Dawn of 10th Feb 09

INR opens weaker, RBI ED says call to be targeted in Repo corridor, Stocks to be up on GDP and Stimulus News, Gsecs sink on supply.

Coca Cola and Pepsi see slowdown, US Stimulus postponed to Tuesday, Cu rises on hope Oil slips on Gloom, US BAD bank to take toxic assets?

SEBI scanner on pledged promoter shares, M&M to make planes, PSU banks package to bail out domestic export auto industry

Rupee
Ø INR should open little changed near three-week highs on Tuesday as cues from Asian shares are mixed while the USD’s strength against major currencies could curb any rise. INR 48.68 Vs 48.57/58 on Monday. It touched 48.56 during the session, the strongest since Jan. 19. USD index performance against the majors was 0.5 % higher. 1M NDF were at 48.58/61, almost steady compared with onshore spot rate.

Bonds
Ø Yields may rise on Tuesday ahead of a meeting of government and RBI officials to finalise the schedule for additional borrowing in the year to March. 8.24 % 2018 f ended at 6.33 % on Monday, compared with Friday’s close of 6.19 %. RBI has already borrowed 620 billion I above the budget estimate and will auction bonds for 80 billion on Friday.

Stocks
Ø Govt sees 2008/09 GDP growth at six-year-low of 7.1% Tata Steel climbs 7.2 pct on higher Jan steel output . Shares rallied 3 % on Monday to their highest close in a month, as hopes for stimulus plan was reinforced after official estimates showed the economy was expanding at its slowest pace in six years. The government forecast the economy to expand 7.1 % in the year ending in March, well below 9 % in 2007/08, boosting expectations for fresh government stimulus measures.

Call
Ø Rates ended nearly flat on Monday on lower demand for funds in the second week of the reporting cycle as most banks had sufficient funds to meet reserve requirements. Rates closed at 4.10/15 %, barely moved from Friday’s close of 4.00/10 %. It closed at 4.05/15 % in an illiquid market on Saturday. Anand Sinha, an executive director at the Reserve Bank of India, said on Monday the RBI will continue to maintain ample liquidity in the banking system using conventional and unconventional tools.. He also said the RBI will maintain the overnight cash rate between the reverse repo rate. Banks kept 452.35 bln INRs with the RBI via the reverse repo window.hile no bank borrowed any funds through the repos.

Global
DJIA 8,270.87 -9.72 Nikkei 7,984.54 +15.51 FTSE 4,307.61 +15.74 H Seng 13,860.81 +91.75 US10Y 3.010 +0.012 EUR 1.3019 Yen 91.46 Gold 895.00 Crude 39.90

Ø The Dow and Nasdaq dipped on Monday as falling oil prices hurt energy shares and a brokerage raised concerns about Coca-Cola Co and PepsiCo , blunting a rise in financial stocks on hopes a bailout will spare shareholders. Focus was on the government’s bank rescue plan after its announcement by Treasury Secretary Timothy Geithner was postponed by one day until Tuesday, while a $827 billion economic stimulus package faced hurdles in the Senate.

Ø FTSE higher on Monday in a choppy session, extending its winning run to a fifth day as Barclays led banks higher, offsetting weakness in drugmakers.

Ø Nikkei average swung in to negative territory on Tuesday on a firmer yen and as U.S. stock futures moved lower, which some market players said was a reaction to a media report the U.S. Treasury has dropped plans to establish a “bad bank” to take problem financial assets.

Ø USD fell broadly on Monday as investors focused on the expected positive impacts of a U.S. bank bailout package on the global economy, weakening some of the safe-haven bid for the U.S. currency.

Ø Gold fell nearly 2 % on Monday on profit taking after the precious metal failed to break above $930 an ounce last week, and investors monitored U.S. Congressional debate of an economic stimulus.

Ø Copper rose to its highest level in more 2M than two months on Monday on hopes that economic stimulus packages in China, the world’s biggest user of the metal, and the United States will spur demand.

Ø Oil prices fell on Monday as a gloomy U.S. demand outlook outweighed talk of OPEC production cuts and hopes that a U.S. economic stimulus package would be passed by Congress this week.

India Front Page
Ø SEBI is planning to make it compulsory for promoters to disclose the end use of funds raised through pledging their shares with financiers, in a move to raise transparency and provide more information to investors.

Ø Cholamandalam DBS Finance Ltd is seeking to dip into its security premium reserves to offset losses.

Ø Bajaj Auto Ltd plans to raise its stake in European power sports bike maker KTM Power Sports to

Ø PSU banks led by the State Bank of India and its associates have begun working out a loan restructuring package for domestic auto makers, who have been hit by delayed payments from U.S. auto makers.

Ø Mahindra and Mahindra Ltd’s auto components and design engineering arm, Mahindra Systech, is in advanced talks with two Australian aerospace companies – one to buy an aircraft components maker and the other to forge a joint venture for building eight-and 14-seater planes.