Dawn of 19th Nov 08

Rupee near 50 , Liquidity Returns , Stocks 15% down in 5 sessions, Govt helps steel, OIL SLIPS , HP boosts morale, CDS in India , NBFCs, HFCs in favour, Global car makers postpone launch

RUPEE

Ø INR opened lower on Wednesday, as weaker Asian equities raised concerns of FII withdrawals from the local stock market. INR at 49.80 after opening at 49.73. It had ended at 49.66/67 on Tuesday. The INR had hit a record low of 50.29 late last month.

CALL

Ø Rates ended Tuesday’s session lower as demand for funds in the banking system fell in the second week of the reporting fortnight, which reduced pressure on call rates. Call ended at 6.50/6.75 %, lower than Monday’s close of 6.90/7.00. “Rates have come down mainly because there is lower demand in the second half of the reporting fortnight. Dealers said the outflows for Friday’s upcoming bond auction would be offset by the buyback of MSS. . RBI absorbed 161 billion INRs via the two reverse repo auctions, the higest since Nov. 7, indicating surplus funds in the system.

BONDS

Ø Yields rose slightly on Wednesday, with sentiment cautious ahead of a series of bond auctions this week. 10Y at 7.47 %, a tad higher than Tuesday’s close of 7.46 %. The RBI will sell treasury bills worth 70 billion INRs on Wednesday. It will also auction state loans worth 48.5 billion INRs on Thursday and government bonds of 90 billion INRs on Friday.

STOCKS

Ø Indian shares are expected to start lower on Wednesday, tailing weaker Asian peers but the downside could be limited after sliding more than 15 % in the past five sessions. Metal shares such as Tata Steel and SAIL will be in focus after the government imposed 5 % import duty on steel and iron products to support domestic makers from cheaper imports. “I won’t be surprised if the market closes positive. We have already breached 9,000. Even those going short don’t have the courage to go down much further,” said S.P. Tulsian, an independent investment analyst.

GLOBAL

Ø DJIA 8,424.75 +151.17 Nikkei 8,180.13 -148.28 FTSE 4,208.55 +76.39 HSeng 12,901.38 -14.51 US10Y 3.540 -0.106 EUR 1.2625 Yen 96.94 Gold 738.00 Crude 54.69

Ø U.S. stocks staged a late fight back on Tuesday after stronger-than-expected results and the outlook from computer maker Hewlett-Packard offset fears of more losses at Citigroup and other banks.

Ø FTSE ended 1.9 % higher Tuesday as strong gains on Wall Street and by oil heavyweights offset fresh falls from struggling banks amid more turmoil in the financial sector.

Ø Nikkei average slid 0.7 % on Wednesday as fears of global recession and a stronger yen outweighed the positive impact from overnight gains in U.S. shares.

Ø . USD rose against most major currencies on Tuesday as U.S. stocks fell into negative territory and investors worried about a deepening global recession.

Ø U.S. gold futures ended more than 1 % lower on Tuesday as a volatile stock market triggered liquidation in futures, but platinum rose after an industry report predicted a market deficit for that metal this year.

Ø Industrial metals trimmed gains in late business on Tuesday as a sharp downturn in U.S. equities sapped strength from the complex, while a poor demand outlook continued to dampen sentiment.

Ø U.S. crude futures ended at the lowest level in nearly 22 months on Tuesday, moving in lock-step with Wall Street, where U.S. stocks lost ground on deepening economic worries.

INDIA FRONT PAGE

Ø Government is examining the possibility of notifying jet fuel as a ‘declared good’, which would ensure it attracts a uniform sales tax of 4 % across the country, against the prevailing average sales tax rate of 21 %.

Ø The Board for Industrial and Financial Reconstruction has approved Ess Dee Aluminium Ltd’s acquisition of the ailing India Foils Ltd a Vedanta group firm. Ess Dee will pay 1.20 billion INRs for a 90 % stake in the firm.

Ø Government is considering a proposal to raise banks’ exposure limit to infrastructure-focused non banking financial companies.

Ø RBI looking at augmenting the resources of the NHB to help finance HFCs

Ø Toyota Motor Corp has put the India launch of its mass-produced hybrid vehicle range ‘Prius’ on hold citing infrastructure issues, a steep duty structure and inability to launch at competitive prices.

Ø Volkswagen’s light commercial vehicles — ‘Craftar’ and ‘Caravalle’ — will be deferred to the middle of next year from 2008-end as earlier planned.

Ø Reliance Haryana SEZ, a joint venture between Mukesh Ambani’s Reliance Ventures and the Haryana State Industrial and Infrastructure Development Corporation, has retrenched some employees. The company is developing a 5,000-hectare special economic zone in Haryana.

Ø India may introduce trading in credit default swaps next year as a measure to offset defaults in debt markets.