RUPEE

Ø Stop Press : INR above s at 50.50 The Indian INR weakened towards a record low on Tuesday on fears of sharp FII outflows after heavy losses in stocks around the world, and 10-year bond yields fell below 7 % to their lowest in more than three years. 9:10 a.m. the partially convertible INR was at 50.47/50, compared with Monday’s close of 50.30/32 per dollar on Monday. In early trade, it touched 50.55 and had hit a record low of 50.60 on Nov. 20. Traders said state-run banks, thought to be acting on behalf of the RBI, bought INRs at around 50.50.

CALL

Ø Rates ended lower on Monday on low demand for funds as most banks had already met their reserve requirements in the latter half of the two-week reporting cycle, dealers said. Call closed at 6.10/6.15 %, compared with 6.90/7.00 % at close on Friday. It ended at 6.40/6.50 % in an illiquid market on Saturday. A total of 111 billion INRs is expected to enter the system this week, according to Reuters data, as interest on various bonds and T bill redemptions, further improving cash supplies with banks. Banks parked 365.65 billion INRs with the RBI at its daily reverse repo auctions and borrowed only 5 billion INRs via repos, indicating surplus funds in the system.

BONDS

Ø The 10-year bond yield was at 6.99 % compared with Monday’s close of 7.06 %. It hit a low of 6.98 % in early deals, its lowest since August 2005. India’s manufacturing industry contracted sharply in November, a survey showed, and economists said fallout from last week’s attacks on Mumbai risked deepening a deceleration already underway due to the global financial crisis.

STOCKS

Ø Stocks fall 2.8 pct, INR heads toward all-time low . Indian shares shed 2.8 % and the INR fell towards an all-time low on Monday as a slew of weak economic data and shaky European markets rattled investors after last week’s deadly attacks on Mumbai. Shrinking manufacturing activity as well as falling vehicle sales and exports provided fresh evidence of a rapidly slowing economy, which kept alive expectations for easier monetary policy . Exports in October contracted an annual 12.1 %, the first year-on-year decline in nearly three years.

GLOBAL

Ø DJIA 8,149.09 -679.95 Nikkei 8,011.69 -385.53 FTSE 4,065.49 -222.52 Hang Seng 13,462.41 -646.43 US10Y 2.757 -0.165 EUR1.2620Yen 93.19 Gold 778.00 Crude 49.31

Ø U.S. stocks tumbled on Monday as news pointing to the deepening economic slump around the world erased the bulk of last week’s sharp gains, with financial services companies and retailers among Wall Street’s biggest casualties.

Ø FTSE slid 5.2 % on Monday as concerns over demand for raw materials hit heavyweight commodity stocks, while weak data highlighted problems facing the UK economy.

Ø Nikkei average tumbled 5.3 % on Tuesday to a 10-day low as exporters such as Honda Motor Co skidded on a strengthening yen amid growing fears about the global economy.

Ø U.S. stocks slid on Monday after data showed factory activity fell to its weakest since 1982 and Federal Reserve Chairman Ben Bernanke said the U.S. economy remained under considerable strain.

Ø The USD trimmed gains against the euro on Monday after Fed’s Bernanke said the US is now better equipped to tackle systemic risks. Bernanke said the U.S. economy remained under considerable strain. He added further interest rate cuts beneath the Fed’s current target of 1 % for its benchmark overnight funds rate were “certainly feasible”, but suggested the Fed would also use other unconventional measures to aid growth.

Ø U.S. gold futures ended more than 5 % lower on Monday as a sharply lower stock market and a higher dollar amid a wave of risk aversion triggered a sell-off in all precious metals.

Ø LME tin jumped almost 6 % on Monday on reports of a plan to build a big stockpile by China, the world’s biggest producer of the metal, before easing as markets took a closer look at the figures.

Ø U.S. crude oil futures settled at a fresh 3-1/2-year low on Monday, after OPEC’s weekend decision to defer any further output cut until mid-December.

INDIA FRONT PAGE

Ø EIH Ltd owner of ‘Trident-Oberoi’, hit by terror attacks in Mumbai, may open the ‘Trident’ in the next 10-12 days while the ‘Oberoi’ will get operational in 3-4 months.

Ø CEO of the retail venture of personal care products maker Dabur India Ltd has quit and the company has scaled down its investment. It has deferred setting up 350 health and beauty stores branded and NewU.

