Commodities Section of the day: Gold :Gold off 3-month high; dollar weakness supports

Gold edged lower on Friday, although a weaker dollar supported positive sentiment after upbeat economic data in the previous session weighed on the greenback and sent bullion to a three-month high.

Gold was headed for a weekly rise of more than 3 percent, its biggest one-week gain in nearly a month, after rallying for four straight sessions to push through a key technical level, aided by macroeconomic data.

Upbeat data from Germany on Thursday pushed the euro to a 2-1/2-month high against the dollar, helping gold as a cheaper greenback attracts buyers holding other currencies to dollar-priced commodities.

"Technicals, along with the weakness in the dollar, lead to gold buying," said Peter Tse, director at ScotiaMocatta in Hong Kong.

Tse said technical indications suggested gold could test higher levels, after it broke key resistance around $1,760 on Wednesday, but some profit-taking selling could emerge ahead of the Group of 20 finance ministers meeting on weekend.

"Beware that any correction could be sharp and deep, even though the trend is still looking fairly good for the time being," he added.

The euro zone debt crisis is expected to dominate the discussions at the G20 meeting, before a European Union summit on March 1-2.

Spot gold edged down 0.2 percent to $1,777.04 an ounce by 0149 GMT, off a three-month high of $1,787.11 on Thursday.

U.S. gold lost 0.4 percent to $1,779.10.

Investors will also be watching a second three-year long-term refinancing operation (LTRO) allotment by the European Central Bank on Feb 29, which is expected to inject nearly half a trillion euros to banks.

Hopes of more monetary easing by central banks have helped gold rally nearly 14 percent this year, as any injection of cheap cash raises the inflation outlook, which polishes gold's appeal as an inflation hedge.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings gained 1.209 tonnes to 1,282.796 tonnes by February 23, the highest in more than two months.

Spot silver lost 0.1 percent to $35.28 after a hefty 3 percent rise in the previous session pushed prices to $35.59, a level unseen in nearly four months.

Spot platinum edged down 0.2 percent to $1,714.99, off a five-month high of $1,731.50 hit in the previous session. The metal is headed for a weekly rise of more than 5 percent.

Traders and analysts cautioned that platinum's recent rally might be losing steam soon.

"I wouldn't read too much into it, as the size and volume in trading of that metal has been fairly light. We have to wait a few days to confirm that the rally can be sustainable," said Tse of ScotiaMocatta.

Precious metals prices 0149 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1777.04 -2.75 -0.15 13.64

Spot Silver 35.28 -0.05 -0.14 27.41

Spot Platinum 1714.99 -3.00 -0.17 23.11

Spot Palladium 712.47 -4.53 -0.63 9.19

COMEX GOLD APR2 1779.10 -7.20 -0.40 13.55 4700

COMEX SILVER MAR2 35.30 -0.26 -0.73 26.44 1740

Euro/Dollar 1.3367

Dollar/Yen 80.09

COMEX gold and silver contracts show the most active months

Source: Money control

11 things that moved markets during the week

Key indices posted their first weekly loss this calendar after seven successive weeks of gains, as the market looks to consolidate the massive gains made so far. The Nifty and Sensex retreated 2-2.5%, closing at 5429, and 17923 respectively. Second line shares felt the heat of the sell-off, with the mid cap and small cap indices declining around 4% each.

Sentiment has improved considerably, but valuations are no longer as attractive as they were till a couple of months, say market players. Any upmove from hereon is likely to be selective, as players scour for stocks with which still have some upside left, or are better placed to withstand any sudden correction. Realty, capital goods and banking shares were among the worst performing sectors for the week.

Here is a glance at the 10 events/data/policy that move the market during the week.

Greece bail out package: After much haggling, the European Union finally handed over Greece its second tranche of financial aid, 130 billion euros. But doubts persist on whether the ailing Eurozone member will be able to meet the stiff austerity targets the lenders have set for it.

Kingfisher 's woes: Matters at the ailing airline took a turn for the worse this week, and it looks like nothing short of a miracle can save Vijay Mallya's dream project. Bankers are refusing further loans, the I-T department has frozen the company's bank accounts for non-payment of service tax, oil firms are insisting on upfront payment for fuel, pilots have quit en masse, and the company has cut both fleet and daily flights by more than half.

Sterlite - Sesa Goa merger: Both stocks had a rough week. Sterlite, because the restructuring at flagship Vedana Resources Plc means the debt in group company Cairn will be shifted to Sterlite's books. Sesa Goa shares tumbled after the I-T department disapproved of Rs 246 crore of tax deductions for three of its export units.

