupee slipped on consistent dollar buying by banks. According to one dealer, "There was some panic demand as importers who were reluctant to buy dollars during the rupee's rally, were forced to hedge their liabilities when the rupee started depreciating rapidly".

Supply of dollars had also dwindled as exporters seem to be holding back selling dollars, expecting the rupee to weaken further.

Dealers said RBI has entered the market selling dollars, in a bid to cool down the market. Though this move did steady the rupee, it slipped again to close at its lowest in the day at 48.20.

Mr R. Madhavan, Vice-President, Research, Bank of America, said, "The rupee depreciated today due to several reasons — there was some genuine demand as some short positions were being covered. The tension at the border and the movement in the Yen a nd other Asian currencies has also put pressure on the rupee".

However, analysts point out that the rupee was traded at around 48.10 a month ago. "Even though the rupee has lost around 40 paise in the past week, it had gained by around 30 paise during the month. It is expected to depreciate to around 48.50-75 to the dollar," said one analyst.

Forwards closed lower, with the six-month forward premia closing at 6.75 per cent (6.85 per cent) and the 12-month forward premia closed at 6.40 per cent (6.43 per cent).

Reliance Petroleum went down by 4.98 per cent to close at Rs 25.75. Initially, most PSUs opened positively reflecting a healthy sentiment. VSNL remained flat at Rs 208.10 on the BSE and marginally lower at Rs 208 (0.24 per cent) on the NSE.

Shipping Corporation of India ended higher at Rs 29.15, up by 7.37 per cent on the BSE and at Rs 29.20 (16.85 per cent) on the NSE. IBP also closed higher at Rs 397 (1.46 per cent) on the NSE and lower at Rs 391 (0.09 per cent) on the BSE.

Call rates close lower: Securities prices gained by around 40-50 paise over Thursday morning levels as demand for bonds resumed after a weak opening. Call rates also closed lower after opening relatively higher to boost bond prices.

According to dealers, a weak rupee and high call rates caused bond prices to open weak and fall further by around 25 paise during the morning trade. The cross-border tension also added to the uncertainty in the market, said dealers.

The 11.50 per cent 2011, which had opened at Rs 120.90 closed at around Rs 121.45/55. The yield on this paper is 8.26 per cent.

The 11.03 per cent 2012 paper closed at Rs 118.45/55 after opening at Rs 117.90 and the 9.85 per cent 2015 paper closed at Rs 110.50 after opening at Rs 110.

Call rates opening at around 8.10 per cent in the interbank call market here but closed lower at 6.50-6.75 per cent. Dealers expect the liquidity position to be comfortable as the second stage of the CRR cut, injecting Rs 2,000 crore into the system, wil l be effective this week.

There were no bids received by the RBI in the one-day repo and reverse repo auctions.

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