Dawn of 10th Dec 08

Rupee firms on stocks, CALL BELOW 6%, IN govt. bonds 3.5yrs high, US Bonds 50 years high , Crude on slippery ground, Corporates renegotiate FCCBS, Rel Com 1st one to buy back its FCCB, Bad News Update: Bata closes stores , Mahindra says trouble, Wokhardt divests, Ships on dry land , FMCG dealers default, Hope Jap Machine Orders not so bad

RUPEE

Ø INR opened higher on on Wednesday as gains in Asian share markets eased concerns about an outflow of FII from the market. At 9:10 a.m. INR at 49.18/22 compared with Monday’s close of 49.58/59. The market was shut on Tuesday for a holiday.

CALL

Ø Rates closed at 5-month lows on Monday as rate cuts by the RBI over the weekend reduced banks’ borrowing costs, enabling them to lend at lower rates. Call ended at 5.00/5.25 %, a level last seen on July 4, according to Reuters data. It had closed at 6.10/6.15 % on Friday and at 6.10/6.20 % in an illiquid market on Saturday. The repo rate or the ( key lending rate )now stands at 6.5 % and its reverse repo rate, at which it is at 5 %. The RBI absorbed a total of 274 billion INRs through its auctions while it received no bids , which shows surplus cash in the system.

BONDS

Ø Yields could rise on Wednesday as investors may positions ahead of an auction at the end of the week, after they had dropped to their lowest in more than 3-½ years in the previous session. 10Y ended at 6.69 % on Monday, down from Friday’s close of 6.76 %. The yield fell as far as 6.57 % on Monday, its lowest since March 2005. RBI said it would auction 100 billion INRs ($2 billion) of bonds on Friday; 60 billion INRs of 7.27 % 2013 bonds and 40 billion INRs of 7.50 % 2034 bonds. Ahead of the auction, the government will buy back 100 billion INRs of MSS bonds on Thursday,

STOCKS

Ø Indian shares to start higher on Wednesday, helped by gains in regional markets, but selling was expected at higher levels due to investor fears the economic slowdown will hurt corporates more than expected. Traders said despite last weekend’s interest rate cuts and an extra $4 billion of spending by the overnment, corporate profits are seen sliding over the next two quarters as demand drops. Asian stocks hit a one-month high on Wednesday on hopes for government-led help for key sectors such as technology that encouraged risk taking.

GLOBAL

Ø DJIA 8,691.33 -242.85 Nikkei 8,491.55 +95.68 NASDAQ1,547.34 -24.40 FTSE 4,381.26 +81.20 EUR 1.2907 Yen 92.15 (92.64) Crude 42.12

Ø U.S. stocks fell on Tuesday as profit warnings from FedEx Corp and others prompted investors to retrench after two days of big gains, while unprecedented demand for the safety of government securities signaled that fear remains a dominant force in the market.

Ø FTSE 1.4 % by midday on Tuesday, touching its highest level in a month as investors shrugged off a raft of weak data in anticipation of further growth-boosting government action.

Ø Nikkei average gained 1.1 % on Wednesday, helped by gains in exporters such as Tokyo Electron as the yen softened, while investors took some comfort in machinery orders data that some said was not as bad as they had feared.

Ø USD against mst major currencies on Tuesday as more weak global economic data renewed fears of a worsening crisis, snuffing out a Wall Street rally and prompting safe-haven flows into the greenback. The yen also rose broadly as investors sold holdings of risky assets that were financed by borrowing the Japanese currency at low interest rates. Yields on U.S. government debt fell toward five-decade lows.

Ø GOLD futures ended slightly higher on Tuesday as weaker stock markets bolstered bullion’s appeal as an alternative investment.

Ø Copper tumbled on Tuesday as the previous day’s rally sparked by a U.S. economic stimulus package ran out of steam with the weak demand outlook for industrial metals returning to the fore.

Ø Oil prices fell nearly 4 % on Tuesday after the U.S. government forecast the world economic slowdown would shrink global oil consumption this year for the first time since the early 1980s.

INDIA FRONT PAGE

Ø Many companies, which issued FCCB during the recent bull run, are revising the conversion price downwards after negotiations with institutional investors, who own the bonds.

Ø RBI and the FMre together working on a plan which will focus on closer supervision of credit rating agencies, greater accountability for their actions and disclosure of rating methodologies.

Ø Wockhardt Ltd is in talks with ICICI Venture, ChrysCapital and other private equity firms to divest a 15 % stake for raising funds.

Ø FM to low state-owned India Infrastructure Finance Company to lend money to telecom firms to bid for licences at the 3G spectrum auction early next year.

Ø Hotels will further slash room rates in the January-March quarter to bring back foreign tourists who have cancelled tours due to the Mumbai terror attacks.

Ø The Landmark Group, a Dubai-based retail chain, has put its plans for a hospitality sector in India on indefinite hold.

Ø India’s shipbuilding industry may suffer cancellations of about 15 % of their total orders, worth at least 37.5 billion INRs, due to a slump in international trade. Orders for about 35 ships that were to be built in shipyards around the country have been cancelled.

Ø UK-based BAE Systems has submitted a fresh application to the government seeking approval for a joint venture with Mahindra & Mahindra BAE will hold 26 % in the joint venture that will manufature artillery, armoured vehicles and anti-land mine vehicles in India.

Ø Nagarjuna Construction will raise about 2 billion INRs through NCDs to -finance its expansion plans.

Ø Tata Coffee is in advanced talks with a Russian coffee firm to sell its instant coffee in Russia’s retail market. The deal is expected to be finalised in three months.

Ø Reliance Communications is set to be the first company to buy back FCCB after India’s RBI allowed premature buyback of such bonds through INR resources as well

Ø Major fast moving consumer goods companies such as Godrej Industries >, Marico Ltd and Dabur India Ltd have curtailed supplies to select leading modern trade retailers, following default in payments.

Ø Bata India Ltd < India’s biggest footwear maker, is restructuring its operations by planning to close down some retail outlets, launch new range of sportswear, bid for new footwear orders from hospitals and armed forces in an attempt to boost sales.

Ø Mahindra & Mahindra can hold out in this slowdown only till March after which it will have to take “some very difficult steps”, President Pawan Goenka said.