MyValueResearch

DAWN OF 27th MAY 09

RUPEE

INR is expected to rise on Wednesday after falling for 2days, with gains in regional stocks raising expectations for inflows into the domestic market. Higher Asian currencies will also help. INR closed at 47.88/90 per $ on Tuesday, falling 1.25 % from Monday’s close of 47.28/30, its biggest one-day fall in nearly three months and further retreating from Friday’s five-month high of 46.90. SGX Nifty were up 2.4 %, pointing to a firm start in the domestic market.  $’ strength versus other major currencies and month-end $ demand from importers and refiners, could cap the INR gains. The $ index an indicator of the U.S. unit’s performance against six majors, was up 0.1 %.

 

BONDS

Yields hit a one-month high on Tuesday before ending flat, with traders wary of an  upward revision in planned market borrowing in June and additional stimulus spending by the Gov.   10Y closed at 6.56 %, unchanged from its previous close, after trading in a range of 6.50-6.58 %. It is up 33 bps so far in May with the bulk of the rise in the previous 3Ddays. FM said the Gov. was ready to deliver further fiscal stimulus to arrest a slowdown in growth, but added fiscal prudence was also a priority.

 

STOCKS

Indian shares snapped a 2D rise and fell 2.3 % on Tuesday as tensions arising from North Korea’s nuclear test dented investor confidence across Asia and Europe amid renewed jitters about the global economy.    Traders said the main drivers of the market – FII  that had pumped in more than $5.5 billion since mid-March were now selling some blue-chip stocks as they believed the rally had made them expensive.

 

CALL MONEY

Rates ended steady on Tuesday as ample liquidity in the system kept rates down amid good demand in the first week of the reporting fortnight. Call closed at 3.20/30 % unchanged from its previous close.    Banks deployed 1.4 trillion with RBI in the reverse repo auction.

 

GLOBAL RECAP

DJIA 8,473.49 +196.17  Nikkei  9,446.80 +135.99 FTSE   4,411.72  +46.43 H Seng   

US10Y 3.549   EUR 1.3964 Yen 95.34   Gold 945.00 Crude  62.40

·         U.S. stocks climbed more than 2 % on Tuesday as data showing the biggest monthly jump in consumer confidence in 6Y lifted hopes of an economic rebound, and a brokerage upgrade of Apple Inc drove sharp gains on the Nasdaq.

·         Britain’s leading share index ended 1.1 % higher on Tuesday after data showed U.S. consumer confidence rose, with energy stocks, cigarette makers and food retailers leading the gainers.

·         Nikkei stock average gained 1.5 % on Wednesday, after U.S. consumer confidence put in its biggest monthly jump in six years, boosting hopes of improvement in the U.S. and the global economy.

·         $ edged up against the yen on Tuesday after data showed improvement in U.S. consumer confidence, while worries about Germany’s economy and banks knocked the euro off last week’s 4-1/2-month high.

·         Gold dropped on  Tuesday as a stronger $ prompted profit taking, but the first notable rise in the bullion holdings of gold-backed exchange-traded funds in recent months indicated investment interest.

·         Copper prices rebounded from a near 3 % drop on Tuesday as rallying equities and robust U.S. consumer confidence data  helped offset investor concerns over domestic copper sales by China.

·         Oil rose 78 cents to settle at $62.45 a barrel, the highest settlement since Nov. 5, after trading up to $62.50 — the highest intraday trade since Nov. 10.

 

INDIA FRONT PAGE

·         PSU banks plan to cut lending rates by 100-150 bp points within a fortnight following a FM directive to lower interest rates in line with falling cost of funds.

·         Gov. is considering a proposal to do away with FBT fringe benefit tax — on all benefits and perks that companies provide employees — in the coming Union budget.

·         Gov. may dilute stakes in power sector firms such as NTPC NHPC and Power Grid to 51 % over the next few years for about 600 billion rupees.

·         India is likely to double the price of natural gas sold through the administered price mechanism to $4.2 per million metric BTU, which is equivalent to the price Reliance Industries gets for its KG basin gas, a move that could boost profits of ONGC and Oil India Ltd.

·         Realtor Unitech has sold its under-construction hotel in Gurgaon for 2 billion rupees to an unidentified individual and is close to selling a service apartment for 2 billion rupee.

·         Financial services firm Edelweiss Capital plans to launch its retail broking business in the next three months.

·         Reliance Power , has achieved financial closure for its 1,200 megawatt, coal-fired Rosa power plant in Uttar Pradesh by raising at least 24 billion rupees from a domestic consortium.

·         The country’s top cigarette maker, ITC Ltd will have to suspend production at all its factories to introduce pictorial warnings on cigarette packs from June 1, but it will make sure there was no supply gap in the market.

·         Coromandel Fertilisers is in talks to invest 30-40 billion rupees to set up a urea and ammonia manufacturing plant in a West Asian country, the details of which will be finalised close to December.