Global Markets

• Treasury 10-year notes surged after the US unemployment rose to a 26 year high of 10.2% and the Fed indicating that it would keep interest rates low for an extended period.
• The unemployment rate in the US jumped to 10.2% in October, the highest level since 1983, raising concerns on the emerging economic recovery. Payrolls fell by 190000 last month, more than economist forecast.
• The World Bank raised its forecast for East Asian Growth, largely due to rebound in China driven by aggressive fiscal and stimulus measures. Stripping out China, the bank reckons the developing economies of East Asia would grow by 1.1% for the financial year 2010 and pick upto 4.5% next year.
• Australia’s Central Bank raised interest rates for a second straight month during the week as it moved to gradually lessen stimulus in an improving economy. Yet the Australian dollar dipped as investors turned cautious. The statement provided by the Reserve Bank Of Australia (RBA) suggested that RBA was open minded about skipping a hike in December and than consider the same in February.
• The Bank of England’s rate setting committee has kept UK interest rates on hold at 0.5% for the seventh successive month. The Bank also informed that it would continue with its programme of pumping £175bn into the economy which is expected to take another month to complete.
• Gold surged to a record high above USD 1100 per ounce as investors pounced on the metal on volatile trade after data showed US employer cut a bigger than expected jobs in October and on news that Srilanka had joined India purchasing the precious metal in favour of the US currency.

Indian Equity Markets

• Equities staged a recovery after an earlier steep correction with the barometer index BSE Sensex regaining the psychological 16,000 level. But intraday volatility was immense in the last three trading sessions of the week. The BSE 30 – share Sensex rose by 1.65% in the week ended November 6, 2009. While the BSE mid cap outperformed the Sensex rising 3.99%, the small cap index underperformed the Sensex gaining 1.59%
• Direct tax collection during the first seven months of the current fiscal grew 3.92% to 173,447 Crores. October’s personal income tax collection grew 16.1%, while corporate tax registered a negative growth of 4.72%. In addition, the indirect tax revenue declined by 24% for the first half. The same can be attributed to a sharp lower imports and sharp fall in excise collections.
• Giving dis-invesment programme a big push, the centre has asked all listed profitable, central public sector enterprises to meet the mandatory listing norm of atleast 10% public ownership.

Outlook: Volatility has been the order of the day on the bourses over the past few days and it may remain so over the next two months or so as foreign institutional investors (FIIs) resort to year-end profit taking.

Indian Fixed Income Markets

• The Indian bond remained flattish for the week. The bond gains pared despite positive news that the federal cabinet decision allowing the government to use the proceeds from the sale of stakes in state run companies until March 31, 2012 to finance social schemes.
• The RBI auctioned Rs.9000Cr of bonds during the week. The auction for 7.32% GOI 2014, 6.35% GOI 2020 and 7.50% GOI 2034. The cut-off yield was at 7.0924%, 7. 7706% and 8.3495% respectively. Considering that the auction cut-offs was higher than market expectation, market sentiment improved and bond prices closed marginally lower than previous week’s close.
• The weekly wholesale price index was not released for the week. The commerce and Industry informed that it would now release that data monthly from November 12, 2009.

Outlook: The bundling up of state government securities along with incremental government papers accompanied with an increment in SLR requirement could potentially keep the yields ranged.

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