Dawn of March 19, 2009

$ Falls on Fed , INR Rises , Bonds up on buy back, SGX up 21 pts stocks to follow global trend , Call a little up on tax

FED HISTORIC MOVE 1 TRILLION MORE: Buy back long dated securities and MBS , INFLATION back in fashion on money supply concerns . UK unemployment tops 2 million, EURO 1.34 massive rise

Silver Lining : Lending back in fashion IDFC and IDBI fund plans , Jet misses payment??, Videocon buys HF, Pantaloon becomes fit.

Rupee
INR open higher at 51 .07 – 51.08 . INR rose to its highest close in 3W on Wednesday as tax payments squeezed cash supplies and as investors hoped a rising stock market would rekindle FII interest for local assets. INR ended at 51.29/30 per $, 0.35 % above Tuesday’s close of 51.47/4850, its highest finish since Feb. 27 when it ended at 51.10/12. “There is some sort of a shortage of INR funds in the market due to the tax outflows. That is driving the INR up and we may see 50.75 per $ being tested in the near term,” said

Sudarshana Bhat, chief currency trader with state-run Corporation Bank. 1M NDF at t 51.62/51.72.

Bonds
RBI said it would buy back on Thursday the 7.37 % 2014 and 7.56 % 2014 bonds for 30 billion each, and the 7.99 % 2017 bonds for 40 billion. RBI, sold 80 billion of bills on Wednesday, will sell 100 rupees of bonds on Friday. U.S. Fed vowed to pump an additional $1 trillion into the U.S. economy in an aggressive bid to battle a deep recession, partly by buying government bonds for the first time since the 1960s. The yield on the 6.05 % 2019 bond ended at 6.44 % on Wednesday from Tuesday’s closing of 6.50%. The 8.24 % 2018 bond yield ended at 6.67 %, lower than the previous close of 6.71 %.

Stocks
SGX Nifty one month up 21 POINTS : India’s main stock index rebounded 1.3 % on Wednesday to its highest close in a month, led by energy giant Reliance Industries and banks, tracking a revival in global risk appetite. Buyers flocked to Reliance as the country’s largest listed company prepared to begin pumping gas from its huge field off India’s east coast this month, and commission all secondary units at a 580,000 barrels per day new refinery.

Call
Indian cash rates ended higher on Wednesday as advance tax outflows added to pressure on banks who were already scrambling to meet reserve requirements in the first week of the reporting cycle. The overnight call money rate closed at 4.25/40 %, above its previous close of 4.20/30 %. Banks parked 201.90 billion INRs with the RBI at rev. repo .

Global
DJIA 7,486.58 +90.88 Nikkei 7,922.89 -49.28 FTSE3,804.99 -52.11 H Seng 12,998.41 -118.76

US10Y 2.531 -0.483 EUR 1.3428 Yen 96.08 INR 51.29 Gold 893.25t Crude 49.48

Ø U.S. stocks leaped on Wednesday after the Federal Reserve surprised Wall Street when it said it will buy long-term Treasury bonds for the first time in four decades in an effort to revive the recession-hit economy.

Ø FTSE ended 1.4 % lower on Wednesday tracking falls on Wall Street, dragged back by weak commodity issues and banks, with UK unemployment topping 2 million.

Ø Nikkei average slipped 0.6 % on Thursday, giving up early gains as Honda Motor Co and other exporters fell on a stronger yen.

Ø $ fell sharply on Wednesday, hitting a 2M low against the euro, after the Fed Reserve said it will buy $300 billion of long-dated Treasuries over the next six months to help boost the economy. The euro surged above $1.34 for the first time since mid-January for its biggest one-day gain since its 1999. The Fed also said it plansto buy $750 billion more of mortgage debt to ease credit conditions.

Ø Gold rebounded sharply on Wednesday as a surprise move by the Federal Reserve to buy up to $300 billion worth of long-dated U.S. government debt rejuvenated bullion’s appeal as a hedge against inflation.

Ø Copper shot into positive regions late Wednesday, following a steep rally in U.S. equities when the Federal Reserve said it will buy $300 billion of long-term Treasury debt in the next six months. Analysts said the implications of easier credit in the Fed’s announcement should help the demand outlook for copper.

Ø Oil fell $1 a barrel on Wednesday after data showed U.S. crude inventories swelled to the highest level in nearly two years and the World Bank cut its 2009 forecast for China’s economic growth.

India front page
Ø UTV Software Communicationsis looking to raise 1-1.25 billion rupees from a strategic partner for its English news channel, UTVi.

Ø IDBI Bank will lead a consortium in arranging $1 billion for national carrier Air India to fund aircraft acquisition.

Ø Multiplexes are cutting ticket prices by 12-40 % to check a drop in occupancy.

Ø Jet Airways which had won a plot at an auction held by the Mumbai Metropolitan Region Development Authority, has defaulted on the payment due by March 13.

Ø Pantaloon Retail has tied-up with Talwalkars Better Value Fitness to launch 11 gyms and spas in the next two years.

Ø Mahendra Nahata of Himachal Futuristic Communications Ltd has agreed to sell his 36 % for 12-13 billion rupees to the Dhoots of the Videocon Group, which runs Videocon Industries Nahata and the Dhoots have a telecoms joint venture, Datacom.

Ø IDFC Group is said to be investing around 3.5 billion rupees in Essar Power to part finance equity for the company’s projects.