Dawn of Jan 15th 09

Rupee weakens, FII sell $310 Min 09, 10Y retreats 113 bp volatility in a week, RBI buys back MSS , HDFC net up 45% up falls on NPAs

GLOOM RULES: HSBC needs 30 billion, Retail sales, Citigroup , Japan Machinery orders, Oil , Copper all crash, Greece downgraded

Unitech capital restructuring, trains to run on CNG, Nuclear Power Bonds

RUPEE

Ø INR is expected to start weaker on Thursday as weak regional stock markets and fresh bouts of risk aversion raise concerns about capital outflows. INR closed at 48.85/86 per USD on Wednesday, 0.5 % stronger than its previous close of 49.11/12. FII have withdrawn about $310 million from Indian shares this year, after dumping more than $13 billion in 2008. 1M NDF were at 49.30/40, weaker than the onshore closing spot rate.

BONDS

Ø Indian federal bond yields are expected to ease for the fourth consecutive day on Thursday, following lower U.S. Treasury yields and ahead of inflation data. 10Y ended at 5.58 % on Wednesday, below Tuesday’s close of 5.68 %. At the day’s low of 5.52 %, the yield had fallen 68 basis points this week after rising 113 basis points last week. The RBI is buying back 30 billion) of MSS ahead of the f 100 billion INRs of fresh auctions on Friday. REUTERS WPI FORECAST is to have fallen to an 11-month low in the first week of

CALL

Ø Rates ended nearly flat on Wednesday as cash conditions remained good due to adequate liquidity in the system in the wake of softening credit growth. Call ended at 4.20/4.25 %, barely changed from Tuesday’s close of 4.20/4.30 %. Banks parked 229.95 billion INRs with the RBI at its reverse repo auctions on Wednesday, but did not borrow any funds through the repos, an indication of surplus cash in the system.

STOCKS

Ø Recovery in Asia, Europe bolsters sentiment, short covering Reliance Industries, Infosys lead gains HDFC Bank net jumps 45 pct, but stock falls on bad debts Shares snapped a four-day losing streak and climbed 3.3 % on Wednesday, bolstered by a recovery in global markets and led by Reliance Industries . There was hectic short covering as shares opened higher in Europe following a rebound in Asia, but the market undercurrent remained edgy with investors watching every twist in the fraud-scarred Satyam Computer Services saga.

GLOBAL

Ø DJIA 8,200.14 -248.42 Nikkei 8,102.77 -335.68 FTSE 4,180.64 -218.51 H Seng 13,140.69 -563.92 10 YR Bond 2.206 -0.092 EUR 1.3173 Yen 89.00 Gold 821.50 Crude 37.45

Ø U.S. stocks fell to six-week lows on Wednesday on worries about deeper losses at banks worldwide and as U.S. retail sales data pointed to a deepening recession. Citigroup tumbles more than 23 %. December U.S. retail sales fall 2.7 %.

Ø FTSE fell 5 % to lowest close in over a month on Wednesday led by financials which were thumped on anxiety over their balance sheets. Banks were hammered after Morgan Stanley said HSBC Europe’s biggest bank, may have to raise as much as $30 billion in capital and halve its dividend.

Ø Nikkei share average slid 4 % on Thursday after worries about a deeper recession sent U.S. stocks to six-week lows, while machinery makers sank after Japan’s machinery orders logged a record fall.

Ø USD rose against the euro on Wednesday after dismal U.S. retail sales figures and a downgrade to Greece’s debt rating deepened fears about the global economy and boosted the greenback’s safe-haven appeal.

Ø Gold fell 1 % on Wednesday, giving up earlier gains as the USD firmed against the euro after weaker-than-expected economic data sparked a flight to the relative safety of the U.S. currency.

Ø Copper fell nearly 5 % on Wednesday after data showing much worse than expected U.S. retail sales deepened fears about the global economy and its effect on demand for metals.

Ø Oil fell $2 a barrel to below $36 on Wednesday after a U.S. government report showed larger-than-expected rises in inventories of gasoline and distillates.

INDIA FRONT PAGE

Ø Maytas Infra Ltd promoted by the founder family of the fraud-hit Satyam , is finding it difficult to raise working capital and is in talks to sell interests in projects to Ramky Infrastructure and Nagarjuna Construction. While the former has confirmed it has been approached, Nagarjuna has denied it, the report said.

Ø Real estate developer Unitech Ltd is trying to refinance a part of its exposure to short-term fixed maturity plans (FMP) and convert it to long-term debt. FMPs have invested 15 billion INRs

Ø Nuclear Power Corp of India is planning to raise 500 billion INRs through tranches of tax-free bonds by 2011 to help achieve its target of 22,000 megawatts by 2022.

Ø Indian Railways plans to convert 200 diesel-run locomotives into compressed natural gas (CNG) locomotives, to be run on CNG supplied by Indraprastha Gas Ltd