Dawn of 21st July 2009

INR @ 48.36 may rise on $ weakness , Auctions 27,800 cr , Monetary Policy on 29th if SLR 1% hike 40,000 cr gone , Stocks rise as TCS declares a 22% bonanza.

US Inc gears up for good corporate results , CIT group thrown a lifeline , $ falls as investors venture out of their safe havens – has the storm abated

Gsec FII cap to rise above $6.5 billion , Sops on power equipment import , Infosys to manage coaches , Buy a BMW Bike  , Vedanta gets in expansion mode , Service Tax on Freight services may be rolled back.

 
INR

INR @ 48.24 and is expected to rise on Tuesday, helped by the $’s weakness against some currencies, but gains likely will be kept in check by importer buying from refiners.  INR closed at 48.21/22 per $ on Monday, 1.1 % stronger than Friday’s close of 48.73/74. The unit rose to as high as 48.18 in intraday trades, its highest since July 6. FII inflows a net $1.2 billion stocks so far in July, taking net purchases in 2009 to $6.2 billion, and further buying was expected in a rising market. 1M NDF were at 48.31, indicating a bullish near-term outlook. Nifty futures in Singapore were down 0.3 %. . Dollex near a 6W low. U.S. crude futures were above $64 a barrel, bolstered by a weak $.

 
BONDS

Yields are expected to rise on Tuesday as the prospect of heavy debt supply and higher commodity prices push investors to the sidelines.  7.94 % 2021 rose to 7.28 % on Monday from Friday’s close of 7.19 %.  6.90 % 2019 also rose to 6.92 % from Friday’s 6.85 %. AUCTIONS :    RBI will sell 63 billion of SDL on Tuesday, 95 billion of bills on Wednesday and 120 billion of bonds on Friday. (278).  U.S. Treasury prices rose on Monday, climbing back up from earlier losses as trades related to corporate debt deals dominated the market in a week without

 
STOCK

Indian shares rose 3 % on Monday to their highest close in 5 weeks as a last-minute rescue seen for troubled U.S. lender CIT Group and a raft of positive earnings fuelled global appetite for riskier bets. TCS , surged 15.3 % to 500.10 its best one-day %age gain, after it beat forecasts with a 22 % rise in quarterly profit.     Several factors, including ample global and local liquidity, a recovery in earnings growth and strong corporate balance sheets, will spur the market over the next 12 months, Morgan Stanley analyst Ridham Desai said.

 
CALL

Rate ended little changed near the RBI’s main borrowing rate of 3.25 % on Monday as banks funded their reserve needs comfortably amid robust cash conditions. Call closed at 3.20/30 %, barley moved from Friday’s close of 3.25/30.   The RBI is scheduled to announce 2009/10 fiscal’s first r monetary policy on July 28 might hike the (SLR), to help the Gov.’s additional market borrowing.    A one % rise in SLR, , could bring down the liquidity surplus by at least 400 billion I. Banks deployed 1.27 trillion INRs at Monday’s reverse repo auction by the RBI.

 
GLOBAL MARKET

DJIA  8,848.15 +104.21  Nikkei  9,522.26 +126.94   FTSE   4,443.62  +54.87 H Seng      19,412.99 -89.38 US 10 3.610    EUR 1.4236 Yen 94.22    Gold 952.  Crude   64.29

·         U.S. stocks rallied on Monday, pushing the S&P 500 to an eight-month closing high, after CIT Group Inc was thrown a lifeline to avoid bankruptcy, and investors bet corporate America would log another strong set of earnings this week.

·         A broad-based rally in the stock market saw FTSE recording gains for a sixth straight day, with banks leading the surge and commodity shares jumping on stronger crude oil and metal prices.

·         Japan’s Nikkei stock average gained 1.4 % as optimism about a U.S. economic recovery grew, sparking a revival of risk appetite, with blue-chip exporters such as Canon Inc gaining.

·          $ weakened broadly on Monday, hitting a six-week low against the euro, as strong U.S. corporate earnings prompted investors to plunge back into high-yielding currencies and other risky assets.

·         Gold futures rallied above $950 an ounce on Monday, reaching the highest level in more than a month, as a sharp $ decline and better U.S. corporate earnings boosted bullion’s inflation-hedge appeal.

·         A brighter economic outlook and more downside in the U.S. $ drove the price of copper to its loftiest level since mid-October, with some analysts expecting improved global demand for industrial metals later this year.

·         Oil rose on Monday as optimism about a potential global economic recovery lifted markets and expectations of a turnaround in fuel demand.

 
INDIA FRONT PAGE

·         India is likely to raise the investment cap in Gov. securities by FII  investors beyond the current limit of $6.5 billion.

·         Punj Lloyd is planning to raise $125-$150 million by placing fresh QIP to retire part of its high-cost debt and infuse liquidity.

·          India is planning to permit projects that allow merchant sales of upto 40 % of saleable energy in case of hydel power and 15 % in thermal power to get zero import duty and excise duty waiver on equipment purchase. It is also planning to extend its policy of giving price preference of 15 % to domestic equipment companies till 2011.

·         The union budget proposal to levy a 10 % service tax on railway freight may see a partial rollback , with the Gov. planning to exempt sensitive commodities such as food items and fertilisers in a bid to curb rising retail food prices.

·         German luxury carmaker BMW  is planning another foray into India’s minuscule high-end motorcycle market through its Motorrad range of super bikes.

·          Infosys  has bagged a pilot project to roll out an integrated coach management system for the Indian Railways. The project cost is small, but its success would determine the time-frame for the railways floating the final tender for the project, estimated to be about 2.10 billion INRs.

·         The London-listed Vedanta Resources plans to spend 430 billion INRs to enhance its capacity, in addition to its 500-billion INR plan in power generation.

·          British hedge fund Spinnaker Capital Group is in talks to sell its 25 % stake in Hyderabad-based cement firm Sanghi Industries Ltd

·          Apollo Hospitals Enterprise is planning to hive off its pharmacy division as a separate entity by the last quarter of the present financial year. It is also open to have a foreign player as an equity partner for the new corporate entity.