Dawn of 5th Dec 08

RUPEE OPENS WEAKER , RBI GUV SAYS OTHER MEANS FOR GROWTH, INFLATION COOLS, BOE at 2% cuts 1% , Tata Steel to reduce manpower.

RUPEE

Ø The INR opened slightly weaker on Friday but then strengthened, with traders waiting for the stock market open to get some cues on the likely direction of fund flows. INR was at 49.80/90, compared with Thursday’s close of 49.87/89

CALL

Ø Rates were unchanged at close on Thursday as most banks had completed their funding to meet reserve requirements on the eve of the reporting day. Call ended at 6.10/6.20 %, unchanged from its previous close. However, dealers expect the cash rates to rise next week in the wake of advance tax outflows due in the coming days. RBI absorbed a total of 520.6 billion INRs through its reverse repo auctions

BONDS

Ø Yields are seen falling in early trade on Friday as expectations build the RBI will soon cut interest rates, although upcoming corporate tax payments could see liquidity tighten. 10Y ended at 6.84 %, 13 basis points off its day’s low of 6.71 %, which was its lowest since April 2005. It had closed at 6.78 % on Wednesday.

Ø RBI Governor Duvvuri Subbarao, said there were a number of measures other than rate adjustments to stimulate demand conditions in the economy, which prompted dealers to book profits.

STOCKS

Ø Rose 5.5 % on Thursday to its highest close in more than 2 weeks as expectations for an interest rate cut received a boost from slower-than-expected rise in inflation.

GLOBAL

Ø DJIA 8,376.24 -215.45 Nikkei 7,977.77 +53.53 FTSE 4,163.61 -6.35 H Seng 13,808.59 +298.81 US10Y 2.563 -0.092 EUR 1.2755 Yen 92.51 Gold 773.25 Crude 43.70

Ø U.S. stocks fell on Thursday as a sharp decline in oil prices sent the energy sector tumbling and disappointing profit outlooks from large companies such as Merck raised the specter of a worsening economy.

Ø FTSE 100 ended a volatile session slightly lower on Thursday as investors digested a 100-basis point cut in interest rates and losses in miners eclipsed stronger oils.

Ø Nikkei average gained 0.7 % on Friday, helped by shares of firms reliant on domestic demand, though bank shares slid on fears about the potential fallout if big U.S. automakers file for bankruptcy.

Ø GBP traded higher against the $ on Thursday with investors satisfied with the 100 basis point cut in the Bank of England’s benchmark interest rate. The Bank of England’s key rate is now 2 %.

Ø Gold prices ended lower Thursday on a steep crude oil decline despite a weaker $ against the euro, and worries about deflation could put a damper on gold’s rise.

Ø Aluminium prices touched 4-½ year lows on Thursday as the Bank of England and the European RBI cut rates and investors fretted about demand outlook as inventories rose.

Ø U.S. crude oil futures ended below $44 on Thursday to hit their lowest level in nearly four years on demand worries amid an economy in recession

INDIA FRONT PAGE

Ø Piramal Group’s healthcare PE fund is holding discussions to pick up a stake in Kaveri Medical Centre, a 400-bed hospital for 1 billion rupees.

Ø Standard Chartered IL&FS Asia Infrastructure Growth Fund is buying 5 % stake in IL&FS Transportation Networks, valuing the later at 26 billion rupees.

Ø Manipal Education has acquired the entire shareholding of American University of Antigua from New York-based Greater Caribbean Learning Resources.

Ø Larsen & Toubro Ltd has deferred its entry into the commercial shipbuilding business and has also decided to scale back its investment for a new shipyard near Chennai.

Ø Glenmark Pharmaceuticals Ltd has filed counterclaims in the US district court of New Jersey, claiming two patents of Teva Pharmaceutical Industries Ltd for making the cardiac drug carvedilol, are invalid and unenforceable.

Ø Bidding for 23 mega road projects worth around 300 billion rupees under phase III of National Highways Development Programme has been deferred. The last date for submission of bids by shortlisted companies was Nov. 21, but no bids were received.

Ø The communications ministry will refund about 1.12 billion rupees to Reliance Communications Ltd which it had paid as part of the entry fee while taking approval for offering dual technology in 2007 as it is surrendering the permission for the technology in six circles.

Ø Essar Oil Ltd proposes to set up a 40-billion-rupee LNG terminal in Gujarat. It is in talks with Hindustan Petroleum Corp Ltd for a possbile equity participation in the project.

Ø Mahanagar Telephone Nigam Ltd is set to launch mobile video surveillance services on Dec. 11, a month ahead of a process to offer private firms 3G licences.

Ø Tata Steel is planning to reduce its headcount by more than 7,600 by 2010 from mechanisation of plants, outsourcing work and the closure of some units among other rationalisation measures. The current strength is nearly 31,500.