MyValueResearch

Dawn of 19th Feb 09

INR past 50, NDF, Asian currencies, Taiwan economy, Stocks . Bonds rally on Guv. Comments, OMO 6000 Cr in line. Nomura predicts cuts, Fri. RBI strike- Mon. Holiday 5 days LAF today, Stocks in hazy territory.

Obama package of $275 Billion for housing , Housing data disappoints , OIL slips inventories at 11Y high, Al lowest since 2002

PSU banks to get capital for capital adequacy?, Unitech cancels projects, Air India cost cuts, IFCI revokes guarantee on ICICI 950 million, ORCHID TO BUY BACK FCCB

Rupee
INR Opens at 49.83 .INR dropped past 50 on Wednesday to an 11W, hit by falling shares, weakening Asian currencies and worries about the economic outlook, and traders said it could soon target record lows. Asian currencies fell as news of a record slump in Taiwan’s economy added to the region’s woes, INR closed at 49.92/93 down 0.5 % from Tuesday’s close of 49.67/68. It has fallen 2.5 % against the dollar this week. The INR fell to 50.10 during trade, its lowest since Dec. 3, but pared its losses on buying from state-run banks. INR hit a record low of 50.65 on Dec 2. 1M NDF at 50.18/28 per dollar, weaker than the onshore spot rate. “There would be some strong resistance for the INR around 50.15-20 levels, but if it breaks that, then the INR could head towards the record lows seen and beyond,” the chief dealer with a state-run bank said.

Bonds
Yields fell on Wednesday, snapping 3D rise after the RBI chief said there was room to cut rates, and as sentiment for debt lifted ahead of a bond buyback to improve liquidity. The RBI governor added lower inflation did not mean rates must drop too. 8.24 % 2018 closed at 6.36 %, 12 BP below Tuesday’s close of 6.48 %. After market hours the RBI said it will buy 60 billion of bonds from the market through an auction on Feb. 19, which was largely in line with market expectations. It comes ahead of 120 billion INRs of federal debt sales on Feb. 24.

VIEW: “Therefore, we continue to expect the RBI to cut both the repo and reverse repo rates by 50 BP each in March and by a further 100 BP by mid-2009. We also expect the CRR to be lowered by 200 BP points to 3 % by end-2009,” Nomura economist Sonal Varma said.

Stocks
Stocks to open lower SGX Nifty -17 .Eased 0.2 % in seesaw trade on Wednesday, with banks leading the fall on lingering concerns about their profit margins in a faltering economy. A partial recovery in markets such as Hong Kong and an early rise in European markets helped limit the losses, and some stocks such as Reliance I bucked the trend on bargain hunting. Traders said the outlook remained hazy.

Call
Rates inched higher on Wednesday on slightly higher demand from banks securing funds to meet reserve needs in the first week of the reporting cycle. Call ended at 4.10/20 %, up from Tuesday’s close of 4.00/15 %. Employees at the RBI are on a strike on Friday, owing to which RTGS may not be operational, while the markets close on Monday for a religious holiday. The RBI said that it will conduct 5-day liquidity adjustment facility on Thursday. Banks parked 403.85 billion INRs with the RBI at its money market operations.

Global
DJIA 7,555.63 +3.03 Nikkei 7,572.37 +37.93 FTSE 4,006.83 -27.30 H Seng 12,914.11 -101.89

US10Y 2.761 +0.107 EUR 1.2576 Yen 93.55 Gold 964.00 Crude 34.51

Ø The S&P 500 and Nasdaq edged lower on Wednesday, after bleak housing data overwhelmed President Barack Obama’s $275 billion plan to prop up the housing market.

Ø Adding to the somber mood, the Fed slashed its economic forecast for 2009, and several companies, including Deere & Co , posted dismal results.

Ø FTSE ended 0.7 % lower on Wednesday, down for its fifth straight session, as energy stocks fell on depressed oil prices, while financials took a further beating and weak data weighed.

Ø Nikkei stock average rose 0.5 % on Thursday, with exporters leading the market higher after the dollar climbed above 93 yen for the first time in six weeks.

Ø The dollar stormed above 93 yen for the first time in six weeks on Wednesday and neared a three-month peak against the euro after President Barack Obama pledged up to $275 billion to stem U.S. home foreclosures.

Ø U.S. gold futures surged to a fresh seven-month high on Wednesday after risk-averse investors gained the upper hand over early sellers looking for profits off the 3 % gains achieved a day earlier, traders said.

Ø Aluminium fell to its lowest level since October 2002 on Wednesday, as concerns over dwindling demand were reinforced by further bad news for the car industry and a rise in inventories to record levels.

Ø Oil prices fell nearly 1 % to below $35 a barrel on Wednesday as dealers bet that slumping fuel demand in top consumer the United States has forced crude inventories to an 11-year high.

India Front Page
Ø Maytas Infra Ltd , the construction firm linked to the fraud-hit Satyam and part of a consortium that won the contract for two major airport projects in Karnataka, will be issued termination notices for lack of interest. Nagarjuna Construction Co Ltd and an arm of Vienna International Airport are part of the consortium.

Ø Dena Bank , Bank of Maharashtra and Oriental Bank of Commerce could be in line for capital infusion of public sector banks to maintain their capital adequacy ratios at above 12 %.

Ø Unitech has dropped plans to develop two of its six information technology parks due to a demand slump.

Ø IFCI Ltd has revoked a guarantee from ICICI Bank to recover 950 million rupees in dues from Maytas Infra.

Ø Low cost carriers IndiGo , SpiceJet and GoAir have reduced fares by around 30 % on most metro routes, helped by lower jet fuel prices and after a slump in ticket sales.

Ø Reliance Industries is likely to sell its first consignment of natural gas to Nagarjuna Fertilizers & Chemicals

Ø Orchid Chemicals and Pharmaceuticals Ltd will raise overseas debt to retire $175 million in foreign currency convertible bonds.

Ø Air India expects to save up to 3 billion rupees a year through cost cuts, including scrapping a plan to spend 600-million-rupees to publicize its international routes.