Ø Over half of the fishing vessels operating neat the major ports on the country’s western coast are unregistered, posing a threat to India’s maritime security.

Ø The direct-to-home operators, which has been witnessing a price war due to competition, will soon see prices going up as much at 15 % as the operators pass on the price impact of the weakening INR against the dollar that increases the cost burden of the imported set-top boxes.

Ø BHEL , is likely to sign a pact with Japan’s Toshiba Corp in December to procure technology for making high-powered transmission equipment and offer services in building transmission plants.

Ø Tata Motors Ltd will borrow from the public and will pay up to 11 % annual interest on three-year deposits as the credit crunch limits its ability to refinance loans used to acquire the luxury brands, Jaguar and Land Rover, in June.

Ø Nearly 300 small and medium-sized ancillaries in the Adityapur industrial area have had to shut down because the nearby Tata Motors truck factory in Jamshedpur, which receives supplies from them, has been resorting to weekly closures of five days.

Ø The Taj, owned by Indian Hotels Ltd and hit in the Mumbai terror attacks, is not accepting reservations till the end of 2009. Both the ‘Palace’ wing and the ‘Tower’ wing will be closed for renovation.

To change and to change for the better are two different things. We are constantly changing, be it a small change, such as the difference in our exact mindset, or profound, such as a move from one location to another, but in doing so, we are not always progressing. A poor man may become rich; through misfortune he may become poor again. His circumstances have changed twice, but he has seen no progress.

Progress simply means, “to advance towards a higher or better stage”, or say “ Progress is a change that benefits us” but a Change may take a positive step forward or may turn into a devastating step. There are aspects of human creativity that do not foster progress, though they may inaugurate change–permanent or temporary…like politics, arts and religion. A political system, for instance, may change from an absolute monarchy to a democracy; but it can also change back again. Similarly, it’s very possible for a progress to occur that, on a personal-level benefits us, but does not benefit the society as a whole. Or sometimes we do not agree with a policy, but it helps society as a whole. Progress is not the greed of one, which allows uncontrolled growth that destroys all the qualities of one’s life. Progress is about maintaining our values and ethics while recognizing that some change is inevitable, and that change can even be an improvement. Little steps can lead us to the path of progress like developing new skills and making perfect the existing ones, meeting like-minded activists or sharing experiences, inspiration and enthusiasm for taking action on the issues we really care about.

But what separates change from progress? Well, we can’t avoid change, it’s mandatory, and progress, however, is optional. Change is inevitable, but what often is overlooked is the fact that neither the passage of time nor change occurring guarantees progress. The challenge is to work towards making inevitable change a positive step — whether it’s in our business or our personal life.

The true factor in progress is character. Character is one’s ethical strength, the ability to judge things unbiased, the capacity to break beyond the bounds of common thought and excel to the best decision overall. When the opportunity to change comes about, it’s up to the individual to take a grasp on that change, and rather than idly sit and allow it to alter him or her.

Change requires nothing, it happens on its own. Progress requires character…therefore, to maintain Progress and advance the pace of positive Change; all of us who strive to improve the lives of people and the nation, must bring to bear the maximum measure of our creativity, skills, resources, and dedication for the mutual benefit…benefit by reacting to change in a positive way.

INVESTMENT RATIONALE

§ Co. plans to put 3,000 MW capacities on commercial generation during the year. Out of this, 1,000 MW capacity has already been put on commercial generation at Sipat (500 MW) and Kahalgaon (500 MW). The remaining 2,000 MW to be put under commercial operation will include 2 units of 250 MW each at Bhilai, one unit of 500 MW at Sipat and 2 units of 500 MW each at Kahalgaon.

§ Capacity utilization (PLF) of coal based power plants reached 92.24 per cent in 2007-08 compared to the national PLF of 78.61 per cent.

§ NTPC has been on a rapid expansion spree over the past few years, during which, it invested around Rs 23,000 crore in fixed assets. Since it also generated cash of Rs 24,000 crore from operations, it did not have to raise extra cash from other sources. The company plans to invest nearly Rs 13,600 crore during FY09, over and above an investment of Rs 8,200 crore in FY08. Currently, a capacity of 16,180 mw is under construction, including 3,750 mw in JV companies, which will be completed by FY12. Of this, 2,800 mw will be completed in FY09, which can add about Rs 700 crore to the bottomline.

