Dawn of 26th May 09

MARKETS: SGX Nifty up INR weaker on Oil demand and $ strength , Stocks seen positive but range bound  1% , Debt woes on Govt. Fiscal Stimulus

GLOBAL: $ Recovers but on German dip in confidence.

 

INR

·         INR @ 47.47 should open flat to slightly weaker on Tuesday, taking cues from the $’s rise overseas and mixed Asian stock markets. Dollex rose 0.2 % .  INR ended at 47.28/30  on Monday, 0.4 % weaker than 47.11/12 at close on Friday when it rose during trade to 46.90, its strongest since Dec. 19, 2008.  Dealers said month-end $ demand from oil refiners and importers was also likely to put pressure on the INR.  Asian indices were mixed.

 

BONDS

·         Yields are expected to open higher on Tuesday on concerns the Gov. will increase its planned borrowing in the final budget.  A television channel quoted finance ministry sources as saying on Monday the Gov. was working on a stimulus package of 0.5-1 % of gross domestic product, which dealers say could put pressure on market borrowings. 10Y ended up 8 bp  at 6.56 % on Monday after rising to 6.58 %, which was its highest since mid-April. Yields have risen 21 bp over the past three sessions.  The Gov. is due to sell 45 billion of SDL  on Tuesday, 70 billion of T bills on Wednesday and 150 billion of bonds on Thursday.

 

STOCKS

·         Rose 0.2 % on Monday, but Bharti Airtel fell 5.4 % after the leading telecoms firm said its plan to buy 49 % of South Africa’s MTN would dilute earnings in the first year. The main index was supported by non-ferrous metals producer Sterlite Industries which rose on higher metal prices.    In the broader section, gainers led advancers by almost 8 to 1 on relatively heavy volume of 878.5 million shares.

 

CALL MONEY

·         Indian overnight cash rates ended slightly higher on Monday on demand from some banks who borrowed for funding needs, but stayed near the RBI’s main borrowing rate, as cash in the system was more than sufficient. Call closed at 3.20/30 %, above Friday’s close of 3.00/10. It had also closed at 3.20/30 % in an illiquid market on Saturday.    Banks deployed 1.28 trillion with the RBI in its reverse repo auction on Monday, showing the extent of liquidity in the banking system.

 

GLOBAL RECAP

·         DJIA  8,277.32  -14.81  Nikkei  9,266.94  -80.06  FTSE   4,365.29  +19.82 H Seng 17,164.18  +42.36  EUR 1.3968  Yen 94.69  Gold 959.75  Crude  61.21

·         European shares closed higher on Monday with Sanofi Aventis  leading pharmaceuticals higher after winning a U.S. contract, and some analysts choosing to interpret a leading German economic survey positively.

·         Nikkei stock average lost 0.9 % on Tuesday, weighed by tech shares such as TDK Corp though slides were checked by defensive shares such as drug makers and communications companies. 

·         Euro slipped against the $ on Monday, stung after a gauge of German corporate sentiment fell short of market expectations, suggesting that any recovery in the euro zone’s biggest economy would take more time.

·         Gold prices softened on Monday but remained within sight of a two-month high above $960 touched in the previous session, retaining their sheen in the face of a weaker $.

·         Copper rose 1.4 % on Monday, lagging a 3.2 % surge in London in the previous session, supported by a slide in the $ and easing stocks.

·         Oil prices fell towards $61 a barrel on Monday ahead of OPEC’s meeting in Vienna, where the group was widely expected to agree to hold output steady.

 

INDIA FRONT PAGE

·         The KK Modi Group is acquiring 10.8 % stake in Godfrey Phillips India from joint venture partner Philip Morris for about 1-1.25 billion INRs, raising its stake to 47 % and reducing the U.S. tobacco maker’s share to about 25 %.

·         Gov. is looking to split the commerce and industry ministry into two separate ministries with two cabinet ministers.

·         Tech Mahindra the new owner of fraud-hit Satyam Computer Services is likely to appoint a new chief financial officer to the beleagured company in two weeks.

·         Uttarakhand power department has asked Larsen & Toubro to stop work on its 99-megawatt hydel project in the state’s Rudraprayag district.

·         Ranbaxy Laboratories Ltd could take a hit of as much as $50 million due to a delay in supplying a key ingredient to UK’s AstraZeneca used to make anti-ulcer drug, Nexium.