Dawn of Dec 11th 08

INR recovers to 48+, FII back with 114mil $ stocks jump, Call at 5, Gilts Rally, Reuters Poll – Inflation 8%, IIP 2.2%, Guv. says hard year MS cuts growth to 5.3, Gold up 4%, Cu up 4%, Oil up 8%, Banks cut small? Home loans by 3%, ONGC to buy 1Bln $

RUPEE

Ø INR opened higher on Thursday as traders were buoyed by expectations of a further rise in local shares after a strong showing so far this week. At 9:05 a.m. (0335 GMT), the partially convertible INR was at 48.75/80 per USD, compared with Wednesday’s close of 49.03/04. In Singapore, NIFTY index futures were up 1 %, suggesting a stronger opening for local markets.

STOCKS

Ø Indian shares rose 5.37 % on 114 $ Mln purchases by FII to their highest close in a month. Iinvestors remain worried by a deteriorating economic outlook. Reliance Industries, jumped 9.6 % to 1,227.20 INRs, its biggest gain since Oct. 31 taking it to its highest close in a month, with FII the buying. The index is still down 52.4 % in 2008. Morgan Stanley cut its forecast for Indian growth in the year starting April 2009 to 5.3 % from 5.7 %, saying the higher cost of capital would crimp demand.

CALL

Ø Rates closed flat on Wednesday on adequate cash in the system with demand for funds coming off in the later half of the session, dealers said. Overnight cash rate ended at 5.00/5.10 %, compared with Monday’s close of 5.00/5.25 %, which was a five-month low. The RBI absorbed a total of 273.70 billion INRs at the repo auctions, which shows surplus cash in the system.

BONDS

Ø Yields could fall back towards their lowest in more than 3-½ years ahead of inflation data after the RBI governor said growth forecasts were likely to be revised down. India’s growth projections for the current financial year ending in March 2009 may be revised downwards and 2009/10 may be a “more difficult year”, Reserve Bank of India Governor Duvvuri Subbarao said on Wednesday. 10Yended at 6.63 % on Wednesday, off an intraday low of 6.59 %, and below its previous close of 6.69 %. On Monday, the yield fell as far as 6.57 %, its lowest since March 2005, after the RBI had cut its policy rates sharply.

Ø Inflation due on Thursday is expected to show the annual rate slowed to 8 % in late November from 8.4 % in the previous week, a Reuters poll showed.

Ø Data on Friday is forecast to show industrial output grew a weak 2.2 % in October from a year earlier, sharply down from September, and analysts said slowing demand and deepening recession in major economies threaten further slumps.

GLOBAL

Ø DJIA 8,761.42 +70.09 Nikkei 8,591.27 -68.97 FTSE 4,367.28 -13.98 H Seng 15,384.83 -192.91 US10Y 2.655 +0.005 ,EUR 1.3022 Yen 92.64 Gold 802.25 Crude 43.77

Ø U.S. stocks rose on Wednesday as rebound in oil prices and other commodities lifted energy and mining shares, offsetting nervousness over the fate of Washington bailout for ailing carmakers.

Ø FTSE dipped 0.3 % on Wednesday, snapping a two-day rally, as a slide in banks and pharmaceuticals outweighed gains in miners led by Rio Tinto , which unveiled a plan to cut jobs.

Ø Nikkei average slipped 1.2 % on Thursday, losing some gains made the previous day on a stronger yen and as uncertainty over quick approval for U.S. auto rescue plans pressured recent gainers such as Advantest

Ø USD slipped to a 2W low against the euro on Wednesday while the yen fell broadly as a tentative agreement by U.S. lawmakers to rescue American automakers helped calm investor sentiment.

Ø Gold climbed 4 % on Wednesday to a 10-day high above $800 an ounce as oil prices rallied

Ø Copper gained more than 4 % on Wednesday, supported by a weaker USD and as sentiment improved slightly on hopes of a deal on a bailout plan for U.S. automakers.

Ø Oil prices jumped 8 % on Wednesday on signs that OPEC kingpin Saudi Arabia has slashed supplies to customers for January as the economic crisis continues to slow demand.

INDIA FRONT PAGE

Ø Telecom groups from the U.S. and Europe are in talks with Reliance-ADAG to acquire around 20-26 % stake in Reliance Communications

Ø State-owned banks may cut interest rates on small-ticket home loans by up to 300 basis points by Friday.

Ø Multinational cement makers, such as Lafarge and Italcementi are learnt to be in the race to acquire Andhra Cements The deal could see the promoters selling their entire 73 % stake in the company.

Ø Heineken may pay a multi-year commercial fee of around $100 million to United Breweries for handling distribution and bottling of its beer brands in India.

Ø Reliance Retail is pruning its support service functions, possibly leading to about 600 job cuts.

Ø The Indian Railways Catering & Tourism Corp and Cox & Kings have announced an equal joint venture to manage and operate the first pan-India super-luxury tourist train, scheduled to start operations in October 2009.

Ø Future Group, which owns Pantaloons Retail and Big Bazaar, will cut prices of private labels across all categories after the government’s decision to cut excise duty to stimulate demand.

Ø DLF Ltd Unitech Ltd and other real estate developers may lower prices by up to 30 % by mid-2009.

Ø A consortium comprising IL&FS and DLF Ltd is set to bag the first privately operated metro line project in Haryana at a cost of 10 billion rupees.

Ø ONGC Videsh, an arm of Oil & Natural Gas Corp has decided to raise $1 billion in loans from banks to part-finance the acquisition of the UK-based Imperial Energy.