Call rates : Call rates were little changed amid low volumes, as surplus cash conditions helped banks to comfortably meet their Where Re comes from & goes Forex Converter reserve requirements, preventing rates from rising sharply. Amidst the current liquidity surplus, there seemed no pressure on liquidity while the availability of funds at cheaper rates from CBLO, an alternative to the inter-bank cash market, also added support to call money rates. At the liquidity adjustment facility (LAF) window, the average amount accepted by RBI through the reverse-repo window, rose to Rs 141,764 crore, Rs 30,663 crore above the previous week’s average of Rs 111,101 crore. Outlook: Call rates could linger in the current range, with comfortable liquidity prevailing in the banking system and lower demand from banks in the second half of the reporting fortnight, preventing any sharp moves. With banks still wary of non-performing loans and slack credit growth, cash conditions would continue in the surplus mode, enabling rates to stay glued near RBI’s reverse-repo rate. Gilts: The yield on the 10-year benchmark (6.05% 2019) bond ended at 6.97% from 6.83% in a volatile week. Aversion for long-tenor bonds increased after the Budget. The security also faced selling, as traders made space for the new 10-year bond that was auctioned on Friday. Bond yields rose sharply at the beginning of the week as the government announced a higher-than-expected market borrowing for the remainder of FY10 that stoked supply fears, and a bloating fiscal deficit estimate pushed the 10-year yield above 7%.

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