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Journalism of Courage
Inter-bank call money rates 8212; short-term interest rates on borrowings among banks 8212; shot up further to 70 per cent due to the tight liquidity position in the banking system. Call rates which hit a high of 60 per cent on Tuesday remained high again as the liquidity in the banking system remained tight. Banks borrow from the call money market to meet shortfalls in their reporting requirements. A major reason for the tightening of the liquidity is the huge outgo of Rs 40,000 crore as advance tax to the government coffers.
According to bankers, call rates which were around 6 per cent earlier this month started moving up suddenly. The steep rise in the last two days even prompted some banks to sell the dollars and buy the rupees.
8220;Liquidity tightness is mainly due to advance tax payments, it will be alright in a few days as the ministries, departments start spending money,8221; Finance Minister P Chidambaram said in New Delhi.
Sensex gains 240 pts
MUMBAI: Dalal Street surged further, thanks to firm Asian markets and short-covering in the derivatives segment Shares from the banking, FMCG, IT and metals segment contributed to gains. The 30-share BSE Sensex 239.94 points 1.89 per cent to settle at 12,945.88, while the S038;P CNX Nifty gained 66.95 points 1.81 per cent, to finish at 3,764.55.
There was renewed buying for shares from the banking space. The BSE Bankex, which was the top gainer among sectoral indices, gained 3.96 per cent. ICICI Bank surged 5.35 per cent. State Bank of India gained 3.31 per cent and HDFC Bank rose 1.35 per cent to Rs 967. Reliance Energy advanced 3.12 per cent to Rs 491.
