Dawn of Nov21′2008:

INR Record Low , Gsecs 3Y High , Stocks near 3Y Low, OIL slips, US-Worst Jobs data in 16 years , Global markets tumble, US Stocks 10Y Low, Aluminum 3Y Low, Projects Stalled

RUPEE

Ø The Indian INR slumped to a record low on Thursday, but heavy selling of USDs by state-run banks probably on behalf of the RBI helped the unit crawl off the trough at close. Traders estimated the state banks sold up to $1.5 billion to halt the INR’s slide after it tumbled to 50.60 per USD in early trade, according to Reuters data, as the stock market extended a slide into a seventh session in a row. “The RBI doesn’t seem to be very comfortable with the INR being weaker than 50,” the chief dealer with a private sector bank said.

CALL

Ø Rates ended lower on Thursday as demand for funds was low on the eve of the reporting Friday as most banks had completely funded their reserve requirements. Call rates closed at 6.20/6.30 %, lower than 6.40/6.50 at close on Wednesday. . “Rates however, are unlikely to rise much more than 8 %, as banks can borrow from the RBI at 7.5 %.” However, aggressive USD sales by the RBI in the forex market to shore up the INR could tighten INR liquidity in the system and push up overnight rates. RBI absorbed 275.45 billion INRs via the reverse repo auction, the higest since Nov. 6, indicating adequate funds in the system.

BONDS

Ø Yields may test their lowest levels in nearly three years on Friday as falling oil prices calm inflation worries and create room for further policy easing, although new supplies could limit the move. 10Y at 7.26 % on Thursday, down from Wednesday’s close of 7.40 %. It struck 7.20 % during trade, its lowest since January 2006. Oil was trading at 3-½ year lows below $49 a barrel. Lower oil prices raise expectations of inflation moderating further in coming weeks. The government will sell 60 billion INRs of 7.56 % 2014 bonds, and 30 billion INRs of 7.94 % 2021 bonds via auction on Friday.

STOCKS

Ø SENSEX fell l 3.7 % on Thursday to its lowest close in more than three years, as jittery investors crammed the exit as a broad sell-off gripped world markets on a worsening global economy. The top 30-share has tumbled nearly a fifth in a seven-session slide, and is poised just 9 % from its lowest in three years at 7,697.39 touched on Oct. 27. inflation rate eased slightly to a 5-½ month low of 8.90 %, adding to expectations the RBI would aggressively lower interest rates.

GLOBAL

Ø DJIA 7,552.29 -444.99 Nikkei 7,532.11 -170.93 FTSE 3,874.99 -130.69 H Seng 11,929.15 -369.41 EUR 1.2460/63

Ø -U.S. stocks plunged yet again on Thursday, as a frantic flight from risk on investors’ deepening economic fears left the benchmark Standard & Poor’s 500 index at its lowest level since 1997 — completing the erasure of more than a decade of stock market gains.

Ø FTSE closed down 3.26 %, tracking falls on Wall Street as weak U.S. jobless figures added to the recessionary woes, with commodities the biggest losers, while banks were mixed and retailers rose.

Ø Nikkei average fell more than 3 % on Friday, striking a three-week low as a stronger yen, an overnight plunge in U.S. stocks and global recession fears prompted investors to sell exporters such as Sony Corp

Ø USD and yen rose against the euro and other currencies from countries with high interest rates as fears of a deep global recession sent investors fleeing for the safest assets.

Ø Gold prices rose on Thursday, buoyed by interest from jewellery makers and investors seeking safety, but a stronger USD against the euro and lower oil prices are expected to weigh on sentiment.

Ø Prices of aluminium and copper sank to their lowest levels in more than three years on Thursday as rising stock levels and anxiety over the health of the U.S. auto industry fanned concerns about demand prospects for industrial metals.

Ø Oil dropped 8 % to below $50 on Thursday as a bearish U.S. jobs report intensified concerns of a long and deep global recession and further crushed demand expectations.

Ø The U.S. government reported the number of workers making new claims for jobless benefits last week surged to the highest level in 16 years, helping to push down global equity markets.

INDIA FRONT PAGE

Ø The finance ministry is considering a further relaxation in overseas borrowings, particularly for infrastructure companies. It is looking at doing away with interest rate caps to make borrowing outside India easier for the infrastructure firms.

Ø The Monopolies and Restrictive Trade Practices Commission has started investigations into Jet Airways Ltd and its low-cost unit JetLite over cartelisation concerns.

Ø The National Highways Authority of India has relaxed the norm limiting a bidder to bid for not more than eight road sector projects, as investor interest in certain projects falls due to the economic downturn. The relaxation will be applicable to projects which have received less than five price bids.

Ø Government and the Reserve Bank of India are working on opening a 750 billion INR refinance window to provide concessional funds for infrastructure, housing and small and medium enterprises by partly leveraging the country’s foreign exchange reserves.

Ø Textiles firm Alok Industries Ltd has decided to put its textile special economic zone project at Silvassa in the union territory of Dadra and Nagar Haveli on hold following the demand slump and credit shortage.

Ø Aditya Birla Minerals a unit of India’s top aluminium maker Hindalco Industries Ltd has suspended work on the Esperanza South Project in Australia citing downturn in copper prices and market conditions.

Ø PNB Principal Insurance Advisory is rapidly scaling down operations and is likely to become non-functional soon. The Advisory is a venture between US-based Principal, Punjab National Bank Berger Paints and Vijaya Bank .

Ø ACC Concrete Ltd, a construction unit of India’s cement maker ACC Ltd has laid off 190 permanent employees amounting to 25 % of its workforce and put its expansion plans on hold due to the bleak outlook on the construction business.

Ø PE arm of Kishore Biyani’s Future Group, Indivision India Partners, has invested 1.50 billion INRs for a 50 % stake in Blue Foods, which operates a chain of reastaurants such as Copper Chimney, Noodle Bar, Cream Centre Bombay Blue, Gelato Italiano and Sphagetti Kitchen.