MY WEALTH CLUB: February 2013

Thursday, February 28, 2013

Budget 2013 :- Live Webcast

Budget Highlights :-

Markets trade with a negative bias. Sensex down 54 points, Nifty trades 27 points lower
To present draft bill on GST in the next few months
Budget Impact: Acil Cotton Inds (up 11%), Malwa Cotton Spg (up 8%), Suryalakshmi Cotton (up 5%), Nahar Ind. (up 1.5%)
Scheme to encourage truthful declaration of Income Tax dues from 1-10-2007
Penalty to be waived for people declaring I-T dues; can pay in two installments
Budget Impact: proposals for spinning and cotton textile sector sees stocks from these spaces rally
Will impose Service Tax on all AC restaurants, not just on those serving alcohol
Sops for low-cost housing to continue
To include 2 services in negative list of Service Tax - vocational courses and testing services
Excise tax on SUVs has been raised from 27 to 30%. SUVs were driving the car market. It will be interesting to see if the buoyant market can absorb this price increase: Bhupesh Bhandari, Senior Associate Editor, Business Standard
Cotton - zero Duty at fibre stage
Removes carpets from Excise Duty bracket altogether
Budget Impact: Change in duty structure for cigarettes negative for ITC 12:39 PM 4% Excise Duty on silver for manufacturing zinc or lead
Excise duty hike on cigarettes unlikely to impact companies as the hike is passed on: Shishir Asthana, Consulting Editor, Business Standard
Special Excise Duty (SED) on cigarettes hiked by 18%
Excise Duty to be hiked from 27% to 30% on SUVs. Those registered as taxis to escape hike
20% Final Withholding Tax on unlisted companies' share buyback 12:36 PM Customs Duty on imported cars hiked from 75% to 100%
To introduce DTC Bill in Budget session of Parliament
Budget Impact: Reduction in STT pushes up listed brokerages. Religare, Aditya Birla Money, Indiabulls Securities, Motilal Oswal up 1.7 to 5%
12:34 PM MRO concession good for companies like M&M and Taneja Aerospace: Shishir Asthana, Consulting Editor, Business Standard
Import Duty on set-top boxes raised from 5% to 10%
No change in standard rate of Excise Duty
Excise on leather goods to be reduced from 7.5% to 5%
Modified provisions under GAAR to be effective from April 1, 2016
No tax slab change, and only a Rs 2,000 tax credit for those earning an annual income of Rs 2 lakh to Rs 5 lakh means the benefit would be restricted only to the lowest slab and not shared by those in the higher income slabs, says A K Bhattacharya, Editor, Business Standard
Securities Transaction Tax(STT) reduced from 0.17% to 0.1%
Commodities Transaction Tax of 0.01% on non-agricultural commodity derivatives
Market Impact: Markets slip post tax proposal announcements. Sensex trades 60 points lower; Nifty slips 28 points
Introduction of Commodity Transaction Tax (CTT) bad for MCX: Shishir Asthana, Consulting Editor, Business Standard
Tax holiday for power plants extended to FY14
Budget Impact: Tax holiday for power plants extended. NTPC, Adani Power, Neyveli Lignite, Reliance Power, Indowind Energy trade firm
Tax Deducted at Source (TDS) at 1% on the transfer of immoveable properties worth more than Rs 50 lakh
Extends Section 80-IA by one year Good for infrastructure company. A longer term clarity was needed as fas as this exemption was concerned, which the FM has not addressed Shishir Asthana
Indian companies not to pay Dividend Distribution Tax for income coming from foreign subsidiary
Dividend Distribution Tax (DDT) surcharge raised from 5% to 10% This announcement will be taken negatively by the market. Dividend yield stocks to be hit Shishir Asthana