§ The company is developing three hydel power plants, totalling 2,000 mw, as a diversification move.

§ An important element of its operations is that it is selling power at Rs 1.84 per unit, as per the rules laid down by the power regulator, which is much lower than the spot price. As the market is freed up over a period of time, the company stands to gain the most.

§ While its expansions may require high leveraging, NTPC looks well-placed with a reasonable debt-equity ratio of 0.52. This contrasts with a debt-equity ratio of 2.3, which is allowed for a generation company. This leaves enough room for the company to raise debt, if required.

§ NTPC is planning to use inland waterways to transport imported coal from seaports to its power stations in an effort to limit the transportation costs, for which it has joined hands with Inland Waterways Authority of India.

§ Co. is participating in the entire value chain of power development to contribute to the Government’s commitment of providing power for all by 2012.

§ NTPC has formed a JV with BHEL, incorporated as ‘NTPC BHEL Power Projects Private Limited’ for manufacturing balance-of-plant (BoP) equipments and main-plant equipments. This JV will also operate in the EPC space.

§ Company has another JV incorporated as “BF NTPC Energy Systems Limited” with Bharat Forge. This will also help in meeting requirement of balance of plant equipment.

§ NTPC has formed a JV with Bihar State Electricity Board under the name Nabinagar Power Generating Company on Sept.’08 for setting-up of a coal based power project having capacity of 1980 MW (3 X 660 MW) and operation & maintenance thereof at Nabinagar in district Aurangabad of State of Bihar.

Suppose company A has 1,000 shares in total, of which 200 are held by the promoters, so that only 800 shares are available for trading to the general public. These 800 shares are the so-called ‘free-floating’ shares.

Similarly, company B has 2,000 shares in total, of which 1,000 are held by the promoters and the rest 1,000 are free-floating.

Now suppose the current market price of stock A is Rs 120. Thus, the ‘total’ market capitalisation of company A is Rs 120,000 (1,000 x 120), but its free-float market capitalisation is Rs 96,000 (800 x 120).

Similarly, suppose the current market price of stock B is Rs 200. The total market capitalisation of company B will thus be Rs 400,000 (2,000 x 200), but its free-float market cap is only Rs 200,000 (1,000 x 200).

So as of today the market capitalisation of the index (i.e. stocks A and B) is Rs 520,000 (Rs 120,000 + Rs 400,000); while the free-float market capitalisation of the index is Rs 296,000. (Rs 96,000 + Rs 200,000).

The year 1978-79 is considered the base year of the index with a value set to 100. What this means is that suppose at that time the market capitalisation of the stocks that comprised the index then was, say, 60,000 (remember at that time there may have been some other stocks in the index, not A and B, but that does not matter), then we assume that an index market cap of 60,000 is equal to an index-value of 100.

Thus the value of the index today is = 296,000 x 100/60,000 = 493.33

This is how the Sensex is calculated.

The factor 100/60000 is called index divisor.

RUPEE

Ø INR is seen in a narrow range on Wednesday, with traders watching the stock market for cues on the U.S. Fed’s latest rescue plan for the economy. The Fed, outlined an $800 billion lending facility to support the market for consumer debt securities. 1M NDF were quoting at 50.35/50 per USD, weaker than the onshore spot rate, indicating a bearish outlook for the local unit in the near term. INR closed at 49.93/95 on Tuesday, off a high of 49.70, but 0.3 % stronger than Monday’s close of 50.09/10. It had hit a record low of 50.60 last week. FII have sold a net $13.7 billion worth of Indian shares so far in 2008 after buying a record $17.4 billion last year, a major prop for the INR.

BONDS

Ø Yields should rise on Wednesday on expectations for easier monetary policy to support growth and traders awaiting inflation data due on Thursday. 10Y ended at 7.22 % on Tuesday, two basis points above Monday’s close of 7.20 %. The yield had fallen to 7.10 % on Friday, its lowest since December 2005. FM said on Monday monetary policy was biased towards stimulating growth and the RBI was likely to lower rates as inflation cooled. Inflation was at 8.90 % in early November, compared with a peak of 12.91 % in August.

CALL

Ø Rates ended lower on Tuesday as banks had sufficient funds, but mild demand did emerge in first week of the reporting fortnight, dealers said. Call rates closed at 6.60/6.70 %, lower from its previous close of 6.90/7.00 %. “Liquidity is adequate, there is no pressure on call rates. They will remain below 7 % for the rest of the fortnight,” said Anoop Verma, an associate vice president with DCB. RBI absorbed a net 7.2 billion INRs from the system via its twin money market operations, indicating sufficient funds in the system.

