Dawn of 31st March 09

INR falters, $ up /FII’s buy now sell now, NDF at premium. RBI huge buyback no cheer for Bonds, DG says avoid Pvt. Placement, Stocks fall on US hard-line on autos, YC steepens, Cash plenty in spite of Mar-31st?

US and UK stocks melt on GM and Chrysler woes , Nikkei rises what’s bad for GM is good for Honda , Oil drops 7%

Vehicle depreciation extended 3M , Aviation fuel up 15%, Volvo shuts plant for 30 days.

Rupee
INR dropped 1.2 % on Monday, its biggest 1D fall in 1M as a slide in shares renewed fears of FII outflows and as the $’s strength also hurt.  INR closed at 51.17, off a low of 51.33, weakest since March 18, but still down from Thursday’s close of 50.59. FII    bought shares worth a net $1.3 billion over the past 3W, but are net sellers of $1.4 billion in 2009. 1M NDF quoted at 51.58/68 per $, weaker than the onshore spot.

Bonds
Yields rose for the 7th session on Monday as the borrowing for 2009/10 weighed, despite the RBI’s bond buyback plan to ease the impact.  2019 yield ended at 7.08 %, after touching an intraday peak of 7.20 %, its highest since March 13, and above Thursday’s close of 7.02 %. The govt. said it will sell 2.41 trillion  of bonds in the first half of 2009/10,  RBI has said it would buy back 800 billion of bonds, on top of MSS maturities of 420 billion in the period.  The spread between the 1Y and 10Y bonds has widened to 205 bp from 160 bp in end-February. Hopes of a pvt placement looked difficult after DG Mohan said such a move should be avoided at all costs.
Stocks
Fell 4.8 % on Monday in the their biggest 1D drop in 3M  as investors took profits after the market had rallied more than 20% over 3W. The close of the fiscal year on Tuesday also encouraged funds to book profits, sentiment across Asia and Europe was soured by the U.S. government’s rejection of turnaround plans for GM and Chrysler.

Call
Rates  lower on Monday as adequate liquidity in the banking system offset demand from banks who borrowed for their funding needs. Call closed at 3.75/4.00 %, off an early high of 5.10 %, and below Thursday’s close of 4.40/60 %. Vs. 4.50/60 % close on Saturday. Banks parked a net 289.30 billion with the RBI at its OMO operations on Monday

Global
DJIA  7,522.02 -254.16  Nikkei  8,308.83 +72.75 FTSE   3,762.91 -135.94 HSeng  13,574.41 +118.08

US10Y  2.717  -0.047 EUR 1.3192  Yen 97.21  Gold  928.00  Crude 48.56

Ø      U.S. stocks slid on Monday as General Motors and Chrysler took a step closer to potential bankruptcy, and a batch of European bank rescues increased concerns over the health of the financial system, interrupting a recent run-up.

Ø      FTSE tumbled 3.5 % on Monday, led by banks and commodity stocks on jitters following Washington’s rejection of a turnaround plans for U.S. automakers.

Ø      Nikkei average rose 1.8 % on Tuesday as investors picked up exporters like Honda Motor Co that had slid the previous day on fears of bankruptcy for U.S. automakers.

Ø      The $ and yen rose against the euro on Monday as fears of bankruptcy for U.S. automakers General Motors and Chrysler prompted investors to seek safety in the U.S. and Japanese currencies.

Ø      Gold firmed on Monday as investors spooked by fresh turmoil in equity markets turned to the precious metal, but a stronger $ is expected to cap gains.

Ø      Copper prices closed at a 1-1/2-week low on Monday as a strong $, falling equities and a persistently weak demand outlook put the brakes on a rally last week that drove prices to their loftiest levels since early November.

Ø      Oil dropped by more than 7 % to below $49 a barrel on Monday, weighed down by the stronger U.S. $ and weaker stock markets.

India Front Page
Ø      Fortis Healthcare Ltd is close to sealing a deal to acquire up to 74 % shareholding in unlisted Wockhardt Hospitals, a unit of Wockhardt Ltd for about 7.50 billion the paper said citing unnamed sources.

Ø      Govt. plans to extend higher depreciation benefit of 50 % on commercial vehicles by three months till June 2009. The higher depreciation rate, translating into lower tax liabilities and insurance premiums for buyers, was set to lapse by the end of March.

Ø      Prices of aviation turbine fuel is set to rise by at least 15 %. Two independent sources in private carriers said they have got feelers from oil marketing companies about the impending price rise.

Ø      DLF Ltd has decided to divest its windmill power generation business. Having invested about 15 billion INRs in the business, DLF is looking to exit at 11 billion INRs after accounting for a depreciation claim.

Ø      Mitsubishi Motor Corp’s plan to produce a compact car from India through its tie up with Hindustan Motors has been indefinitely deferred for lack of funds and sliding demand. The company had planned to launch the premium compact car in 2011/12.

Ø      PE WL Ross & Co is believed to be one of the parties interested in buying out scam-tainted Satyam Computer Services

Ø      Sweden’s Volvo plans to temporarily shut down its bus and truck chassis making plant near Bangalore for almost 30 days.

Ø      Credit Agricole has called off plans to launch an asset management company through a joint venture with Bank of India