Dawn of 3rd feb09

INR recovers on Asian Stocks, 10Y rises on new auction , Stocks hopeful but earnings a concern, Cash surplus

Some hope copper rises , Tech and Telecom companies rally

Tata executives brace for reduction in compensation, GESCO to sell more ships, Shoba looks for funds

Rupee
Ø INR opened higher on Tuesday on expectations that higher Asian shares could temper the pace of FII from local stocks. At 9:03 INR was at 48.82/84 per dollar, compared with the previous close of 48.92/93.

Bonds
Ø Yields edged higher on Tuesday after the government said it will auction 70 billion rupees of federal bonds this week. At 9:12 , the yield on the 8.24 % was at 6.26 %, above Monday’s close of 6.22 %. After the markets had shut on Monday, the government said it will auction 50 billion rupees ($1 billion) of 7.46 % 2017 bonds and 20 billion rupees of 6.30 % 2023 bonds on Feb. 6. Dealers said the papers on offer were illiquid and so may not be see good demand at the auction.

Stocks
Ø Indian shares are expected to open higher on Tuesday, taking cues from firm Asian markets, but there will be resistance as the outlook for company earnings remains grim. Shares in Tata Motors &Mahindra & Mahindra will be watched after they posted sharply lower sales in January. “We could see some amount of bounce back due to firm Asian markets. But the gains are unlikely to sustain and we may see some profit booking happening, as overall mood is not bullish,” said Ambareesh Baliga, vice-president at Karvy Stock Broking.

Call
Ø Rates ended slightly higher on Monday on demand from banks who secured funds for their reserve needs at the start of the new reporting fortnight. Call money ended at 4.15/25 %, a tad above Friday’s close of 4.10/20 %. It closed at 4.00/4.15 % in an illiquid market on Saturday. Banks parked a net 479.70 billion rupees at RBI rev. repo, showing cash is surplus in the system.

Global Markets
Ø DJIA 7,936.75 -64.11 Nikkei 7,881.60 +7.62 FTSE 4,077.78 -71.86 H Seng 13,047.99 +186.50 US10Y 2.719 -0.132 EUR 1.2865 Yen 89.89 Gold 918.25 Crude 40.37

Ø A rally in technology stocks lifted the Nasdaq and the S&P 500 on Monday on bets Obama administration’s economic stimulus will boost spending on telecommunications and tech infrastructure.

Ø FTSE fell for the third straight session on Monday, led by banks and oil firms as investors fretted about corporate earnings, but Rio Tinto soared on news it was in talks to sell assets.

Ø Nikkei stock average edged up 0.1 % in see-saw trade on Tuesday, with Hitachi Ltdclimbing as investors snapped up beaten-down tech shares and shippers powering higher on hopes for Chinese demand.

Ø USD extended losses to trade at session lows versus the euro on Monday as the S&P 500 stock index moved into positive territory, dampening safe-haven demand for the greenback. The euro rose to a session high of $1.2898 according to Reuters data

Ø Gold dropped more than 2 % on Monday, holding just above $900 an ounce as short-term investors took profits on signs of weak jewelry demand and selling related to technical resistance.

Ø Copper prices bounced on Monday after data showed an improvement in U.S. manufacturing activity and inventories slipped, but analysts said it was too early to say the economic cycle was turning.

Ø Oil prices fell nearly 4 % on Monday as gloomy U.S. economic data darkened projections for energy demand and refinery workers averted a strike that would have slashed fuel production.

India Front Page
Ø Jet Airways and Piramal-Suntech Realty have been granted more time by the Mumbai Metropolitan Region Development Authority to remit their dues on land blocks they won in an auction last year.

Ø Senior executives in several Tata group companies are bracing themselves for a 10-15 % salary cut in a bid to reduce wage bill and stave off job cuts at middle and junior levels.

Ø IL&FS Realty Fund has picked up a 15 % stake in Infrastructure Ventures India, a special purpose vehicle floated by Mumbai-based developer Akruti City for 2 billion rupees.

Ø KVK Energy and Infrastructure has parted ways with joint venture partner Maytas Infra Ltd in setting up a 1,050 megawatt thermal power plant in Orissa.

Ø Sobha Developers Ltd plans to raise 7.5 billion rupees through a combination of preferential share sale, land sale and bringing in strategic investors in some projects in an attempt to reduce debt.

Ø SAIL has lined up an investment of 40 billion rupees for implementation of its various mining projects in Orissa.

Ø Tata Capital Ltd will be entering the housing finance segment and has put in an application

Ø GE Shipping Co Ltd is looking to sell more ships as outlook for demand and rates remains weak.