STOCKS

Ø Indian shares fell 2.3 % on Tuesday after an early rally gave way to deeper concerns about sluggish consumer spending that has forced companies such as steel and truck makers to cut output.

GLOBAL

Ø DJIA 8,479.47 +36.08 Nikkei 8,215.66 -108.27 FTSE 4,171.25 +18.29 H Seng 13,183.20 +304.60 US10Y 3.088 -0.243 EUR 1.3009 Yen 95.12 Gold 820.50 Crude 50.86

Ø The Dow and S&P 500 rose on Tuesday amid optimism that the Fed’s latest rescue package could revive the sagging housing market and free up consumer lending.

Ø FTSE edged up on Tuesday with banks higher after the Fed pledged billions of USD to aid the U.S. economy, but miner Rio Tinto plunged after BHP Billiton dumped its year-old takeover bid.

Ø Nikkei lost 1.3 % on Wednesday as the yen’s advance against the USD hit Sony Corp and other exporters, with tech shares suffering on demand fears as the global economy worsens.

Ø The USD fell for a third day versus the euro on Tuesday as new U.S. measures to boost consumer lending helped ease concerns about the financial crisis, diminishing demand for the USD as a haven.

Ø Gold recovered on Tuesday, rolling back earlier 2 % losses, as the USD slid for the third consecutive session against the euro after data showed that U.S. GDP shrank more than expected in the third quarter.

Ø Copper pared losses on Tuesday as a sharply weaker USD offset concerns about metal demand.

Ø Oil tumbled by more than 6 % on Tuesday to below $51 a barrel after data showed the U.S. economy in the third quarter shrank at its fastest pace in seven years, stoking concerns fuel demand will slow further.

INDIA FRONT PAGE

Ø Banks operating in India, including foreign ones, may soon be able to open new branches and set up automated teller machines without a license from the RBI

Ø Real-estate fund Indiareit has acquired about 15 % stake in Mumbai-based Neptune group for about 3 billion INRs.

Ø Global gaming and theme park leader Sega Corp, a subsidiary of Tokyo’s Sega Sammy Holdings Inc is in talks with DLF Ltd for a possible entry into India.

Ø Adlabs Films Ltd is spending 2 billion INRs to expand its integrated film service business and movie exhibitions.

Ø BHEL. has lined up 30 billion INRs for a foray into the solar energy sector and is seeking to rope in a Japanese technology partner.

Ø Bajaj Auto Ltd has decided to scale down output, shrink vendor base to manage costs, align production across its three manufacturing units and aggressively target the exports market, in view of the global economic slowdown.

Ø Jindal Steel & Power Ltd is planning to add hydro-electric, nuclear, wind and solar projects to its larger steel business as demand for power grows.

Ø Fresenius Kabi (Singapore) Pte Ltd, the majority stake holder in Dabur Pharma Ltd , has sought more time from SEBI for complying with norms that require the promoter company to limit its holding to 90 % in a listed entity.

Ø Orient Green Power Company, the renewable energy unit of Shriram EPC Ltd has raised $55 million from a set of private equity players to fund its capacity expansion plans.

Ø Power Finance Corporation Ltd is in talks with Larsen & Toubro Ltd to extend a 5.08-billion-INR debt facility to the latter’s equipment making joint venture with Mitsubishi Heavy Industries

For the past few weeks, Tata Coffee’s Coorg filter coffee was not available in the Calcutta market. Since I’ve been a long term addict and my morning is incomplete without a strong cup of coffee, I fretted and kept enquiring at local stores and supermarkets. ‘No supply’, ‘Not available’ was the standard response.

As the last 200gm packet (that cost Rs 42) dwindled, I panicked and bought a packet of something called ‘Fresh & Honest’. The only problem was that it had 30% chicory mixed with the coffee and tasted pretty awful. The stock market gloom was adding to my morning coffee doom.

Finally, the local grocer informed that a fresh supply had arrived. As I gleefully picked up 4 packets and handed over Rs 200, I was taken aback when the grocer requested a further Rs 8! The 200 gm packet now cost Rs 52 - nearly a 25% price increase.

