Dawn of 6th July 09

INR @ 47.92 , BUDGET at 11 AM , Cut in subsidy and disinvestment watched , Bonds rally as borrowing worries seem to abate , Stocks resilient rise in spite of US Jobs. US Holiday but jobs still concern , Oil slips Cu falls  disappoints, DLF sells land , Lodha looks for PE , Shriram transport 10 billion NCD , Raymond downsizes , Air India cuts salaries.

 

INR
INR @ 47.96 may edge up on Monday on lower oil prices and expectations of higher local share prices, while bond yields may drop in early deals with investors watching the budget for cues on reforms. Budget for 2009/10 will be announced at 11 a.m. It is expected to expand both the budget deficit and its market borrowing requirement to support growth.  Oil prices have fallen from above $70 a barrel to below $65 since last Tuesday on worries that a recovery in the global economy may not be as fast as earlier thought. However, the lower oil price offers some relief to major crude importers such as India. INR ended at 47.89/91 on Friday, compared with Thursday’s close of 47.95/96. $ index was up 0.03 % at 0222 GMT.

 

BONDS
Yields slipped on Friday, fuelled by hopes the Gov. will probably announce lower-than-expected borrowing in the updated budget on Monday.    Dealers said an increase in state-set fuel prices this week and an economic survey released on Thursday pointed to the Gov.’s efforts to improve its finances and reduce its widening fiscal deficit, which was at 6.2 % in 2008/09.  The Gov. is likely to cut subsidies in the budget and an expected thrust on asset sales could limit its borrowing needs, they said.   7.94 % 2021 ended at 7.02 %, below Thursday’s closing of 7.12 %. 10Y  closed at 6.83 %, below its previous closing of 6.87 %.

 

STOCK
Shares shrugged off a meltdown in Global Stocks  and rose 1.7 % on Friday, as investors covered their short positions ahead of an updated budget on Monday and helped the market to post its second consecutive weekly gain. Rail freight and passenger fares were kept unchanged in a separate budget for the railways presented to parliament on Friday, and the main budget is widely expected to detail plans to further open up the economy and kick off asset sales.

 

CALL
Rates ended near the reverse repo rate of 3.25 % in thin trade on the reporting Friday, with most banks already having met their needs. 3D money ended at 3.20/25 %, little changed from its previous close of 3.20/30.

 

GLOBAL MARKET

DJIA 8,280.74 -223.32  Nikkei  9,661.27  -154.80  FTSE 4,236.28   +2.01 H Seng 17,986.98  -216.42 , US10Y   3.502  +0.000 EUR  1.3970 Yen  95.43   Gold 932.75  Crude  65.63

* U.S. markets were closed on Friday for the Independence Day holiday.

* FTSE closed marginally higher on Friday as positive financial and defensive stocks outpaced weaker commodity shares, which tracked a decline in crude and metals prices.

* Nikkei stock average fell 1.6 % on Monday, with shipping firms such as Nippon Yusen retreating after a key gauge of freight costs dropped late last week on softer demand for goods.

* $ dipped against the euro on Friday, reversing some of its sharp gains the previous session following weak U.S. jobs data which dampened hopes that the global economy is poised to recover.

* Gold rose on Friday, steadying above $931 per ounce as the $ lost ground versus the euro, with deeper concerns over the U.S. economic outlook also underpinning the metal.     Spot gold stood at $931.70 by $928.65 late in New York

* Copper slipped on Friday as U.S. jobs data fuelled worries about the health of the global economy and investors questioned the strength of demand from China, the world’s largest copper consumer.

* Oil dropped a $ to below $66 a barrel on Friday after unemployment data hardened views economic weakness would sap energy demand and that last month’s rally was overdone.

 

INDIA FRONT PAGE

Raymond has offered VRS  to over 300 employees at its Thane unit to rationalize cost. The VRS is being offered across the board, including managerial staff.

*  Lodha Group is in talks with 3 PE  to raise $180 million for its three projects.

*  DLF Ltd has raised 10 billion through sale of land parcels across four cities in the past 4-5 weeks and is on course to close more such deals worth another 5 billion in the coming weeks.

*  Major investors in the low-cost airline SpiceJet have asked the company to look for acquisition opportunities in the local market. The airline is yet to appoint a financial advisor for due diligence.

*  Outsourcing firm Genpact Ltd is eyeing a part of the $1.6 billion Indian outsourcing market and has set up a separate unit to foray into the country.

*  State-run Air India is all set to bring in salary cuts as it tries to wriggle out of its staggering losses. 

* NTPC Ltd is willing to buy natural gas from Reliance Industries at a price set by the Gov.

* Dredging Corp of India may end up paying 4.83 billion more than originally intended for buying three dredgers because of delayed decision by the Gov..

*  Shriram Transport Finance Company is planning to raise 10 billion through second non-convertible debentures for expansion.