Will continue with Educational Cess at 3%
Additional tax surcharge on taxes only for one year
Tax surcharge of 10% on companies with annual income of more than Rs 10 crore An immediate impact on the bottomline across corporate India. Market touches a new low on this announcement Shishir Asthana
Only 42,800 people who have been known to have income of more than Rs 1 crore per year year. Tax surcharge of 10% on such income.
Tax credit of Rs 2,000 to every taxpayer in the Rs 2,00,000-Rs 5,00,000 bracket. FM leaves tax slabs and rates untouched
Market Update: Markets trade flat with a positive bias. Sensex up 15 points, Nifty up 5 points
2011-12: Tax GDP ratio at 5.5% for direct taxes and 4.4% of GDP for indirect taxes
Investment allowance of 15% announced for high-value investments of above Rs 1,000 crore. This is a huge plus for large companies, as it improves profitability considerably: Bhupesh Bhandari, Senior Associate Editor, Business Standard
Budget Impact: Wind energy sector to get generation based incentives; Rs 800 crore allocated to the departmet. Suzlon Energy slips nearly 3% to Rs 23.55 per share
Direct Benefit Transfer Scheme to be rolled out during term of UPA government
Fiscal deficit contained at 5.2% in FY13, pegged at 4.8% in FY14 Marginally lower than Economic Survey deficit figure of 5.3%, but enough to stop market decline for time being Shishir Asthana 12:16 PM Markets have gone into the red. Investors perhaps find the budget long on populism: Bhupesh Bhandari, Senior Associate Editor, Business Standard
Budget Impact: Realty stocks rally on proposal for additional interest deduction on housing loan. DLF, Sobha Developers, Ansal Properties, DB Realty up between 1 and 5%
Plan expenditure: Rs 5.55 lakh crore, Non-plan expenditure at Rs 11 lakh crore in FY14
New fund for safety for women, will be called Nirbhaya Fund. Allocation of Rs 1,000 crore
Market Update: Markets slip into the red. Sensex down 11 points, Nifty lower by 5 points Not a big bang budget, but small steps to go a long way in kickstarting the economy. Malini Bhupta, Associate Editor
FII participation in forex segment subject to FX exposure
Defence outlay at Rs 2 lakh crore represents only a marginal rise over Rs 1.93 lakh crore in the current year. FM though has assured that he would provide more if the security of the country demands it: A K Bhattacharya, Editor, Business Standard
294 more cities to have FM radio
Auction of new FM licences in FY14, so that all towns and cities of up to 1 lakh population are covered, is another attempt to raise non-tax revenue, says Bhupesh Bhandari, Senior Associate Editor, Business Standard
Cities having population of more than one lakh to have one private FM radio station Population too small making it not feasible for existing players. Shishir Asthana 12:10 PM Stock exchanges to have dedicated debt segments
Rs 5,200 crore allocated to Ministry of Science and Technology
Rs 5,880 crore to space research
National Skill Development Corporation -- target to train more people, up by 9 mn in 2013-14
Investment allowance of 15% announced for high-value investments of above Rs 1,000 crore Not a big bang budget, but small steps to go long way in kickstarting the economy. Malini Bhupta, Associate Editor
Increased allocation to Defence at Rs 2.03 lakh cr; Rs 86,741 cr for capex 12:05 PM Sebi to simplify procedures for FII, unify categories Clarity will be needed if P-Notes as a category will be removed, if so account holders will have disclose themselve as per the KYC norm.
