MyValueResearch

Dawn of 17th Nov 08

RBI : HFC can borrow overseas , spread on NRE and FCNR Up, Real Estate Risk Weight Down , Export Refinance up, US markets tumble on poor sales , elsewhere the sale continues , Kingfisher scouts for buyers, Derivatives come under scanner, Now IRDA takes steps

RUPEE

Ø INR opened slightly lower on Monday ahead of an expected weaker start in the stock market, which could see more FII withdrawals. At 9:10 ;INR was at 49.02/03 per USD, opening weaker at 49.15, and slightly lower than Friday’s close of 49.01/03.

CALL

Ø Rates fell on Friday as demand for funds was lower after the government infused 100 billion INRs into the system by repurchase of the MSS bonds on Wednesday. Call closed Friday at 7.10/7.15 %, lower from its previous close of 7.30/7.40 % on Wednesday. The RBI did not receive any bids at its daily morning reverse repo auction, while it accepted bids for only 20 billion INRs at the repo auction, indicating comfortable cash conditions in the banking system.

BONDS

Ø Yields could ease on Monday in response to the RBI’s liquidity injection measures at the weekend, and traders expect more steps to cushion the economy against the global financial turmoil. On Saturday, the RBI said it was raising the limit on export credit refinance available to banks to release extra liquidity of about 220 billion INRs ($4.5 billion) into the banking system. In addition to this RBI increased the spread on NRE and FCNR Deposit Rates , 10Yended at 7.48 % on Friday, off an intraday low of 7.41 %, which was its lowest since January. RBI also opened the ECB window for Housing Finance companies as well as reducing the risk weight of CRE to 100% from 150%

STOCKS

Ø Fell 1.58 % on Friday to their lowest close in more than two weeks as the gloomy global economic outlook wilted early gains, with wary investors eyeing this weekend’s G20 meeting for some direction. Infosys Technologies dropped 3.3 % to a one month closing low of 1,217.90 INRs after CLSA said the tech bellwether might miss its revenue guidance in USD terms for the December quarter on a worsening global financial crisis.

GLOBAL

Ø DJIA 8,497.31 -337.94 Nikkei 8,561.19 +98.80 FTSE 4,232.97 +63.76 HSeng 13,342.66 -200.00 US10Y 3.731 EUR 1.2552 Yen 96.01 Gold 747.50 Crude 56.45

Ø -U.S. stocks fell on Friday after a record drop in retail sales last month increased fears that American consumers’ reluctance to spend will push the economy into an even deeper downturn than currently expected.

Ø FTSE closed 1.5 % higher on Friday, as hefty falls seen earlier in the week attracted bargain hunters and investors awaited the outcome of a meeting of world leaders over the weekend.

Ø Nikkei average rose 1.2 % in thin trade on Monday as some investors rushed in to buy following an initial sell-off after data showed Japan’s economy was in recession.

Ø Gold futures ended more than 5 % higher on Friday as heavy buying by funds triggered buy stops ahead of the Group of 20 summit meeting, which could set a positive tone for the bullion market.

Ø Copper prices ended up over 5 % Friday as a rebound in global equity markets gave a lift to the broader metals complex, offsetting a stronger U.S. USD and renewed losses on Wall Street.

Ø Oil fell over 1 % on Friday after news of a euro zone recession and data showing a record decline in U.S. retail sales stirred concerns of a further drop in fuel demand.

INDIA FRONT PAGE

Ø RBI is in talks with some large banks to lower the tenure of derivative contract deals to minimise risks.

Ø Kingfisher Airlines is holding exploratory talks with international carriers for diluting up to 25 % stake.

Ø L&T is in talks with Antwerp Port Authority to establish a greenfield port in the west coast of the country. The venture will initially invest 20 billion INRs into the port.

Ø IRDA to give state-run Life Insurance of India (LIC) more leeway to invest in debt instruments of a single company. This would help state-owned companies access funds from LIC, which has surpluses to invest in these turbulent times.

Ø Government is considering a proposal to subsidize loans for infrastructure projects, offered through public bids, by effectively, capping interest rates and absorbing the cost of higher rates in its own books.

Ø Construction companies such as Larsen & Toubro ,Nagarjuna Construction ,and DLF have not put in bids or withdrawn from the 20 such projects planned under government’s highway projects via PPP

Ø Soda-ash maker Tata Chemicals Ltd is planning to invest 7 billion to 10 billion INRs to ramp-up its soda ash and salt capacity.

Ø Fashion retailer Trent Ltd is considering sale of some of its prime properties to raise cash for expansion as the retail business needs physical space.

Ø Mastek Ltd is in the process of closing down its BPO.