MyValueResearch

Dawn of 20th Nov 08

RUPEE 50.50, INR Liquidity no USD, Gsec trading in favour, Global Auto Crisis now , Fed says DEFLATION, ALuminium 3Y low, Stocks Slide, PFRDA comes of age

RUPEE

Ø STOP PRESS : INR opened at a record low of 50.50 per USD on Thursday as a sharp fall in Asian share prices raised worries of FII selling. INR at was at 50.45/47 per USD. Its previous record low was 50.29, which was hit in late October. It had closed at 50.02/03 on Wednesday.

BONDS

Ø Yields eased on Wednesday on expectations the RBI will lower interest rates further to support slowing economic growth. Yields initially rose as some investors cut positions to generate liquidity ahead of l auctions of about 209 billion INRs ($4.2 billion) this week. 10Y at 7.44 %, off an early high of 7.49 %, and lower than Tuesday’s close of 7.46 %. Volume was heavy at 34 billion INRs. “A rate cut seems highly likely,” a foreign bank trader said, after the finance minister promised more measures to help the economy.

STOCKS

Ø Indian shares dropped 1.83 % on Wednesday, taking their fall to 16.7 % over a six-day losing streak, as worries over the deteriorating global economy saw the market surrender initial gains. It was the lowest close since Oct. 27, the day the market hit a three-year low of 7,697.39. The index has fallen 57 % this year.

CALL

Ø Rates closed lower on Wednesday for a second straight session as demand for funds fell in the second half of the reporting fortnight, with some inflows from interest payments last week easing supplies. Call rates closed at 6.40/6.50 %, little changed from Tuesday’s close of 6.50/6.75 %. There was a total of 119.36 billion INRs worth of inflows via various interest payments and treasury bill redemptions last week. RBI absorbed 244.35 billion INRs via the two reverse repo auctions, the highest since Nov. 6, indicating surplus funds in the system.

GLOBAL

Ø DJIA 7,997.28 -427.47 Nikkei 7,915.63 -357.59 FTSE 4,005.68 -202.87 H Seng 12,151.31 -664.49 US10Y 3.366 -0.162 EUR 1.2521 Yen 95.88 Gold 762.00 Crude 53.04

Ø U.S. stocks plunged to their lowest in five and a half years on Wednesday as investors girded for a lengthy economic downturn and U.S. auto executives predicted a far-reaching calamity without a government lifeline.

Ø FTSE skidded 4.8 % lower on Wednesday, with banks and oil shares tumbling and as Wall Street took a whipping from a grim outlook for the global autos industry.

Ø Nikkei dropped 4.3 % on Thursday to a three-week low, battered by a stronger yen and fears of a global recession that hit exporters such as camera maker Canon .

Ø The USD fell against the yen on Wednesday after minutes from the Fed’s last policy meeting showed policymakers saw deflation risks even after the Fed’s recent half point rate cut.

Ø Gold ended slightly higher on Wednesday, reversing sharp early gains amid liquidation across all asset classes and signs of sliding consumer prices.

Ø Aluminium matched a three-year low on Wednesday after a hefty rise in stocks reinforced the weak demand outlook, particularly from the auto industry.

Ø Oil prices dropped to 22-month lows on Wednesday as U.S. inventories rose and demand weakened due to the global economic slowdown.

INDIA FRONT PAGE

Ø SEBI is considering raising the minimum capital for asset management companies.

Ø Tata Consultancy Services has emerged the lowest bidder for an e-governance contract to computerise ESIC and provide smart cards, pipping Wipro and Infosys TCS bid at 16.77 billion INRs.

Ø PE firm Kohlberg Kravis Roberts is likely to appoint Sanjay Nayar as its India Chief Exceutive Officer. Nayar currently heads Citigroup’s South Asia business.

Ø After a 4 wait, the Pension Fund Regulatory and Development Authority is ready to kick off the process to set up private pension funds so that salaried and non-salaried people can start investing April onwards.

Ø SAIL and Rashtriya Ispat Nigam Ltd are considering scaling down production after a surge in inventories brought about by a sudden and sharp fall in demand.

Ø India’s health minister has proposed to take cigarettes off the duty-free list.

Ø Realtor Sobha Developers Ltd has reduced prices by 8 % on average in 25 of its 34 ongoing residential projects.

Ø Citigroup is in talks with two Indian and one U.S. IT firms to sell its 40 % stake in Polaris Software Lab Ltd