Dawn of 8th Jan 09

THURSDAY markets closed : Satyam takes down the rupee and stocks, NDF rise, FII buy in 2009, 4.86 to 6.08 in 4 years the roller coaster called 10Y

RUPEE

Ø INR fell on Wednesday as a plunge in the equity market triggered by the country’s biggest corporate scandal in memory raised concerns of FII withdrawals, but broad weakness in the U.S. unit limited losses. INR closed at 48.80/81 , 0.3 % weaker than its previous close of 48.66/69. FII bought a net $167.9 million worth of shares in the first four trading sessions of the new year, after they dumped stocks valued at more than $13 billion in 2008. 1M NDF were at 48.97/49.07, weaker than the onshore spot rate.

CALL

Ø Rates ended nearly flat on Wednesday as demand was lower as most banks had adequate funds to meet reserve requirements, dealers said. Call at 4.20/4.30 %, compared with 4.15/4.30 % at close on Tuesday. Banks parked 433.30 billion INRs with the RBI at its daily rev. repo . Dealers said cash rates are likely to hold just above 4 % for the rest of the fortnight.

BOND

Ø Yields posted their biggest 1 day rise in a decade on Wednesday, as investors dumped debt following a surprise announcement of higher-than-expected government borrowing. 10Y ended 57 b.p. s higher at 5.87 %, a level it last tested in mid-December, in an extended trading session, but off an intraday high of 6.08 %. The benchmark yield closed on Tuesday at 5.30 %, and has now risen 101 basis points from a lifetime low of 4.86 % touched in intraday deals on Monday after the RBI slashed rates.

STOCKS

Ø Shares in Satyam plunged more than 3/4th on Wednesday after the it said that it had overstated profits for many years, dragging Indian shares to their first loss in the new year. SENSEX fell 7.25 %, its biggest fall in more than two months, as the worst corporate scandal in memory triggered concerns it might scare FII away from India just when they were showing signs of picking up.

INDIA FRONT PAGE

Ø 17 out of India’s total of 28 urea plants have shut down in the wake of the strike called by key state-run oil firms. The units belong to 10 fertiliser firms, and produce nearly 43,000 tonnes of urea per day.

Ø Textile industry is yet to receive the 14 billion INRs promised in last month’s stimulus package to clear the backlog of reimbursements under the Technology Upgradation Fund Scheme.

Ø CavinKare Pvt Ltd plans to enter the dairy business by acquiring around 50-60 small and medium sized dairies across the country, starting with four southern states.