Market Update: Coal India (up 3.2%), DLF (up 3%), JP Associates (up 2%), L&T (up 1.3%), BHEL (up 1.3%) among top Nifty gainers 12:05 PM Will encourage states to take up waste energy projects via PPP mode
Wind energy sector to get generation based incentives; Rs 800 crore allocated to the department Industry expectation of depreciation based incentive not met -- bad for companies like Suzlon Shishir Asthana
Insurance, pension companies can directly trade in debt market
Market Update: Sensex up 55.40 points at 19,208; Nifty up 14 points at 5,810
FIIs allowed to participate in currency derivatives segment Can increase arbitrage volume in the stock exchnages. Good for broking stocks Shishir Asthana 12:02 PM Mutual Fund distributors allowed to become members of Stock Exchanges
Will follow global policy on determining whether investment is FII or FDI: Where it is less than 10% by one entity, it will be FII, more than 10% will be FDI
KYC of banks sufficient for buying insurance policies A good move to promote insurance product, good for companies like Aditya Birla Nuvo, HDFC Bank and ICICI Bank Shishir Asthana
Sebi Act to be amended to strengthen the market regulator
FM seeks Opposition's support on Insurance, PFRDA Bills
Loans for rural housing -- last Budget saw allocation of Rs 4,000 crore, this time Rs 6,000 crore to Rural Housing Fund in 2013-14
Banks to be permitted to act as insurance brokers Most banks already have a tie-up with some insurance company -- unlikely to have a big impact Shishir Asthana
All Women's Bank to be set up via PSU route An Indian womens bank. A prime example of tokenism towards gender equality! What will stop men from borrowing from it by proxy? Kanika Datta Senior Associate Editor
150,000 weavers, 1,800 co-operative societies to benefit on allocation of additional sum of Rs 96 crore to Ministry of Textiles for internal subvention
Will ensure PSU Banks always meet Basel III norms 11:54 AM Budget Impact: PSU Banks rally on capital infusion proposal. Union Bank Of India, PSB, Corporation Bank, Central Bank of India, IOB move up over 1% each
To constitute panel on transaction costs, finance policies
To provide Rs 14,000 crore for Public Sector Bank recap Good for all PSU banking stocks Shishir Asthana
Funding by companies for technological research in colleges and educational institutions to be treated as part of mandatory CSR under Companies Act
Budget Impact: Textile stocks -- Birla Cotsyn (India), Gokak Textiles, Celebrity Fashions, Alok Industries, Arvind up between 1 and 9%
Budget Impact: Focus on TUFF scheme, textile parks, handloom sector. Stocks rally.
Two major ports in West Bengal and Andhra Pradesh to add 1 million tonne of capacity Investment allowance of 15 per cent announced for high-value investments of above Rs 1,000 crore. This is a huge plus for large companies, as it improves profitability considerably. Bhupesh Bhandari, Senior Associate Editor
Higher allocation for water treatment Good for companies like VA Tech Wabag and Ion Exchange
Coal import in April-December 2012 at 100 million tonne, to rise to 185 million tonne
Non-tax benefits for MSMEs up to 3 years after they graduate to higher category
Budget Impact: To encourage PPP projects along with Coal India. Coal India up nearly 3%
To encourage PPP projects along with Coal India
Shale gas projects to be encouraged
Natural Gas Pricing Policy to be reviewed Natural Gas and Shale Gas pricing policy to benefit

