DAWN OF 28th MAY 09

RUPEE

INR @ 48.08 is expected to edge lower on Thursday, tracking the euro’s losses versus the $ and some sell-off in Asian stocks, with month-end $ demand from refiners seen adding to the pressure.  INR ended at 47.70/71 on Wednesday, stronger than its previous close of 47.88/90 but below an intraday peak of 47.50. On Tuesday it fell 1.25 %, its biggest one-day drop in nearly three months. Dollex was up 0.1 %.. SGX Nifty down 23 points at 9.00.

 

BONDS

Yields should rise on Thursday, ahead of a 150 billion debt sale during the day, with a sharp rise in U.S. Treasury yields adding to the pressure to dump Gov. debt. U.S. Gov. Bonds came under heavy pressure again on Wednesday as investors worried about the ever-expanding amount of debt needed to fund a record $1.75 trillion budget deficit. FM said on Wednesday the Gov. was ready to deliver further fiscal stimulus, but hoped to maintain a fiscal deficit target of 5.5 % in 2009/10. . 10Y ended at 6.63 % on Wednesday, above Tuesday’s close of 6.56 %. It rose to 6.69 % in early trade, its highest since April 15. Borrowing program will be reviewed on Saturday, Finance Secretary Ashok Chawla said on Tuesday.  

 

STOCKS

Indian shares rose 3.8 % on Wednesday to their highest close in more than a week, in line with Asian peers after a jump in U.S. consumer morale reinforced expectations the global economy was starting to recover. FM comments the Gov. needed to push long pending reforms in the financial sector and in the real economy to support growth also helped sentiment.

 

CALL MONEY

Rates ended flat on a third straight session on Wednesday as surplus cash with banks matched demand during the early days of the reporting cycle. Call closed at 3.20/30 %, which has been its close since Saturday.    Dealers said advance tax outflows in the second week of June could lower cash level of some banks, which could result in marginal rise of call money rates. Rev. Repo was 1.20 trillion .The weighted average rate in the call money market was 3.26 %, while in CBLO, it was 2.62 %.

 

GLOBAL RECAP

·         DJIA  8,300.02 -173.47  Nikkei 9,430.92 -7.85 FTSE  4,416.23 +4.51 US10Y 3.742  +0.195  EUR 1.3845 Yen 95.87  Gold 951.00  Crude 63.06

·         U.S. stocks fell on Wednesday as rising yields on U.S. Gov. Debt fueled concern about higher borrowing costs for businesses and consumers, which could hurt the economic recovery.

·         European equities finished higher for a 3rd straight session on Wednesday, boosted by financial and retail shares, on hopes the market has seen its worst for the year and is on track for a recovery.

·         Nikkei stock average edged down 0.1 % in choppy trade on Thursday, with losses in exporters such as Sony Corp on fears about the U.S. economy narrowly outweighing support from shippers and auto shares.

·         $ rose against the euro on Wednesday as fear of an imminent U.S. credit downgrade faded and a ECB  official said interest rates could fall further if economic conditions worsen.

·         Gold prices were a tad higher on Wednesday as equity market weakness and an oil rally spurred investment into bullion, balancing out the negative effects of a firmer $.

·         Copper slipped from a near three-week high on Wednesday, as a firmer $ and weaker share prices dented sentiment, with investors taking little comfort from stronger than expected U.S. housing data.

·         Oil prices hit a six-month high near $64 a barrel on Wednesday after Saudi Arabia, OPEC’s biggest member, said the global economy had strengthened enough to cope with oil at $75 to $80 a barrel.

 

INDIA FRONT PAGE

·         Prakash Telang, currently head of the CV SBU  at Tata Motors is set to succeed MD Ravi Kant, who retires on May 31.

·         At Tata Steel H.M. Nerurkar, ED & COO , would likely takeover after MD  B Muthuraman retires in September.

·         Kant and Muthuraman will likely become non-executive vice chairmen of their firms.

·         Swiss Re the world’s second-largest reinsurer, is in talks with Religare Enterprises for a health insurance JV with an initial investment of up to 5 billion INR.

·         SEBI is considering a proposal to exempt infrastructure firms from a rule that restrains parent companies from raising money through public issue of debentures to fund group firms.

·         Malaysia’s, Axiata plans to raise stake in I Idea Cellular  to 40 % from the current 15% through an open offer.

·         Debt-ridden Wockhardt Ltd is in advanced talks to sell its German business, Espharma GmbH, to another German player, Lindopharm GmbH.