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Friday, March 27, 2009

Stock Market News, Financial News - Mar 27, 2009

Heavy borrowing could pressure rates - officials

By Rajesh Kumar Singh and Manoj Kumar

NEW DELHI (Reuters) - India could overshoot its annual borrowing target in the 2009/10 fiscal year if more fiscal stimulus is rolled out to revive a slowing economy, and this will put pressure on interest rates, senior officials said on Friday.

Policy advisers also said the economy will fare significantly worse in 2009 than in the previous year, and more doses of fiscal and monetary policy may be needed to boost demand and lift growth.  (More ...)

Will Satyam be an albatross around Larsen's neck?

By Sumeet Chatterjee

BANGALORE (Reuters) - Larsen & Toubro is seen as the front-runner to acquire fraud-tainted outsourcer Satyam Computer Services Ltd but a potential purchase could bring more pain than gain.

Not only will the acquisition be a tricky one due to uncertainty about Satyam's accounts and potential legal liabilities from U.S. lawsuits but also it would distract Larsen from its main engineering and construction business.  (More ...)

Reliance signs gas deal with fertiliser firms

NEW DELHI (Reuters) - Reliance Industries on Friday signed deals with 12 fertiliser firms to sell about 15 million standard cubic metres a day (mmscmd) of gas from its block off the country's east coast. Supplies will start from mid-April, Reliance said. 

The firms will pay Reliance a marketing margin of 13.5 cents per million British thermal units (mmBTU) for the gas, said Satish Chander, Director General of Fertiliser Association of India. The margin is in addition to the government-set price of $4.2 per mmBTU for the gas.       (More ...)

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ADVFN World Daily Markets Bulletin (excerpts)

US Market

Stocks Moving Lower As Traders Cash In On Recent Gains

Stocks are showing notable weakness during mid-morning trading on Friday, as investors take profits from the recent rally and digest some mixed economic news. With the decline, the Nasdaq has once again slipped below the unchanged line for the year-to-date period.

On the economic front, the Commerce Department released its report on personal income and spending in the month of February. While the report showed an increase in spending that came in line with estimates, income fell by a little more than expected.

The report showed that personal spending rose 0.2 percent in February following an upwardly revised 1.0 percent increase in January. The modest increase in spending came in line with the expectations of economists.

At the same time, the Commerce Department said that personal income edged down 0.2 in February after a downwardly revised 0.2 percent increase in the previous month. Economists had been expecting a slightly more modest 0.1 percent decrease.

The final reading of the Reuters University of Michigan's consumer sentiment index for March was also released earlier, showing a revised reading of 57.3. Economists had expected the consumer sentiment index to be lifted to 56.8 from the mid-month reading of 56.6.

In other news, President Barack Obama is meeting today with the CEOs of JP Morgan, Citigroup, Goldman Sachs and other banks, as well as executives from industry associations, to discuss the economy and the administration's proposals to increase regulation of the financial system.

Additionally, President Obama will soon unveil the results of a federal examination of the restructuring plans from General Motors and Chrysler, a condition for the auto-makers to rece ive more government capital.

White House Press Secretary Robert Gibbs said the details would be announced before the President departs for the G20 Summit in London on Tuesday.

"The President, as part of viability plans from both GM and Chrysler, is required by the 31st to give an update on those plans and where our government sees them, and we'll be doing that also in the next few days," Gibbs said.

The major averages pulled back to new lows for the session in recent trading, but they have regained some ground since then. The Dow currently remains down 128.39 at 7,796.17, the Nasdaq is down 29.14 at 1,557.86 and the S&P 500 is down 13.55 at 819.31.

European Shares

Europe's top stocks have swung into the red in choppy trade on Friday, led lower by a weak energy sector. U.K.'s FTSE 100 Index is showing a loss of 0.9 percent, while the French CAC 40 Index and the German DAX Index are falling 2 percent and 2.1 percent, respectively.

Asia Markets

The Japanese stock market took a pause for breath Friday bringing to an end nine successive days of rises for the Topix index.
Nevertheless, the Nikkei 225 index reached its highest point since 9 January during the session before easing back to 8,626, down 9 points. Hong Kong's Hang Seng Index ended the day up 0.1 percent.

Commodities

Oil and gold rise after gloomy GDP data
The worst US GDP data for 26 years sent investors scurrying for the safety of gold, pushing the April futures contract up to $940, up $4.20 on the day.

US GDP fell by an annual rate of 6.3% in the final quarter of last year, worse than the initial read of 6.2% but better than consensus forecasts from economists of a 6.6% fall.

Meanwhile, the appeal of gold as a safe asset was further enhanced by news that the total number of US unemployed rose to a record 5.56m, although the dollar’s strength limited the extent of gold’s gains.

The oil price was also on the rise, with the April contract rising above $54 a barrel, reversing Wednesday’s losses when the Energy Information Administration revealed that crude inventories rose by 3.3m barrels last week.

Forex
Dollar dominant
US GDP data that was not as bad as feared prompted support for the greenback Thursday. Though US GDP fell by an annual rate of 6.3% in the final quarter of last year, worse than the initial read of 6.2%, it was still better than consensus forecasts from economists of a 6.6% fall.

Sentiment towards the dollar was also boosted by the relative success of the US Treasury’s auction of seven-year notes. The Treasury sold $24bn of notes at a yield of 2.384%.

The euro was out of favour after data from the European Central Bank (ECB) showed a slowdown in the growth of private sector lending. The aggregate value of loans was 4.2% higher in February than a year earlier, compared with a 5% year-on-year g ain in January. The figures are likely to add pressure to the ECB to cut interest rates some more this year, which will diminish the appeal of the euro.

Sterling also fell back in New York trading despite a good response to the sale of index-linked gilts due to mature in 2022, which was oversubscribed. The auction result came as a relief after the flop the previous day of the auction of 40-year gilts.

The pound fell back by almost a cent, to $1.4444 in New York, having earlier made headway in London trading, where it reached $1.4562. However, even in London the currency finished below its best levels of the day after UK retail sales data revealed a far bigger than expected 1.9% drop in sales from the previous month.

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