Money

Sentiment : Cautious

Yields on long gilts spun south and the yield curve flattened on expectation of a very low cut-off of around 8 per cent for Tuesday's 30-year paper auction.

The 10-year paper yield was barely changed at 7.1730 per cent from 7.1717 per cent on Friday.

Corporate bond rally stalls with no new triggers. Five-year yield marginally lower at 7.59 per cent, from Friday's 8.58 per cent.

Call money ended at around the repo rate of 5.75 percent in light trade. There were few borrowers early in the two-week reporting cycle, which began on Saturday and ends on September 6.

There were bids worth Rs 15,125 crore for 14-day repos, half of which were accepted by the Reserve Bank of India. And at the one-day repo auction, bids amounting to Rs 9,640 crore were accepted out of total bids of around Rs 12,050 crore.

Outlook: Gilts are expected to be ranged as players will prefer to sit tight at least till bidding for the Rs 7,000 crore twin auctions of 15-year and 30-year papers is over. Both the issues are expected to see some heavy bidding, with insurers and provident funds rushing for the 30-year paper. The twin auction is unlikely to crimp liquidity as banks are sitting on an estimated Rs 30,000 crore of surplus funds.

Forex

Sentiment : Bullish

The rupee closed at a new seven-month high of 48.5100/5175 against the dollar after touching an intra-day high of 48.5050.

It opened strong at 48.5350/54 as dollars bunched up at the weekend came in.

Corporates and exporters kept unloading greenbacks but continuous buying by state-owned banks prevented the rupee from escalating beyond 48.50/$.

Some public sector undertakings indulged in month-end dollar buying.

Forwards dipped due to the surfeit of liquidity in the banking system.

Outlook: The rupee is expected to touch 48.50 per dollar on Tuesday. It should trade in the 48.50-48.55 range after opening higher due to the shift in the spot date to August 30 from August 29. Forwards may droop afresh and the six months premium could touch the 4 per cent mark.