MARKET TALK: India Call Rate Down; 8.75%-8.90% Band Tipped

India's overnight call rate is slightly lower as banks are covered to a great extent for their products in the first week of the reporting fortnight (due Friday), says a dealer with a state-run bank. The weighted average interbank rate is at 8.82% vs 8.90% at Friday's close. "Some government spending is easing the cash crunch in the system. Also, the market is expecting a bond buyback by the RBI later this week taking cues from Gokarn's comments," he adds. RBI Deputy Governor Subir Gokarn earlier in the day said that bond buybacks remain an option to manage liquidity, adding that a further cut in banks' cash reserve ratio is possible. Banks borrowed INR1.3 trillion at the liquidity auction of the central bank Monday compared with INR1.66 trillion Friday. The dealer expects the call rate to stay in a 8.75%-8.90% band for the rest of the session.