Dawn of 26th Nov 08

FM Says rate cut if inflation cools , call,Gsecs easy, Rupee Recovers < 50 , Fed 800 Bln, USD loses steam against EUR as US GDP Dips , Banks to set up branches

RUPEE

Ø INR is seen in a narrow range on Wednesday, with traders watching the stock market for cues on the U.S. Fed’s latest rescue plan for the economy. The Fed, outlined an $800 billion lending facility to support the market for consumer debt securities. 1M NDF were quoting at 50.35/50 per USD, weaker than the onshore spot rate, indicating a bearish outlook for the local unit in the near term. INR closed at 49.93/95 on Tuesday, off a high of 49.70, but 0.3 % stronger than Monday’s close of 50.09/10. It had hit a record low of 50.60 last week. FII have sold a net $13.7 billion worth of Indian shares so far in 2008 after buying a record $17.4 billion last year, a major prop for the INR.

BONDS

Ø Yields should rise on Wednesday on expectations for easier monetary policy to support growth and traders awaiting inflation data due on Thursday. 10Y ended at 7.22 % on Tuesday, two basis points above Monday’s close of 7.20 %. The yield had fallen to 7.10 % on Friday, its lowest since December 2005. FM said on Monday monetary policy was biased towards stimulating growth and the RBI was likely to lower rates as inflation cooled. Inflation was at 8.90 % in early November, compared with a peak of 12.91 % in August.

CALL

Ø Rates ended lower on Tuesday as banks had sufficient funds, but mild demand did emerge in first week of the reporting fortnight, dealers said. Call rates closed at 6.60/6.70 %, lower from its previous close of 6.90/7.00 %. “Liquidity is adequate, there is no pressure on call rates. They will remain below 7 % for the rest of the fortnight,” said Anoop Verma, an associate vice president with DCB. RBI absorbed a net 7.2 billion INRs from the system via its twin money market operations, indicating sufficient funds in the system.

STOCKS

Ø Indian shares fell 2.3 % on Tuesday after an early rally gave way to deeper concerns about sluggish consumer spending that has forced companies such as steel and truck makers to cut output.

GLOBAL

Ø DJIA 8,479.47 +36.08 Nikkei 8,215.66 -108.27 FTSE 4,171.25 +18.29 H Seng 13,183.20 +304.60 US10Y 3.088 -0.243 EUR 1.3009 Yen 95.12 Gold 820.50 Crude 50.86

Ø The Dow and S&P 500 rose on Tuesday amid optimism that the Fed’s latest rescue package could revive the sagging housing market and free up consumer lending.

Ø FTSE edged up on Tuesday with banks higher after the Fed pledged billions of USD to aid the U.S. economy, but miner Rio Tinto plunged after BHP Billiton dumped its year-old takeover bid.

Ø Nikkei lost 1.3 % on Wednesday as the yen’s advance against the USD hit Sony Corp and other exporters, with tech shares suffering on demand fears as the global economy worsens.

Ø The USD fell for a third day versus the euro on Tuesday as new U.S. measures to boost consumer lending helped ease concerns about the financial crisis, diminishing demand for the USD as a haven.

Ø Gold recovered on Tuesday, rolling back earlier 2 % losses, as the USD slid for the third consecutive session against the euro after data showed that U.S. GDP shrank more than expected in the third quarter.

Ø Copper pared losses on Tuesday as a sharply weaker USD offset concerns about metal demand.

Ø Oil tumbled by more than 6 % on Tuesday to below $51 a barrel after data showed the U.S. economy in the third quarter shrank at its fastest pace in seven years, stoking concerns fuel demand will slow further.

INDIA FRONT PAGE

Ø Banks operating in India, including foreign ones, may soon be able to open new branches and set up automated teller machines without a license from the RBI

Ø Real-estate fund Indiareit has acquired about 15 % stake in Mumbai-based Neptune group for about 3 billion INRs.

Ø Global gaming and theme park leader Sega Corp, a subsidiary of Tokyo’s Sega Sammy Holdings Inc is in talks with DLF Ltd for a possible entry into India.

Ø Adlabs Films Ltd is spending 2 billion INRs to expand its integrated film service business and movie exhibitions.

Ø BHEL. has lined up 30 billion INRs for a foray into the solar energy sector and is seeking to rope in a Japanese technology partner.

Ø Bajaj Auto Ltd has decided to scale down output, shrink vendor base to manage costs, align production across its three manufacturing units and aggressively target the exports market, in view of the global economic slowdown.

Ø Jindal Steel & Power Ltd is planning to add hydro-electric, nuclear, wind and solar projects to its larger steel business as demand for power grows.

Ø Fresenius Kabi (Singapore) Pte Ltd, the majority stake holder in Dabur Pharma Ltd , has sought more time from SEBI for complying with norms that require the promoter company to limit its holding to 90 % in a listed entity.

Ø Orient Green Power Company, the renewable energy unit of Shriram EPC Ltd has raised $55 million from a set of private equity players to fund its capacity expansion plans.

Ø Power Finance Corporation Ltd is in talks with Larsen & Toubro Ltd to extend a 5.08-billion-INR debt facility to the latter’s equipment making joint venture with Mitsubishi Heavy Industries