My weekly visits to the market has confirmed that the prices of fruits have remained unchanged. So have meat and fish. Same with pulses and rice and spices. Only a slight downward movement in the price of vegetables. The price of petrol and diesel at the pumps have remained unchanged as well.

As far as the “aam aadmi” is concerned, there is no change in inflation. So why are the figures announced by the government going down? My guess is what they call the ‘base effect’. That means the rate is lower than the previous week’s because a year ago the same week’s rate may have been higher than the earlier week’s rate. There seems to be no other explanation.

The balance of payments comprises the current account, the capital account, and the financial account.

-The current account consists of the goods and services account, the primary income account and the secondary income account.
-The financial account records transactions that involve financial assets and liabilities and that take place between residents and nonresidents.
-The capital account in the international accounts shows (1) capital transfers receivable and payable; and (2) the acquisition and disposal of nonproduced nonfinancial assets.

The Current Account
The difference between a nation’s total exports of goods, services and transfers, and its total imports of them. Current account balance calculations exclude transactions in financial assets and liabilities. The current account is used to mark the inflow and outflow of goods and services into a country. Earnings on investments, both public and private, are also put into the current account. Within the current account are credits and debits on the trade of merchandise, which includes goods such as raw materials and manufactured goods that are bought, sold or given away (possibly in the form of aid). Services refer to receipts from tourism, transportation (like the levy that must be paid in Egypt when a ship passes through the Suez Canal), engineering, business service fees (from lawyers or management consulting, for example), and royalties from patents and copyrights. When combined, goods and services together make up a country’s balance of trade (BOT). The BOT is typically the biggest bulk of a country’s balance of payments as it makes up total imports and exports. If a country has a balance of trade deficit, it imports more than it exports, and if it has a balance of trade surplus, it exports more than it imports.

Receipts from income-generating assets such as stocks (in the form of dividends) are also recorded in the current account. The last component of the current account is unilateral transfers. These are credits that are mostly worker’s remittances, which are salaries sent back into the home country of a national working abroad, as well as foreign aid that is directly received.

Capital Account
An account that tracks the movement of funds for investments and loans into and out of a country. The capital account makes up part of the balance of payments. The net result of public and private international investments flowing in and out of a country. The net results includes foreign direct investment, plus changes in holdings of stocks, bonds, loans, bank accounts, and currencies.

The capital account is where all international capital transfers are recorded. This refers to the acquisition or disposal of non-financial assets (for example, a physical asset such as land) and non-produced assets, which are needed for production but have not been produced, like a mine used for the extraction of diamonds.

The capital account is broken down into the monetary flows branching from debt forgiveness, the transfer of goods, and financial assets by migrants leaving or entering a country, the transfer of ownership on fixed assets (assets such as equipment used in the production process to generate income), the transfer of funds received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, and, finally, uninsured damage to fixed assets.

Fiscal Deficit
When a government’s total expenditures exceed the revenue that it generates (excluding money from borrowings). Deficit differs from debt, which is an accumulation of yearly deficits.
A fiscal deficit is often funded by issuing bonds, like treasury bills or consols.

Revenue Deficit
When the net amount received (revenues less expenditures) falls short of the projected net amount to be received. This occurs when the actual amount of revenue received and/or the actual amount of expenditures do not correspond with predicted revenue and expenditure figures.

Trade Deficit
An economic measure of a negative balance of trade in which a country’s imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.

CG’s business operations consist of 22 manufacturing divisions spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka, supported by well knitted marketing and service network through 14 branches in various states under overall management of four regional sales offices located in Delhi, Kolkata, Mumbai and Chennai. Its products include power & industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators/ generators, railway signaling equipments, lighting products, fans, pumps and public switching, transmission and access products. The company is in quality range by having many certifications in the ISO 9000/9001:2000/14001 series.

Investment Rationale

· It has completed the acquisition of French firm “Societe Nouvelle de Maintenance Transformateurs” (Sonomatra) for about Euro 1.30 million. This acquisition would enhance the firm’s capabilities in the services segment of its transmission and distribution business.

· Its Transformer Group has bagged a contract for supply of 13 nos 25 MVA, 400kV single phase and 10 nos 32 MVA, 220kV single phase Generator Transformers for another Hydel projects, valued at Rs 72 Crores.

· Crompton Greaves is working on a business plan to improve the performance of three power distribution divisions in Nagpur bagged from the Maharashtra State Electricity Distribution Company in September 2007. These attempts are being made to bring down the transmission and distribution losses, currently at 45 per cent, over the next few years.