PMEAC's rosy outlook: The Prime Minister's Economic Advisory Council has painted a hopeful picture of the economy for FY12-13, pegging GDP growth rate between 7.5-8.0%, and inflation between 5-6%. But many economists see it as too good to be true, given more populist polices in the offing. Besides, high growth and low inflation at the same time appears a tall order.

State Bank of India : The stock fell nearly 9% during the week on concerns over its rising non-performing loans, and hurt sentiment for the banking sector as a whole.

Citi sells HDFC stake: Citigroup sold its entire 9.85% stake in Housing Development Finance Corporation (HDFC) at Rs 658 per share. The price at which the deal was done-a discount to market price-disappointed investors, more so because this is the second major institutional investors to reduce exposure to the company in less than a month.

Runaway crude prices: Tension in Middle-East over Iran's aggressive nuclear stance pushed crude oil prices to near 10-month highs of USD 106 and USD 123. Bad news for India, whose oil import bill has already surged over 40% for the nine-months ended December, widening an already huge current account deficit and putting further pressure on the rupee.

New CPI-based inflation: The first inflation reading based on the revamped Consumer Price Index at 7.65% has somewhat dampened hopes of a rate cut by the RBI at its policy review meet on March 15. The reading shows a sharp increase in the cost of services, something not factored in the Wholesale Price Index.

Dow hits 13,000: ...for the first time since May 2008, just before the financial crisis broke out.

MCX IPO: The Rs 650 crore-issue was subscribed 53 times, reflecting a strong appetite for quality issues, as well the improved outlook on the market. But too much money flowing in that direction caused a temporary liquidity crunch of sorts in the secondary market, and contributed to the weakness.

Proposed priority sector lending norms: An RBI committee has recommended changes for priority sector lending, which could make things slightly tough for banks on the balance, while making things quite tough for non-banking finance companies, especially those into asset financing, and also for private banks

Source: Money Control

Blackmoney: India ratifies tax convention to bring back illegal funds stashed abroad

India has ratified an international convention on taxation which will help the country in bringing back illegal funds stashed abroad, the finance ministry said on Friday.

India became the 13th country and the first non-OECD nation to ratify the 'Multilateral Convention on Mutual Administrative Assistance in Tax Matters', which seeks to promote transparency and exchange of tax-related information.

The Convention, a ministry release said, "also provides for assistance in the recovery of taxes. This will give a fillip to the efforts of the Government in bringing the Indian money illegally stashed abroad". It will also allow India to seek past information in criminal tax matters.

"A Party to the Convention is compulsorily required to Exchange the past information in criminal matters for at least three years..." the release said.

The convention, it said, explicitly provides for automatic and spontaneous exchange of information and will permit tax officials to enter into the territory of the other country to examine individuals and records.

India has ratified the convention by depositing the Instruments of Ratification on February 21. Out of the 34 countries which have signed the convention, only 13 have ratified it so far.

The other countries who have ratified the convention include France, Italy, Norway, Sweden and United Kingdom. The important nations which are yet to ratify it include Australia, Germany, Japan, Russia and the US.

The information received under the Convention can also be used for other purposes besides those related to tax co- operation like countering money laundering.

The Convention was signed by Sanjay Kumar Mishra, Joint Secretary in the Ministry of Finance, in the presence of Deputy Secretary-General of OECD, Rintaro Tamaki.

This instrument, which was earlier available for the members of OECD and Council of Europe, was amended in 2010 and made open to all countries in June 2011.

It was amended in response to a call given by the G-20 Summit in 2009 for developing a broader multilateral approach to improve co-operation between the countries in the assessment and collection of taxes with a view to combating tax avoidance and evasion.

Ratification of convention by India, the release said, will encourage more countries to join the global network for exchange of tax related information and effectively deal with the menace of tax evasion and money laundering.

The Convention, it added, will "send a strong signal that countries are acting together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place. Many more countries are expected to sign the Convention in future".

India has been spearheading the campaign for automatic sharing of tax related information at global fora including the G-20, a club of rich and developing nations.

Source: Economic times

Top Story of the day: Equity Investment:

Equity is one among the best asset class, no doubt about it.. But huge risk is associated to that.. You have to be very careful about the companies you are investing.. Current price v/s Expected future price.. Check your risk profile, check macro environment factors and Fundamental & Technical analysis of the stock.. Don't go by tips given by your stock broker, do your analysis and then invest. Again equity is only asset class whose return can beat inflation and maximize return, but check risk associated with this.......!!!

