Dawn of 20th Feb09

INR opens weaker 49.87, brief recovery on Profit Booking , USD weakness helps, Bonds Fall: RBI OMO bearish say dealers, Outsourcers up on INR weakness , stocks break even , Inflation 3.92%, RBI employees on strike

US Industrials , 6Y low , jobless benefits record high, Oil rises 14% on inventory fall, Germany steps in to help rest of Europe

NHAI single bids for roads , Kingfisher asked to settle dues.

Rupee
INR snapped a 3D fall and rose on Thursday as banks unwound long USD positions after a sharp sell-off, while exporters also sold USDs and booked profits. INR closed at 49.62/63 , 0.6 % stronger than Wednesday’s close of 49.92/93. “The USD-Asia turned softer in late trade, exporters sold USDs, while there was also some long USD liquidation ahead of a long weekend,” a senior dealer with a foreign bank said. A drop in the USD overseas also buoyed sentiment for the local currency.

Bonds
Yields jumped on Thursday after the RBI set higher-than-expected cut-off yields at buyback auctions for two bonds and decided not to buy any from the third tranche it had offered to purchase. The RBI set a cut-off yield of 6.26 % for the 2018 bond, above an expected 6.22, while at the 2021 bond it set a cut-off of 6.73 %, above an expected 6.63 %. It had also issued a tender to buy 10 billion of 7.40 % 2035 bonds, but did not purchase any. 8.24 % 2018, ended at 6.42 %, well above Wednesday’s close of 6.36 %. It has raised 25 basis points this week.

Stocks
snapped a 3D slide and eked out a modest rise on Thursday, helped by hopes for an interest rate cut but a gloomy outlook for the domestic and world economy kept investors from building large positions. Outsourcers such as Infosys Technologies, led the gains following a more than 2 % fall in the INR’s value against the USD this week.

Inflation was at 3.92 % in the 12 months to Feb. 7, the lowest since Dec. 29, 2007 and slightly below 4.01 % forecast in a Reuters poll.

Call
Rates ended lower on Thursday after rising to 1M highs intraday as most banks have secured funds to meet funding needs ahead of a RBI union strike and a religious holiday. Cash ended at 4.00/15 %, off an intra-day high of 4.35 %, a level last seen on Jan. 19. It had closed at 4.10/20 % on Wednesday. Banks parked 290.95 INRs with the RBI at its money market operations on Thursday.

Global
Ø DJIA 7,465.95 -89.68 Nikkei 7,455.40 -102.25 FTSE 4,018.37 +11.54 H Seng12,781.03 -242.33 US10Y 2.850 +0.082 EUR 1.2620 Yen 94.11 Gold 980.50 Crude 38.85

Ø U.S. stocks fell on Thursday and the Dow industrials closed at a more than 6-year low as fears of nationalization hit bank stocks and data showed the number of jobless benefits recipients rose to a record high.

Ø FTSE ended 0.3 % higher on Thursday after a roller-coaster session, with rallies by oils, miners, and banks offsetting falls by drug issues, with blue chip results proving mixed.

Ø Nikkei stock average fell 1.4 % on Friday, with banks losing ground amid growing gloom about the U.S. economy, while worries about Japan’s situation kept exporters from taking advantage of a weaker yen.

Ø USD fell against the euro on Thursday as world stock markets steadied and hopes that Germany may step in to help some of the weaker European economies whetted investors’ appetite for risk.

Ø Gold bounced from early session lows but still ended weaker on profit taking amid fears the metal’s recent sharp rally had been overdone, although bullion reached new record highs when priced in sterling, the euro, the Australian and Canadian $and the Indian rupee.

Ø Copper prices settled higher on Thursday, extending a technical rebound from the prior session’s slide to 2- week lows as a weaker USD helped fuel the turnaround.

Ø Oil prices jumped 14 % to top $39 a barrel on Thursday after U.S. government data showed an unexpected fall in crude inventories last week due to lower imports and higher demand.

India Front Page
Ø British Airways is in talks with Indian low-cost carrier Go Air for a code-sharing, co-branding and marketing agreement. GoAir will benefit from BA’s Indian network.

Ø Blackstone has offered 2.3-2.4 billion rupees to buy out Prestige Group’s serviced apartments managed by international luxury hospitality brand, Oakwood. The proposal, still in early stages, falls below the realtor’s valuation of 3 billion rupees and its head said he was not interested in selling the asset now.

Ø Singapore-based River Valley Hydro Ventures is close to picking up 75 % in Secundarabad-based power firm, Amritjal Venture for 3 billion rupees.

Ø Indian drug regulator has ruled that companies cannot unilaterally increase prices of medicines under price control by tweaking their composition.

Ø The road transport and highways ministry is working on a proposal that will permit single-bid projects, following a lukewarm response from private firms for various road projects the National Highways Authority of India invited bids for on a build, operate and transfer basis.

Ø India’s airport regulator has asked Kingfisher Airlines to bring down its overall dues for use of airports within the limits of bank guarantees furnished by the end of March.

Ø The aircraft maintenance, repair and overhal venture between infrastructure company GMR and Malaysian Airlines is expected to be finalized by the end of the month. Indian private carrier Jet Airways is expected to pick up equity in the venture.