Dawn of Dec 12th 08

INR retreats, Call comfortable in spite of advance tax, GSECs 4Y HIGH , WPI 8% (40bp lower, Reuters Poll 8%), IIP forecast 2.2, USD falls on hope bad job data, IR cut?, OIL fights back rises 10%, Auto bailout uncertain, GTL to buy back FCCB, Ranbaxy loses sales,

RUPEE

Ø INR retreated from 1M highs in opening trade on Friday as falls in Asian shares raised concerns of more capital outflows from the domestic equity market. At 9:04 a.m. INR was at 48.60/61 , down from Thursday’s close of 48.33/34.

CALL

Ø Rates ended up on Thursday as demand for funds picked up in the first week of the reporting cycle and ahead of advance tax payments due next week, dealers said. Call closed at 5.15/5.25 %, off an early high of 5.50 %, but up from Wednesday’s close of 5.00/5.10 %. RBI absorbed a total of 316.65 billion INRs through auctions , which shows surplus cash in the system.

BONDS

Ø Yields are expected to hold near 4Y lows on Friday as expectations of more interest rate cuts could be offset by concerns that liquidity may tighten due to bond auctions and tax payments. The 10Y ended at 6.46 % on Thursday, 17 basis points below Wednesday’s close of 6.63 % and just above an intraday low of 6.44 %, which was its lowest since October 2004. Governor said he was ready to follow up aggressive lowering of key rates at the weekend to boost an economy slowing more sharply than expected. while a further drop in inflation reinforced rate cut expectations. (8%). IIP data on Friday is expected to show annual growth of 2.2 % for the month of October, slowing sharply from September, a Reuters poll shows.

STOCKS

Ø Ended a seesaw session down 0.1 % on Thursday, as market talk Reliance Industries was close to settling a gas dispute offered some cheer to gloomy investors worried by a deepening global downturn. SENSEX closed 9.44 points lower at 9,645.46 after having fallen as much as 2.2 %. In the broader market 1,562 gainers led 922 losers in heavy volumes of 383.3 million shares.

GLOBAL

Ø DJIA 8,565.09 -196.33 Nikkei 8,610.18 -110.37 FTSE 4,388.69 +21.41 HSeng 15,235.40 -378.50 US10Y 2.609 -0.087 EUR 1.3337 Yen 91.76 Gold 827.75 Crude 47.23

Ø U.S. stocks fell on Thursday on dimming prospects for a federal bailout of Detroit’s Big Three automakers, while bleak comments about the banking sector from JPMorgan’s chief executive hit financial shares.

Ø FTSE ended slightly higher on Thursday, pulled up by heavyweight energy stocks which eclipsed weakness in financials.

Ø Nikkei fell 1.3 % on Friday as a sharply stronger yen hit Canon Inc and other exporters, while automakers fell on worries over the fate of the U.S. auto industry bailout plan.

Ø USD fell on Thursday, as investors overcame their fears about the global credit crisis amid improving credit conditions and sought currencies with higher yields.

Ø U.S. currency, which hit 7W lows versus the euro and yen was also burdened by data suggesting a further rise in unemployment in the world’s largest economy. That should add pressure on the Federal Reserve to cut interest rates again, further diminishing the USD’s appeal.

Ø GOLD jumps $20.20, or 2.5 %, to $829.00 an ounce at 11:51 a.m. EST (1651 GMT) on the COMEX division of the New York Mercantile Exchange.

Ø Volatile copper prices fell more than 2 % before turning positive on the weaker USD on Thursday but economic growth concerns curbed greater gains.

Ø OIL futures ended more than 10 % higher on Thursday as the USD weakened against the euro and traders factored in news that top oil exporter Saudi Arabia had slashed supplies.

INDIA FRONT PAGE

Ø Govt. has withdrawn its month-old affidavit against Reliance Industries saying it did not have the right to sell gas for less than the Govt. set price of $4.2 per million metric British thermal units.

Ø UK-based services firm Serco Group Plc. has acquired a 60 % stake in Infovision, India’s largest business processing outsourcer, for 977 million INRs. It will buy the remainder in two tranches over the next two years.

Ø Ranbaxy Laboratories sales in the US market has fallen 45 % over the last two months after the United States Food and Drug Administration banned 30 of its drugs and on currency fluctuations.

Ø Puravankara Projects Ltd will invest 19 billion INRs by 2010 for three affordable housing projects in Bangalore and Chennai. It would launch two of the projects in six months.

Ø The ministry of railways has inked a 30-billion-INRs long-term agreement with GVK Power for transportation of coal to the firm’s power plant in north India.

Ø Reliance Industries Ltd, which had planned to enter the pharmaceuticals business through high-value generic products, may scale down its planned product portfolio to nearly 25 from 75.

Ø American retailer Target Corp has tied up with India’s Kohinoor Foods , known for its basmati rice brand Kohinoor, for sourcing food & grocery items from India.

Telecom infrastructure firm GTL Infrastructure Ltd will use its 22 billion INRs cash reserves to buy back foreign currency convertible bonds. The FCCBs are due for redemption in November 2012.