Indian Shares End Down For Third Day; Financial Stocks Fall

MUMBAI (Dow Jones)--Indian shares closed lower for a third straight day Friday, led by financial stocks after Citigroup sold its stake in Housing Development Finance, and as investors remained cautious ahead of crucial policy announcements scheduled over the next few weeks.

The Bombay Stock Exchange's Sensitive Index declined 154.93 points, or 0.9%, to end at 17,923.57. The benchmark had closed near a seven-month high Tuesday and is down ...

Budget 2012: Consensus among MPs to raise I-T exemption limit to Rs 3 lakh

Ahead of the Budget, a key Parliamentary panel scrutinising the Direct Taxes Code (DTC) is likely to recommend raising of income taxexemption limit to Rs 3 lakh and tax breaks on investments to Rs 2.5 lakh.

"There is a consensus among the members that annual tax exemption limit be raised to Rs 3 lakh," sources said after the meeting of the Parliamentary Standing Committee on Finance chaired by senior BJP leaderYashwant Sinha.

Raising the tax exemption limit from Rs 1.8 lakh currently, they said, was necessary to provide relief to the people braving the impact of high inflation.

Members also felt that the total tax saving deduction limit, which include investment in provident fund, life insurance, children education and infrastructure bonds, should be raised to Rs 2.5 lakh from Rs 1.2 lakh, sources said.

At present, investments up to Rs 1 lakh in specified instruments are deducted while calculating the tax liability. In addition, investments up to Rs 20,000 in infrastructure bonds are also exempted from tax.

The Standing Committee on Finance has decided to finalise its report on DTC by March 2, enabling Parliament to consider the ambitious reforms in direct tax regime in the budget session beginning March 12.

"The committee will present its report to Parliament in the third week of March", sources said.

The DTC Bill proposes the tax exemption limit of Rs 2 lakh and also provides for revising the tax slabs for all the three categories.

Currently, income of Rs 1.80-5 lakh attracts 10 per cent tax, Rs 5-8 lakh 20 per cent and above Rs 8 lakh, 30 per cent.

The DTC, which will replace the Income Tax Act, 1961, was referred to the Committee for scrutiny in August 2010.

Yesterday, Congress leaders in their wish-list asked Finance Minister Pranab Mukherjee to present a "please all" Budget and raise income tax slabs.

Congress leaders want "please all" Budget

Pitching for a virtual "please all" Budget, Congress leaders in their wish-list asked Finance Minister Pranab Mukherjee to raise income tax slabs, reduce interest rates and earmark more funds for poverty alleviation programmes.

Some of the Congress members, including senior ministers, at the pre-Budget consultations with the Finance Minister expressed concerns over slowdown and wanted him to announce steps to boost growth.

Mukherjee, who is scheduled to present the Budget on March 16 in Parliament, at the outset explained them the current economic situation in India in the context of the world scenario and financial constraints being faced by the government.

The senior leaders who attended the meeting included Ahmad Patel, political secretary to Congress President Sonia Gandhi, Corporate Affairs Minister Veerappa Moily, AICC media cell Chairman Janardan Dwivedi, Members of Parliament (MPs) Sanjay Nirupam and Girija Vyas, CWC member Shakeel Ahmed and Minority Affairs Department Chairperson Imran Kidwai.

"We demanded priority to industrial growth...and focus on banking sector", Congress MP T Subbarami Reddy, told reporters after attending the meeting.

Reddy also suggested that interest rates should be reduced to encourage industrial growth.

Some members urged Mukherjee to raise income tax exemption limit to provide relief to the salaried class. At present, income tax is levied on income above Rs 1.8 lakh per annum.

Congress leaders also demanded that the forthcoming Budget should focus on poverty alleviation programmes by raising allocation for schemes like MNREGA, National Rural Health Mission(NHRM) and Bharat Nirman.

The challenge before Mukherjee would be to arrest decline in economic growth which is expected to decelerate to three-year low of 6.9 percent in 2011-12 from 8.4 percent a year ago.

His other major task would be contain fiscal deficit, which is likely to overshoot the Budget estimate of 4.6 percent on account of increased subsidy bill and low realisation from disinvestment.

As part of the Budget-making exercise, Mukherjee, has already held discussions with various stakeholders, including industry chambers, economists, state finance ministers, farmers and trade union leaders.

State Finance Ministers will also meet here on March 3 to suggest steps for increasing the ambit of the service tax net with a view to garnering more resources.