Dawn of March 30th 09

INR sees 51 on $ strength, ECB to buy back bonds, Stocks may slide as JP Morgan sounds alarm, Bonds see red on borrowing.Down wave as bankers say March was bad or profit taking , Stocks , Oil retreat .

Banks to blacklist cos. Using working capital for fixed assets, Relief to auto sector only if prices are cut, Some SOP for software retailers, Laxmi Mittal says restore incentives

 

Rupee
INR sees 51 in opening trades. The $ rose on Friday, posting its largest one-day gain against the euro in more than two months, boosted by a growing view that the ECB Bank may be the next to purchase its own bonds to stimulate growth.    Weak U.S. stocks also drew safe-haven bids toward the $ compared with the single euro-zone currency. The currency was further pressured by comments from German Finance Minister Peer Steinbrueck suggesting fiscal irresponsibility in Europe could put the euro at risk. SNESEX  has risen nearly a quarter from a 2009 low hit on March 6. FII have bought a net $619 million worth of shares in the past nine sessions, a key factor helping the INR’s recent rise, trimming their net sales in 2009 to $1.7 billion. 1M NDF quoting at 50.91 with wide spreads. As per technical analysts INR looks like heading into consolidation period, but longer-term outlook is still in favor of upside bias. On the upside, look for closing above 51 to dampen the bearish tone and focus back on 51.25. On downside, tough support is at 50 but below here however will slide to 49.40 in due course.

 

Bonds
The 10-year yield  ended at 7.02 %, its highest close since March 13 and sharply up from Wed close of 6.77 %, after the government said it would borrow a higher-than-expected $47 billion in the first half of 2009/10.

                                                                                                                                             
Stocks
JP Morgan CEO  told CNBC television that  March was a tougher trading environment than January and February, a sentiment  echoed by other bank executives. The CEO  warned that further deterioration of commercial real-estate and other assets was inevitable during this recession.  Stocks seen opening weaker on global decline in stocks. SENSEX rose 0.4 % on Friday, as increasing optimism about the global economy boosted markets worldwide.

 

Call
Indian cash rates rose on Thursday on higher demand for funds on the last borrowing day for the current reporting cycle, but the rates eased later in the day after most of the banks funded their bi-weekly reserve needs.    The four-day money ended at 4.40/60 %, off an early high of 4.90 %, but above Wednesday’s close of 4.00/10 %. The market is closed on Friday for a religious festival, making Thursday the last day of the two-week reporting period. Banks parked a net 111.50 billion INRs with the RBI showing the extent of cash surplus in the banking system.

 

Global
DJIA    7,776.18 -148.38  Nikkei  8,475.06   -151.91  FTSE  3,898.85  -26.35 H Seng  13,870.81 -248.69

US10Y 2.764 EUR  1.3245  Yen 98.02   Gold 924.00  Crude  52.40

Ø      Wall Street capped a strong week on a down note on Friday as investors booked profits in the wake of the recent upward surge and bank shares dropped after bank executives indicated March had been a tougher month for the industry than the previous two.

Ø      FTSE 100 share index closed 0.7 % lower on Friday as strength in Barclays and other banking stocks was outweighed by weakness across a wide range of sectors, hit by the grim economic backdrop.

Ø      Nikkei average slipped 1.2 % on Monday as investors locked in profits after last week’s sharp rally, with bank shares such as Mitsubishi UFJ Financial Group falling following a drop in their U.S. counterparts late last week.

Ø      $ rose on Friday, posting its largest 1D gain against the euro in more than 2M, boosted by a growing view that the ECB may be the next to purchase its own bonds to stimulate growth.

Ø      Gold fell on Friday as precious metals came under pressure from a strengthening $ and reduced safe-haven demand after recent U.S. steps to stem an economic crisis.

Ø      Copper ended down on Friday, backing away from a near five-month peak, as a general commodity downturn and uncertainties about the strength of real demand from manufacturers, particularly in China, weighed on values.

Ø      Oil fell nearly $2 on Friday as weaker stock markets, soft economic data, and evidence of OPEC overproduction encouraged profit-taking after several days of gains.

   

India Front Page
Ø      GlaxoSmithKline and Sanofi-Aventis  are in separate talks to buy out France-based Merieux Alliance’s 80-% stake in Shantha Biotech. The deal values the unlisted Hyderabad-based firm at about 12 billion INRs, the paper said citing two unnamed sources.

Ø      RIL will begin gas production from the Krishna Godavari (KG) basin in 24 to 48 hours, with gas production from the Dhirubhai 6 (D6) block estimated to add close to $2 billion to the company’s profit at peak production levels.

Ø      Govt .has warned auto companies it will not consider any stimulus package for the auto industry unless they reduce the prices, which were raised after a recent 4-% excise duty cut on vehicles, of popular brands.

Ø      Govt.  plans to remove either the service tax or the countervailing duty on packaged software such as Microsoft Office to offer some relief to over 4,000 software retailers hit by multiple taxes in a slowing economy.

Ø      6,400 employees have quit fraud-hit Satyam Computer Services after last September, when the company claimed a headcount of 53,000.

Ø      PSU  banks have started blacklisting companies diverting loans taken for working capital for other purposes such as acquiring fixed assets, as banks prepare themselves to comply with the Basel II banking guidelines from April 1.

Ø      LSE is in talks with FT  to buy a stake in its stock exchange arm MCX-SX.

Ø      Lakshmi Mittal has threatened to stop work on the 189.19-billion-INR oil refinery project at Bathinda in Punjab unless the state govt. restored the fiscal incentives, which were scrapped a few years ago.

Ø      S&Pis expected to hold discussions with FM officials as the govt seeks an explanation for lowering India’s long-term sovereign rating outlook from ’stable’ to ‘negative’.

Ø      Gitanjali Gems has scrapped its plan to set up a special economic zone in Nanded, Maharashtra and is also going slow on six other SEZ projects in Maharashtra and Gujarat due to lower global demand for jewellery items.

Ø      Tata group has bagged an order worth 1.60 billion INRs from BEL to supply 16 missile launchers for the indigenously built Akash missile system.