Dawn of 9th June 09
RUPEE
INR @ 47.65 & is expected to hold near 2W lows on Tuesday, tracking losses in regional stock markets that could trigger FII withdrawals from domestic shares. Most Asian currencies were lower versus the $, and the dollex , was up 0.1 %. INR ended at 47.555/565 off an intraday low of 47.75
BONDS
Yields should rise for a third session on Tuesday, weighed by higher auction this week and lack of clarity about the Gov.’s borrowing plans. 10Y which registered only 11 trades on Monday, edged up to 6.58 % from 6.56 % on Friday as the uncertainties pushed investors to shorter-tenor papers. Higher U.S. yields are also likely to hurt sentiment, dealers said. U.S. Treasuries prices fell on Monday, sending yields to 7M highs, as fears the Fed will raise interest rates sooner than expected swept through the bond market. AUCTION 150 billion of bonds on Thursday, up 25 % from a scheduled 120 billion for the fourth consecutive week. The Gov. will outline its market borrowing plan for 2009/10 in its budget in early July, and the increase in auction amounts has raised some concerns that an initial gross borrowing target of 3.62 trillion could be increased.
STOCKS
Shares fell 2.9 % on Monday in their biggest drop in almost six weeks as investors took profits after a near 90 % rally over the past three months, with weak Asian and European markets aiding the selloff. However, underlying sentiment was firm with expectations the economy was set to recover in the coming months and hopes the Gov. will unveil market-friendly measures in the budget in early July to boost growth. Among the main losers were SBI and ICICI that had more than doubled in value since early March, while Tata Steel and Sterlite Industries <STRL.BO> dropped as metal prices edged down. Most of the rise can be attributed to more than $6 billion of investments from FII since mid-March, with hopes of investor-friendly reforms from the re-elected ruling coalition boosting sentiment.
CALL MONEY
Indian cash rates ended little changed on Monday, as banks were able to comfortably borrow for their RBI needs as cash surplus in the banking system remained at more than 1 trillion Call ended at 3.20/30 %, where it has been closing since Thursday. The amount parked at the RBI through the reverse repo auction.
GLOBAL RECAP
DJIA 8,764.49 +1.36 Nikkei 9,848.70 -16.93 FTSE 4,405.22 -33.34 HSeng 18,276.57 +23.18 US10Y 3.897 +0.058 EUR 1.3891 Yen 98.32 98.37 Gold 943.75 Crude 68.68.
U.S. stocks rebounded on Monday to end flat, shrugging off lighter-than-expected sales from McDonald’s and lowered iPhone prices from Apple The three major U.S. stock indexes had fallen more than 1 % before rallying in the last hour of trading, led by bank shares.
FTSE shed 0.8 % on Monday, weighed down by weak energy and mining stocks, depressed by lower commodity prices, while banks fell as recent bullish sentiment soured.
Nikkei stock average edged down 0.2 % on Tuesday, with resource-linked shares such as trading house Mitsui & Co slipping in the face of broad weakness in commodities prices.
The euro fell broadly on Monday, hurt by a rating agency’s second downgrade on Ireland’s sovereign debt, while the $ extended gains as Treasury yields continued to rise following last week’s stronger-than-expected U.S. jobs data. The euro fell as low as $1.3806, according to Reuters data,
August gold contract was down $13.90, or 1.4 %, at $948.70 an ounce on the COMEX Spot gold traded at $947.75, down 0.8 % from its late Friday quote in New York.
Aluminum prices climbed to their highest level since early January on Monday, as a rise in material tagged for delivery hinted at stronger demand and softened the blow of yet another record high in stocks. But copper led a sell-off in other industrial metals, as extended gains in the $ versus the euro and a weaker tone in equities dragged values down.
Crude oil futures stayed down midday on Monday as prices moved narrowly near unchanged, swayed by a stronger $ and a weaker Wall Street that was down on profit and interest rate worries.
INDIA FRONT PAGE
· RBI may standardize the way banks calculate their prime lending rates and bar them from lending below their respective PLRs for more transparency.
· HLL which had earlier planned to sell its 49 % stake in its BPO unit to Cap Gemini SA by March 2009, now plans to do so by March 2010.
· Chougule family, founders of Indage Vintners , intends to scale up their shareholding in the company as a precursor to divest majority stake in the firm’s domestic winery business to a strategic investor.
· Reliance Communications is close to awarding a $500-$600 million operations and maintenance contract to French telecom infrastructure provider Alcatel-Lucent
· US PE group TPG has nudged ahead of two other funds in the race to own less than 15 % of Pantaloon Retail which has been in talks with at least three PE investors to raise money and expand its stores network.
· ECB norms are slated to be liberalized further with the Gov. planning to expand the list of sectors that can raise funds overseas.
· India’s defense ministry has agreed to release 45 mega hertz (MHz) of spectrum, the radio frequency on which mobile phone signals travel.
· SEBI has suggested a phased reduction of the securities transaction tax as part of a package of measures to develop the capital markets.
· Gujarat Cooperative Milk Marketing Federation, which owns and markets Asia’s largest dairy brand, Amul, has chalked out plans to add 6,000 Amul parlors across the country in 2009-10.
· UK-based Blyk Ltd, a company positioned as a free mobile service network for 16-24 year olds, is preparing to enter India and is in talks with one or more local telecom operators.
· Hyundai Motor India is studying the feasibility of setting up a diesel engine plant close to its car manufacturing plant near Chennai.
