Dawn of 30th July 09

INR @ 48.57 on oil demand and stock market sentiment r , WPI may be negative 1.46 %REUTERS POLL , HLL , Tata Steel , Reliance disappoint , Chinese Markets send scare.Chinese bank may stem lending , China Stocks fall 5% , Oil slips 6% on inventory surge , Cu falls on Chinese demand

 

INR

INR @ 48.57 dropped to fresh one-week lows on Thursday as mostly weak regional stocks raised concerns about the outlook for the local market, while some month-end $ demand from refiners also hurt.  At 9:20 a.m. the INR was at 48.55/56 per $, off an early low of 48.58, its weakest since July 22 and below its close of 48.42/43 on Wednesday. 1M NDF were at 48.62/72, weaker than the onshore spot rate. Nifty futures in Singapore were up 0.2 %.   The $ trimmed gains against most other major currencies on Thursday. U.S. crude futures fell below $63 a barrel on Thursday.

 

BONDS

Yields were largely steady on Thursday ahead of weekly inflation data due at noon (0630 GMT) after the RBI raised its inflation projection for 2009/10 at a scheduled review this week.    * At 9:11 a.m., the benchmark 10-year bond yield was at 6.90 %, a notch below Wednesday’s close of 6.91 %.    * The Gov. will sell 120 billion INRs of bonds on Friday as part of its revised first-half borrowing plan of 2.99 trillion INRs. The RBI sold 90 billion INRs of bills and 20 billion INRs of state loans on Wednesday. WPI  is forecast to have fallen 1.46 % in the 12 months to July 18, steeper than the previous week’s decline of 1.17 %, a Reuters poll of 11 analysts showed on Wednesday. 

 

STOCK

Indian shares slid 1 % on Tuesday, their third consecutive fall, as a sell-off in Shanghai stocks on fears Chinese banks may begin to restrict lending weighed on markets across Asia.     Chinese stocks dropped 5 %, their biggest fall in eight months, dragging down India’s main index as much as 2.9 % before it pared losses as analysts said any moves by banks in China were unlikely to affect India. China’s banking regulator on Tuesday had urged lenders to ensure that loans enter the real economy, rather than flow into property and stock markets for speculation.    Dealers said disappointing results from Reliance , HLL,  Sun Pharmaceutical  and Tata Steel had made investors cautious and weakened the market momentum seen since mid-July.

 

CALL

Indian overnight cash rates were steady on Wednesday as demand for funds from banks remained low in the second week of the reporting cycle amid ample liquidity in the banking system. Call closed at 3.20/3.30 %, unchanged from previous day’s close.    Banks parked 1.19 trillion INRs in the RBI’s reverse repo auction on Wednesday, highlighting the extent of the surplus cash in the banking system.

 

GLOBAL MARKET

DJIA 9,070.72  -26.00  Nikkei 10,116.49 +3.25  FTSE  4,547.53  +18.69  Hang Seng 20,303.02 +167.52  US 10Y 3.668   EUR 1.4063  Yen 95.01    Gold 931.00   Crude  62.95

·         U.S. stocks fell on Wednesday as investors worried that China’s banks might be poised to hit the brakes on lending to stem market excesses, a move that could curb the global economic recovery.

·         FTSE on Wednesday as gains from financial stocks, boosted by strong numbers from the British arm of Spain’s Banco Santander and positive broker comment, outweighed a weak mining sector.

·         Nikkei stock average was flat on Thursday, with caution after a Chinese stock tumble offsetting a surge in auto shares after Honda Motor Co and Nissan Motor Co  eked out surprise quarterly profits. Honda climbed 8.1 % to become the biggest contributor to the Nikkei 225, and Nissan rose 7.5 %.

·          $ climbed to a two-week high against the euro on Wednesday, as steep losses in Shanghai’s stock market and an unexpectedly weak U.S. durable goods report reignited the greenback’s appeal as a safe haven.

·          August gold contract limited losses to $11.60, or 1.24 %, at $927.50  an ounce by  on the COMEX Exchange.

·         Copper prices fell to their lowest in a week on Wednesday as the $ firmed on rising risk aversion and as investors focused on the prospect of reduced Chinese imports of the metal.

·         Oil dropped nearly 6 % on Wednesday to near $63 a barrel in the biggest one-day slide since April after data showed a surge in U.S. crude inventories on higher imports and lower refinery activity.

 

INDIA FRONT PAGE

·         A consortium comprising RInfra, SNC Lavalin  of Canada and Reliance Communications has bagged the contract to construct the 82.5-billion-INR Charkop-Bandra-Mankhurd corridor of the Mumbai Metro. The consortium was the sole bidder.

·          The diversified Hinduja group is scouting for a partner to speed up the process of setting up its first hospital in Chennai. Massachusetts General Hospital is one of the names doing the rounds.

·         The Gov. is set to give security clearance to Unitech Wireless’s proposal to hike its foreign shareholding by Norwegian telecom firm, Telenor to up to 74 %, on condition that none of the staff of Telenor Pakistan, which is wholly-owned by Telenor, are employed in India.

·          Indian Oil Corp and explorer Oil India have jointly initiated talks for a possible acquisition of Bermuda-incorporated Gulf Keystone Petroleum an independent explorer, which has operations in Kurdistan in Iraq, and Algeria. The acquisition could cost over $2 billion.

·          Power Grid Corp is in talks with Advanced Engineering Associates International Inc of the U.S. to bid for a 500-circuit kilometre transmission contract in Arizona, U.S.