· CG’s acquisitions (Pauwel, Ganz and Microsol) have given it the much-required brand recognition in the overseas market, access to superior technology and entry into automation products, thus providing unique synergies to become a global solutions-oriented T&D player. Today, it is one of the few manufacturers in the country to have access to 765-KV transformer technologies. Hence, CG has the capability to compete with large companies such as ABB and Areva for a share of incremental investment in T&D sector, which will come largely in high-voltage products.

· Company, through its wholly owned subsidiary- CG International BV, Netherlands, has acquired additional 40% voting share capital in PT Pauwels Trafo Asia, Indonesia, for a sum of USD 10.70 million. With the acquisition of these shares, the Company, through its subsidiaries now owns 100% of the voting share capital of the above Indonesian Company.

· Crompton Greaves is on the lookout for an acquisition in the industrial systems space.

TNPL manufactures a range of high-quality, surface-sized maplitho paper to suit any kind of printing, sheet-fed or web offset. Its plants are at Pugalur, Karur district. The company has two unique advantages. First, it makes paper out of cheap and fixed-cost bagasse. Second, it can completely switch from newsprint to printing and writing paper and vice versa depending on market conditions.

Investment Rationale

· The Mill Expansion Plan for increasing the paper production capacity from 2,45,000 tpa to 4,00,000 tpa is expected to be implemented by March 2010.

· The company has completed the Rs 565 crore mill development plan that would see its captive pulp production capacity increase from 500 tonne per day to 720 tonne per day. The benefit of this expansion plant would start accruing from May 2008. This will help the company to control the cost of raw material and insulated it from the fluctuating pulp costs in the international market. An added benefit is that the new pulp mill follows the elemental chlorine free process, an environment friendly process.

· The company continues to enjoy its relatively lower reliance on wood as it makes paper primarily from Bagasse- a sugarcane waste product, which is abundant and cheap, as compared to wood, which is scarce and expensive. In order to further de-risk the company’s exposure to volatile wood pulp prices, TNPL has raised its pulpwood plantation in 29,962 acres under farm forestry and captive plantation schemes including 10,616 acres added during current year.

· TNPL is also setting up a mini cement plant having a capacity of 400 tpd at capex of Rs.40-45 crore for producing high-grade cement using the lime sludge and fly ash generated in the process of manufacture of paper. TNPL will be the first mill from Paper Industry to produce high-grade cement from the lime sludge and fly ash, the waste materials in paper manufacturing.

· Company is also proposing to construct an IT Park in the surplus land (63.5grounds) it holds on the outskirts of Chennai.

· TNPL is all set to enter into carbon trading having got its bio-methanation plant registered as a clean development mechanism (CDM) project with UNFCCC (United Nations Framework Convention on Climate Change). This is the country`s first ever CDM project in the waste management sector to be registered with UNFCCC. TNPL emerges as the first paper mill in India that registered a CDM project with UNFCCC.

RUPEE

Ø The Indian INR slumped to a record low on Thursday, but heavy selling of USDs by state-run banks probably on behalf of the RBI helped the unit crawl off the trough at close. Traders estimated the state banks sold up to $1.5 billion to halt the INR’s slide after it tumbled to 50.60 per USD in early trade, according to Reuters data, as the stock market extended a slide into a seventh session in a row. “The RBI doesn’t seem to be very comfortable with the INR being weaker than 50,” the chief dealer with a private sector bank said.

CALL

Ø Rates ended lower on Thursday as demand for funds was low on the eve of the reporting Friday as most banks had completely funded their reserve requirements. Call rates closed at 6.20/6.30 %, lower than 6.40/6.50 at close on Wednesday. . “Rates however, are unlikely to rise much more than 8 %, as banks can borrow from the RBI at 7.5 %.” However, aggressive USD sales by the RBI in the forex market to shore up the INR could tighten INR liquidity in the system and push up overnight rates. RBI absorbed 275.45 billion INRs via the reverse repo auction, the higest since Nov. 6, indicating adequate funds in the system.