Wednesday, February 27, 2013

Bond yields tread water ahead of Economic Survey

The yields on 10-year 8.79% - 2021 bonds were trading down by 1 basis point at 7.81% from its previous close of 7.82%

Bond yields were treading water with bond dealers looking for cues from the government's economic survey report due to be released in the afternoon. Further, caution was also witnessed ahead of the much awaited Union Budget, where the dealers await the fiscal deficit target and gross borrowing numbers for the next financial year starting in April.

On the global front, US Treasuries firmed in Asian trade, on Wednesday on political deadlock in Italy triggered by inconclusive elections and after Federal Reserve Chairman Ben Bernanke reaffirmed the central bank's commitment to monetary stimulus. Meanwhile, Brent crude oil, which fell under $113 a barrel on Tuesday as inconclusive Italian election results revived investor concerns about instability in the euro zone and about future demand for fuel, was now trading above $113.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading down by 1 basis point at 7.81% from its previous close of 7.82%.

The benchmark five-year interest rate swaps were trading unmoved at its previous close of 7.19% on Tuesday.

Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the government securities for an aggregate amount of Rs 10,000 crore on March 1, 2013 through multi-security auction using the multiple price method.

Call rates edge higher on steady demand

Interbank call rates were trading higher at 7.85/95% from its previous close of 7.75/7.80% on Tuesday, given the steady demand, as banks prefer to borrow mostly in the first week to avoid a last minute scramble in the second week. However, not a sharp up run is expected in call rates after central bank, in order to ease the tight liquidity condition, announced an Open Market Operation (OMO) to buy bonds up to Rs 10,000 crore on March 1, post market closed on Monday.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 112,905 crore through repo window on February 27, 2013, while banks using special LAF facility borrowed Rs 115,290 crore through repo window and parked Rs 25 crore via reverse repo window on February 26, 2013.

The overnight borrowing rates touched a high and low of 7.90% and 7.80% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.88% on Wednesday and total volume stood at Rs 22,756.83 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.75% on Wednesday and total volume stood at Rs 20,130.65 crore, so far.

The indicative call rates which closed at 7.75/80% on Tuesday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.

Short Term Bond Funds - Attractive Opportunity

Indian Economy has slowed down in the last few years. A big impact of this has been on Interest rates of deposit and debt funds. Last year at this time, Fixed Deposits and FMP were offering 10% but the current yield on same has come down to approx 9%. Going forward, Interest Rates are expected to further come down in next 1 year as economy further slows.

One instrument which does really well in falling interest rate scenario is Short Term Bond Fund. The strategy of the fund is to hold good quality Corporate Bonds of 2-3 years time horizon when interest rates are good and sell the bonds at premium when interest rates in economy goes down. These funds have done really well in the last 1 year with average return being greater than 10%. These category of funds are expected to do well in coming 1 year as well.

Mywealthclub.com recommends following funds in this category for investment:

Scheme	Corpus (In cr.)	1Y	2Y	3Y	MWC Rating
UTI - ST Income Fund (G)	2050	11.37	11.48	9.65	*****
Birla SL - DBF (G)	14481	10.12	10.21	8.6	*****
Templeton - India ST Income Plan (G)	6035	9.99	9.76	8.34	*****

Average		10.49	10.48	8.86

*As on 25/2/13 **Returns for more than 1 year are annualized.

The above funds have been shortlisted on the basis of consistency of performance, quality of fund management team, quality of underlying investments etc.

Points for consideration:

Allocation - Investor can look at deploying a maximum of 40% of his Debt/ Fixed Income Portfolio in the above funds.
Diversification – Investors are recommended to invest equally in all the above 3 funds to diversify the portfolio.
Expected Return – Investors may expect a return of 9% to 11% in next 1 Year.
Time horizon – Minimum recommended time horizon for the above funds is 1 Year.
Liquidity – The above funds are liquid and investor can withdraw the funds when required. An exit load of 0.5% to 0.75% may be applicable if withdrawal is made before 6 or 9 months depending upon the fund.
Taxation – The capital gain from investment will get taxed at 10% or 20% with indexation whichever is lower. If an investor invests in the above funds before 31^st March’13 and sells after 1^st April 2014 then he will be eligible for double indexation which may bring down his tax liability to 0%.
Expense Ratio – The above funds have an inbuilt expense ratio of approx 1% - 1.5%. The above performance shown is net of expense ratio.
Advisor commission – Advisor gets paid 0.2% to 0.9% depending upon the fund.

If you want any additional information or invest in the above funds then please contact us at support@mywealthclub.com or call us at 90156 15190.

Financial Coffee

Tuesday, February 26, 2013

Call rates steady above repo level on firm demand

The overnight borrowing rates touched a high and low of 7.90% and 7.75% respectively

Interbank call rates were trading steady at its previous close of 7.85/90% with demand remaining firm at the start of a new reserves reporting week. Further, banks' borrowing from the central bank has hovered at more than Rs 1 trillion for most of the month, showing the continued extent of the liquidity tightness in the banking system.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 115,290 crore through repo window on February 26, 2013, while banks using special LAF facility borrowed Rs 128,425 crore through repo window and parked Rs 25 crore via reverse repo window on February 25, 2013.

The overnight borrowing rates touched a high and low of 7.90% and 7.75% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.88% on Tuesday and total volume stood at Rs 24,568.15 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.75% on Tuesday and total volume stood at Rs 23,252.55 crore, so far.

