Dawn of 17th Dec 08

INR rises 50 p 47.35, Stop Press – 10Y at 5.84% , Call Comfortable, Stocks Rise 1.47%, FED CUT -0 to .25%, GLOBAL MARKETS RALLY , Al sees 5Y Low , Oil Slips, Govt Aids Ships, Wockhardt plans for FCCB buy back , Tata motors contemplates to securitize loan pool.

RUPEE

Ø INR rallied to its strongest in more than a month and bond yields fell to 4-½ year lows on Wednesday following a deep cut in U.S. interest rates. At 9:06 a.m. INR was at 47.35/36 per USD, stronger than Tuesday’s close of 47.92/93 and trading at its highest since Nov. 10.

CALL

Ø Rates ended a little up up on Tuesday as advance tax outflows continued to drain cash from the system but liquidity is still comfortable, traders said. Call closed at 6.40/6.50 %, higher than its previous close of 6.00/6.10 %. But, the cash is seen flowing back within the next two-three days as government spending picks up, dealers said. Call rates will stay at or below 6.50 % as banks can comfortably borrow at that rate from the RBI. RBI absorbed a total of 315.95 billion INRthrough its twin reverse repo auctions while it injected only 73.75 billion INRs via the repo route, which shows the surplus cash in the system.

BONDS

Ø 10-year bond yield dropped to 5.84 %, 15 basis points below Tuesday’s close of 5.99 %

Ø Rate cut hopes in India gained further momentum after data showed factory output declined in annual terms for the first time in more than 13 years in October. . At Tuesday’s close, the bond yield has fallen 108 basis points so far in December.

Ø Fed cuts interest rate target to 0 pct to 0.25 pct range Fed on Tuesday broke into uncharted territory as it chopped benchmark interest rates to as low as zero and pledged to use “all available tools” to turn back a deepening recession. In a surprise and historic move, the Fed lowered its target for the interbank federal funds rate to a range of zero to 0.25 %, a record low, from 1.0 %, and said it was willing to keep rates low

STOCKS

Ø Rose 1.47 % on Tuesday on late buying in frontline stocks such as Reliance Industries and covering of short positions by domestic institutions ahead of an expected cut in U.S. interest rates. ONGC jumped 6.1 % , the biggest % rise of the top 30 stocks, aided by hopes of a sharp supply cut by OPEC later this week that could bolster crude oil prices.

GLOBAL

Ø DJIA 8,924.14 +359.61 Nikkei 8,659.16 +91.14 FTSE 4,309.08 +31.52 H Seng15,553.97 +423.76 US10Y 2.300 -0.216 EUR 1.4075 Yen 89.00 Gold 838.25 Crude 44.12

Ø U.S. stocks rallied on Tuesday after the Federal Reserve rewrote its playbook by slashing borrowing costs to a record low, even zero, and pledging more unconventional steps to fight the deepest recession in generations.

Ø FTSE ended higher on Tuesday, ahead of the U.S. Federal Reserve’s rate decision, as energy and pharmaceutical stocks rose, although heavyweight HSBC fell on fundraising fears.

Ø Nikkei rose 1.1 % on Wednesday, with banking stocks among the biggest gainers after the U.S. Federal Reserve slashed borrowing costs to a record low, prompting a rally on Wall Street.

Ø USD tumbled versus the euro on Tuesday after the Federal Reserve cut interest rates to a range between zero to 0.25 %. For details, The euro was last 1.5 % higher at $1.3915 from $1.3790 before the Fed’s announcement. It traded as high as $1.3934, its highest level since early October.

Ø Gold rallied above $850 an ounce on Tuesday after the U.S. Federal Reserve cut interest rates to a record low of zero to 0.25 %, stirring inflation worries.

Ø Aluminium hit a 5-year low on Tuesday on sluggish demand from the car industry but pared losses as the USD turned negative against the euro after weak U.S. economic data.

Ø Oil prices fell more than 3 % on Tuesday as lingering worries about shrinking global energy demand countered expectations OPEC will agree to deepen supply cuts and a move by the U.S. Federal reserve to cut interest rates.

INDIA FRONT PAGE

Ø International Coal Ventures is in talks with three New Zealand-based coal mining firms and a U.S.-based coal firm for acquisitions worth $450-500 million. The talks, if successful, will give India access to 220 million tonnes of coal reserves.

Ø Moser Baer India Ltd has acquired exclusive home video license for UTV Motion Pictures’ 25 films for the next five years in a deal worth 250 million INRs.

Ø The finance ministry has endorsed the communications ministry’s decision to limit the upcoming

Ø The government will set up a 100-billion-INR fund to extend low-cost credit to local shipping firms for buying new vessels. Soft loans will be provided to those firms which order ships from local shipyards.

Ø The commerce ministry has written to its finance counterpart suggesting local banks should share half the losses arising out of derivatives deals undertaken by exporters .

Ø ABG Shipyard is running the risk of order cancellations worth 10 billion INRs as a Norwegian buyer for three seismic surveyor vessels is facing a financial crunch.

Ø Tata Motors Ltd may tap its 80-billion-INR vehicle loans pool to raise funds for working capital and refinancing of loans for Jaguar and Land Rover brands.

Ø SEBI has decided to keep on hold the matter of mandatory grading of IPOs . Its Primary Markets Advisory Committee is of the opinion that it was too early to form a conclusive view of the effectiveness of a such a move.

Ø Wockhardt Ltd plans to sell assets to raise money to partly repay liabilities arising out of the redemption of $110 million worth of FCCBs

Ø The JV of BHEL and NTPC will function as a state-run entity for the next three years as the founders have dropped plans to sell equity shares.