BONDS

Ø Yields may test their lowest levels in nearly three years on Friday as falling oil prices calm inflation worries and create room for further policy easing, although new supplies could limit the move. 10Y at 7.26 % on Thursday, down from Wednesday’s close of 7.40 %. It struck 7.20 % during trade, its lowest since January 2006. Oil was trading at 3-½ year lows below $49 a barrel. Lower oil prices raise expectations of inflation moderating further in coming weeks. The government will sell 60 billion INRs of 7.56 % 2014 bonds, and 30 billion INRs of 7.94 % 2021 bonds via auction on Friday.

STOCKS

Ø SENSEX fell l 3.7 % on Thursday to its lowest close in more than three years, as jittery investors crammed the exit as a broad sell-off gripped world markets on a worsening global economy. The top 30-share has tumbled nearly a fifth in a seven-session slide, and is poised just 9 % from its lowest in three years at 7,697.39 touched on Oct. 27. inflation rate eased slightly to a 5-½ month low of 8.90 %, adding to expectations the RBI would aggressively lower interest rates.

GLOBAL

Ø DJIA 7,552.29 -444.99 Nikkei 7,532.11 -170.93 FTSE 3,874.99 -130.69 H Seng 11,929.15 -369.41 EUR 1.2460/63

Ø -U.S. stocks plunged yet again on Thursday, as a frantic flight from risk on investors’ deepening economic fears left the benchmark Standard & Poor’s 500 index at its lowest level since 1997 — completing the erasure of more than a decade of stock market gains.

Ø FTSE closed down 3.26 %, tracking falls on Wall Street as weak U.S. jobless figures added to the recessionary woes, with commodities the biggest losers, while banks were mixed and retailers rose.

Ø Nikkei average fell more than 3 % on Friday, striking a three-week low as a stronger yen, an overnight plunge in U.S. stocks and global recession fears prompted investors to sell exporters such as Sony Corp

Ø USD and yen rose against the euro and other currencies from countries with high interest rates as fears of a deep global recession sent investors fleeing for the safest assets.

Ø Gold prices rose on Thursday, buoyed by interest from jewellery makers and investors seeking safety, but a stronger USD against the euro and lower oil prices are expected to weigh on sentiment.

Ø Prices of aluminium and copper sank to their lowest levels in more than three years on Thursday as rising stock levels and anxiety over the health of the U.S. auto industry fanned concerns about demand prospects for industrial metals.

Ø Oil dropped 8 % to below $50 on Thursday as a bearish U.S. jobs report intensified concerns of a long and deep global recession and further crushed demand expectations.

Ø The U.S. government reported the number of workers making new claims for jobless benefits last week surged to the highest level in 16 years, helping to push down global equity markets.

INDIA FRONT PAGE

Ø The finance ministry is considering a further relaxation in overseas borrowings, particularly for infrastructure companies. It is looking at doing away with interest rate caps to make borrowing outside India easier for the infrastructure firms.

Ø The Monopolies and Restrictive Trade Practices Commission has started investigations into Jet Airways Ltd and its low-cost unit JetLite over cartelisation concerns.

Ø The National Highways Authority of India has relaxed the norm limiting a bidder to bid for not more than eight road sector projects, as investor interest in certain projects falls due to the economic downturn. The relaxation will be applicable to projects which have received less than five price bids.

Ø Government and the Reserve Bank of India are working on opening a 750 billion INR refinance window to provide concessional funds for infrastructure, housing and small and medium enterprises by partly leveraging the country’s foreign exchange reserves.

Ø Textiles firm Alok Industries Ltd has decided to put its textile special economic zone project at Silvassa in the union territory of Dadra and Nagar Haveli on hold following the demand slump and credit shortage.

Ø Aditya Birla Minerals a unit of India’s top aluminium maker Hindalco Industries Ltd has suspended work on the Esperanza South Project in Australia citing downturn in copper prices and market conditions.

Ø PNB Principal Insurance Advisory is rapidly scaling down operations and is likely to become non-functional soon. The Advisory is a venture between US-based Principal, Punjab National Bank Berger Paints and Vijaya Bank .

Ø ACC Concrete Ltd, a construction unit of India’s cement maker ACC Ltd has laid off 190 permanent employees amounting to 25 % of its workforce and put its expansion plans on hold due to the bleak outlook on the construction business.

Ø PE arm of Kishore Biyani’s Future Group, Indivision India Partners, has invested 1.50 billion INRs for a 50 % stake in Blue Foods, which operates a chain of reastaurants such as Copper Chimney, Noodle Bar, Cream Centre Bombay Blue, Gelato Italiano and Sphagetti Kitchen.