The indicative call rates which closed at 7.85/90% on Monday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.

Bond yields trade lower after RBI unveils another round of OMO

Bond yields were treading lower after RBI unveiled another round of bond purchase to ease the tight cash condition. Further, the yields also edged lower on the back of a global risk-off due to Italy’s parliament deadlock.

On the global front, US Treasury debt prices rose and benchmark yields dipped to the lowest in a month on Monday with safe-haven demand as Italian exit polls reflected uncertainty over whether the country would be able to form a stable government. Meanwhile, Brent crude futures fell by more than a dollar to one-month lows below $114 a barrel on Tuesday as a potential political vacuum in Italy revived worries over instability in the debt-plagued euro zone

Back home, the yields on 10-year 8.79% - 2021 bonds were trading down by 1 basis point at 7.79% from its previous close of 7.80%.

The benchmark five-year interest rate swaps were trading lower by 4 basis points at 7.85% from its previous close of 7.89%.

Railway Budget 2013

On the cards: 67 new express trains, 27 passenger trains, 5 memo services, increase in frequencies
East-west corridor underway, will be taken forward First AC electrical multiple unit (EMU) will be introducted in mumbai in 2013-14
To meet growing demand 72 new trains in Mumbai, 18 new services in kokata
500 km of new line for 2013-14, will convert 450 kms of metre gauge to broad guage
Target of 800 km of ace conversion scaled down to 527 km in 2012-13; target of 700 km of track doubling will be marginally increased
Passenger fares increased in January, so no more hikes for now, but will increase supplementary charge in superfast train, reservation fee, cancellation charge
Planned investment pegged at Rs 63,600 for 2013-14
Railways hopes to end 2013-14 with a balance of Rs 12,506 crore
Electrification of 1,200 km to be completed this year
Looking at potential application of Aadhar: Rlys Minister
1800-111-321 toll free for complaints and suggestions on catering services started functioning on 18th January
Minister proposed to launch "Aazaadi Express" to enable the youth to travel to places of historical importance across the country.
Freight target set 1,447 mn tonne in 2013-14, 40 mn tonne more than current year
This year Indian Railways is set to achieve the 1 billion tonne club, joining Chinese, Russian and the US railway.
Freight revenues pegged at 93,500 cr, growth of 9%
Number of passengers to increase 5.2%
Working expenditure 14% more than current year
Operating ratio to come down to 88% next fiscal
Gen-next e-ticketing service by Decemeber, says Railway minister
Freight income pegged at for FY13 target Rs 89,976 crore, says Railway minister
Bansal: Gross traffic receipts at Rs 1.26 lakh crore in FY13
Concessional travel for sportspersons, military personnel who have won awards, new rail factories,sops to Railway employees
Awarded railway sportspersons to travel free in First Class
Railways has been able to repay the entire Rs 3,000 crore loan with interest to the Finance Ministry in the current financial year.
Freight earnings growth lower than estimated, reflecting the overall slowdown in GDP growth
To set up electromotive unit in joint venture with BHEL: Rlys Minister
Rs 2,000 crore allotted for land and station development
Dronacharya awardees to be given free passes to travel on Rajdhani trains
Complimentary card pass to soldiers, enabling travel in first class, AC cars
Railway gallantry awardees -- one card pass with one companion
Freedom fighters have to renew pass every year, will now have to renew only every 3 years
Mountain railways exclusive club of india, will preserve them in good shape and health
National railway museum showcases indian railway history.. revamp plan to be rolled out in 2013-14
Austerity will be observed by railway, no wastage
347 ongoing projects have been recognised as priority projects

Will energise 1,000 level crossing with solar power

Pushes for use bio degradable, environment friendly products in railway, ban plastic completely
Says 14 lakh employees are most valuable asset, however 1.52 lakh vacancy
Staff quarters to be constructed at a cost of Rs 300 cr
Proposes air-conditioned locomotive coaches, provide water facility

