Dawn of 7th Jan 08

10Y Gsec. falls to 5.69% , Govt. announces huge borrowing plan, Cash Surplus 59,360 Cr,

Global Stocks Rally on dismal economy report by Fed

OVL to issue 1 year CP, Andhra Bank Tier II

Truck Sales fall 73.5% in December.

RUPEE

Ø INR gained on Wednesday with a rise in regional stock markets offset by the USD’s strength against major currencies. * At 9:10 a.m., INR was 48.48/49 per USD, compared with Tuesday’s close of 48.66/69. USD rose against the euro on Wednesday to hover near a 1M high hit the previous day, continuing to draw support from gains in U.S. stocks on hopes for an aggressive stimulus package from the Obama govt.

CALL

Ø Rates eased on Tuesday on improved cash cash conditions in the banking system. Call rates ended at 4.15/30 %, below 4.25/4.35 % at close on Monday. Banks parked 593.60 billion with the RBI at the rev. repo auction. “Credit has not picked up… which is a reason for excess cash in the system, ” said G. Bhaskar, senior dealer at Andhra Bank. Money that has come back through government spending has also helped ease the cash conditions, he added.

BONDS

Ø Yields climbed sharply on Wednesday after the government announced a heavy borrowing program for the remaining period of the fiscal year 2008/09 ending in March. 10Y opened at was at 5.69 %, higher than Tuesday’s close of 5.30 %. The government said it would borrow 500 billion INRs ($10.3 billion) via bonds between Jan. 5 and March 31.

STOCKS

Ø Climbed 0.6 % in seesaw trade on Tuesday, stretching gains into a fourth session, but investors were wary about quarterly earnings that are widely expected to be downbeat. Traders said improved risk appetite among foreign funds helped underpin the market after it fell more than 1 percent at one stage. “All the good news is now out. We had the stimulus package and the rate cuts. The global markets have been quite supportive so far this year,” said Neeraj Dewan, director of Quantum

GLOBAL

Ø DJIA 9,015.10+62.21 Nikkei 9,263.15 +182.31 FTSE 4,638.92+59.28 H.Seng 15,458.52 -50.99 US30Y 3.058 +0.031 EUR 1.3493 Yen 93.97 Gold (Lon) 848.25 Crude 48.52

Ø U.S. stocks gained on Tuesday on the increased likelihood of a government stimulus package after the release of minutes from the last Federal Reserve policy meeting painted a dismal picture of the U.S. economy.

Ø FTSE rose for the 6th session in a row on Tuesday, with mining stocks leading the way on firmer metal prices while drug makers also gained after recent weakness.

Ø Nikkei share average climbed 2 % on Wednesday, touching a two-month high as tech shares such as Kyocera Corp powered up on hopes for a U.S. economic stimulus package, while exporters rose on a weaker yen.

Ø USD pared gains against the euro on Tuesday after minutes from the Federal Reserve’s most recent policy meeting suggested the Fed is concerned about the weak outlook for the U.S. economy and that downside risks remain substantial

Ø Gold finished higher on Tuesday, rebounding from a two-week low early in the day on chart-based support and as investors covered short positions

Ø Copper jumped more than 7 % on Tuesday on buying ahead of an annual re-rating by major commodity indices,but the rally was expected to be short-lived as demand concerns remain.

Ø Oil prices slipped below $49 a barrel on Tuesday as weak U.S. economic data triggered a bout of profit-taking, outweighing rising geopolitical tensions and OPEC production cuts that threaten to tighten supplies.

INDIA FRONT PAGE

Ø Kohlberg Kravis Roberts is considering pulling out of Aricent after it bought it two-and-a-half years ago for $900 million. KKR has had talks with Wipro Tata Consultancy Services and Tech Mahindra for possible sale.

Ø ONGC Videsh Ltd (OVL) is raising 52.50 billion INRs from Citibank India to partly fund its recent $2.1 billion acquisition of UK’s Imperial Energy OVL will issue one-year commercial paper, which will carry an interest of 8.15 %.

Ø The government will soon designate IDBI Bank Ltd and SIDBI to float a special purpose vehicle (SPV) for subscribing to investment-grade papers of non-bank finance firms.

Ø An arm of India Infrastructure Finance Co Ltd has sanctioned loans worth $270 million to two projects undertaken by Tata Power Ltd and Anil Dhirubhai Ambani Group.

Ø Tata Power Ltd plans to sell part of its stake in group firms Tata Teleservices Ltd and Tata Teleservices (Maharashtra) to raise about 20 billion INRs to fund ongoing projects.

Ø Reliance Industries Ltd has decided to stop gasoline supplies to Iran after fulfilling all contractual obligations. The decision will not impact its business as the quantity of supplies was not substantial.

Ø Truck sales have dropped 73.5 % to 6,221 units in Dec against 24,222 units in the same month of the previous year in line with the sharp drop in cargo movement.

Ø Andhra Bank plans to raise 6 billion INRs as Tier-II capital soon and the fund will be used for credit expansion.