National skill development scheme of railway would impart skills in drills held in 25 locations across the nation -- multi disciplinary institute in nagpur for providing railway maintainence, equipment skills

Exclusive secunderabad indian railways institute of financial management, five fellowships in national universities

Expansion in the number of centres for conducting railway recruitment exams has resulted in as many as 47,000 vacancies filled up
New manufacturing units, maintainence units to be set up to generate more employment
Railway production units have contributed to generating employment; all of them achieved production targets in 2012
Target of 4,500 cr has been set up for Railway production units 2013-14
Will address concerns of private sector with respect to recently established projects connecting mines, ports, to cities -- will ensure payback of investment 9,000 cr including 3,800 cr for port connectivity project
Rs one lakh crore to be raised from public-private partnership, Rs 1.05 lakh crore through internal resources in the 12th Plan
12th Plan railway size to be Rs 5.19 lakh crore, with gross budgetary support of Rs 1.94 lakh crore
Cleanliness at stations, trains -- commited to bring about a marked change:
Will focus on cleanliness at stations, trains, says is commited to bring about a marked change in the quality of travel
Inititives to include: Bio toilets on trains; 200 stations with mechanised cleaning services; clean train stations; Launching pilot project in trains to contact personnel on trains for coach cleaning on sms, and get immediate feedback
Electronic display in trains for giving real time updates of coming trains, stations
Free wifi on select trains
First aid services at railway stations
One coach in select trains to provide excellent ambience, will be named anubhuti
Amenities for differently abled passengers, icluding facilty for boarding, exiting trains, braille stickersfor blind passengers, to figure coaches, toilets
Railways to strive to provide better interface with employees
Extending internet booking time: now book online between 12:30 am to 11:30 pm, prebooking from mobile phones
Sms alerts to passengers to provide reservation station to be rolled out shortly
Four Companies of RPF personnel for safety of women already in place, another 8 to be set up. 10% reservation for women RPF personnel in these companies; Security helpline numbers made available to facilitate passengers to report any incident
40% accidents, 60% fatal incidents reported at level crossing
Estimated requrirement Rs 37,000 cr, eliminating 31,846 level crossing, 134, 530 crossings are unmanned, will only be possible with support from central road
Elimination of 10,700 unmanned level crossings targeted during the Plan; no more new such crossings to be created
TTWS automatic signalling systems
Upgradation of track structures
Fast and reliable disaster management systems
17 bridges which have been identified as distressed and marked for rehabilitation to be completed in next one year
Corporate plan for 10 year period 2014-24 to enhance safety plans
Railways market borrowing of 2 lakh cr, could allocate only 10,000 cr in the first year of 12th plan; next four years calls for a paradigm shift
Condemns allahbad station stampede " the incident has shaken us, safety is a necessary mandate for running the railways"
Railways fall short of guage conversion and expansion targets in 11th plan, convert only 5,322 km
Number of Passenger trains increased from 8,897 in Fy12 to 12,258 in FY13.
Losses to railways on account of passenger traffic likely to mount to Rs 24,600 crore in 2012-13 from Rs 22,500 crore in 2011-12.
Growth of Railways does not conform to economic principles, says Pawan Kumar Bansal, cites steep hike in input costs
Railway Minister Pawan Kumar Bansal gets ready to present the Railway Budget for 2013-14.

Markets to get a cautious start; Rail budget eyed

US markets slumped, while most of the Asian markets have made a soft start

The Indian markets barely managed a positive close in the last session, some panic selling in broader markets spooked overall market sentiments, though the bluechip stocks held their bastion and supported the markets to recover in the final hours. Today, the start is likely to remain cautious as the traders will be eyeing the debut Rail Budget of Pawan Kumar Bansal, on whether he yields to pressure of hiking passenger fares yet again or looks at other measures to mobilise resources to offset the burden of the recent diesel price hike. There is expectation of slew of passenger-friendly measures such as improvement in catering service, maintaining cleanliness at rail premises and development of stations.

Railways stock like, Kernex Microsystems, Zicom Electronic, Titagarh Wagons, Kalindee Rail, Bartronics India and BEML that have been suffering since last couple of days, will see some action based on the announcements made in the Rail Budget. The other sector that is likely to be in spotlight today is telecom sector, as on the last day of the second round of spectrum auction, nobody applied for GSM waves, Russian conglomerate Sistema Shyam was the sole applicant for the 800 Mhz band spectrum used by CDMA operators and that too in just one of the three bands offered for sale.Though, traders are likely to get some strength as global ratings agency Standard & Poor's has said that it sees economic growth improving to 6.4 per cent next fiscal.

The US markets tumbled with the start of new week, though the indices got a positive start but uncertainty about the outcome of elections in Italy led the sharp selling in the markets. The Asian markets have made a mixed start with majority of them trading in red on concern that European debt crisis may come to the forefront again, with the election outcome of Italy. The Japanese market was suffering a cut of over a percent as the companies that do business in Europe dropped.

Back home, key domestic benchmarks witnessed another day of consolidation with both the frontline indices managed to keep their head above water on Monday. However, market participants stayed away from piling positions in risky assets ahead of Railway and Union Budget. The local gauges pulled back after breaching 19,250 (Sensex) mark as investors continued taking positions in software and technology stocks led by rally in Infosys, TCS and HCL Tech. Sentiments also got some support as select non-banking finance companies (NBFC) shares like Mahindra & Mahindra Financial Services, L&T Finance Holdings, Bajaj Finserv, Bajaj Finance and Reliance Capital all edged higher in early morning deals after the Reserve Bank of India (RBI) issued guidelines for the new bank licences, which will pave the way for both corporate entities and NBFC to begin banking operations.

Bond yields tread water ahead of Budget

The yields on 10-year 8.79% - 2021 bonds were trading steady at its previous close of 7.80% on Friday

Bond yields were treading water as investors preferred staying on the sidelines ahead of the budget on Feb 28. However, traders will also watch the railway budget on Feb 26 for cues on how serious the government is about mending its finances.

On the global front, US Treasuries prices edged higher on Friday in the absence of key US economic data, as investors prepared for testimony next week from Federal Reserve Chairman Ben Bernanke, which will be scoured for clues of when the central bank may slow or stop buying bonds. Meanwhile, Brent crude was off 7 cents at $114.03, also ending last week with its biggest loss since early December.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading steady at its previous close of 7.80% on Friday.

The benchmark five-year interest rate swaps were trading flat at its previous close of 7.22% on Friday.

Call rates inch up at start of new reserves reporting week

Interbank call rates were trading higher at 7.85/90% from its previous close of 7.75/80% since demand edged higher at the start of a new reserves reporting week. The call rates ended at 7.80/85% on Saturday.

The banks via Liquidity Adjustment Facility (LAF) borrowed Rs 74,140 crore through repo window on February 22, 2013, while banks using special LAF facility borrowed Rs 74,220 crore through repo window and parked Rs 365 crore via reverse repo window on February 22, 2013.

The overnight borrowing rates touched a high and low of 7.95% and 7.85% respectively.

According to the Clearing Corporation of India (CCIL), the weighted average rate (WAR) in the call money market was 7.87% on Monday and total volume stood at Rs 24,470.27 crore, so far.

As per CCIL data, WAR in the CBLO (Collateralized Borrowing and Lending Obligation) market was 7.75% on Monday and total volume stood at Rs 24,185.75 crore, so far.

The indicative call rates which closed at 7.80/85% on Saturday were contributions made from Andhra Bank, AXIS Bank, Bank of America, Bank of Baroda, Bank of India, Canara Bank, J P Morgan Chase, Citibank N.A., Corporation Bank, Credit Agricole Bank, Indusind Bank, ICICI Bank, ICICI Securities, IDBI Bank, Jammu and Kashmir Bank, Punjab National Bank, RBS, Societe Generale, Standard Chartered, so far.