A major development during the week was the award of licenses for basic telephony.
Of 40 licenses granted, Reliance and Tatas have cornered the lions share.

Another piece of news has been the prospect of a hike in steel prices - HR coil prices are expected to be hiked by Rs500 per tonne from April 1, 2001.

However, during the week end, two negatives surfaced :

Firstly, doubts have been expressed over the government's ability to meet the tax figures.
While direct tax collection is expected to fall short of revised estimates by Rs 45-60bn,
indirect taxes are estimated to be lower by Rs20-30bn.

Secondly, the growth of the economy seems to be slowing down.

Sectoral change in the quarter ended December :

While the core sector and agriculture seem to be on a better wicket, manufacturing and the secondary sector seem to be facing hardships. And with banks likely to fight shy of lending
to preferred clients as they tighten their lending norms, these segments seem vulnerable in the
short term too.

FII inflows could be affected as there could be a heightened interest in the US and European markets next week. While prospects of another rate cut in the USA are high, as the
government seems desperate to kick start the economy, the ECB has signaled that it will
cut rates as concerns persist that a US economic slowdown could damage the European economy. Expectations of a rate cut and a rally in banking stocks on signs that Allianz could
sign an agreement to buy Dresdner Bank over the weekend, led to a buoyancy in the European markets. Asian markets in contrast, could see another choppy week as alternate bouts of hope and a slowdown in two key economies outside of USA - Japan and China - continue to play
hide and seek.

A crucial support level for the Sensex is 3,491. appear While the prospects of this level being seem high, value based buying could lead to resisting a free fall. Besides with naked short sales being banned, we expect some rationality to make its way back in the market at current levels, most stocks seem to be attractively valued. Hence, we recommend buying in counters like
Pidilite, Godrej Soaps and ITC near 3491 levels.

Money Market -Weekly Update

Market Highlights :

• Call rates were 7.10%-14.00%.
  
  
• The Indian Rupee was at 46.60/64.
  
  
• The RBI infused liquidity through reverse repo at 9% in the week.
  
  
• The government securities prices rose by 50-100 paise.
  
  

Exim Policy Highlights :

• India lifts import curbs on 715 items
  
  
• India confident of achieving 18% export growth in 2001/2002
  
  
• India aims to achieve 1% share of global trade by 2004/2005
  
  
• Allows import of second hand cars not older than 3 years
  
  
• Commerce Minister says that he favors cheaper export finance
  
  
• Export growth falls to 10.46% in February v/s 24.01% in January
  
  

During the Week :

Call rates firmed up amid sharp increase in the borrowing volumes from banks. With banks opening after a day's holiday and many more holidays to follow along with the curtailing of lendable funds by major lenders ahead of financial year-end. Further liquidity concerns and perceived outflows due to auction, spiked call rates. Reserve bank of India infused funds
worth Rs 5015 crore by accepting 32 bids at 9.00% through the reverse repo auction on
Friday. Participants have depend on Central bank over past couple of days to borrow funds
to fulfil reserve requirement. The Indian unit opened firm and is expected to hold its ground at these levels because of bunched up dollar supplies finding their way in the markets. However year-end demand for the greenback will check a sharp appreciation in rupee value. Rupee is expected to remain choppy since, on one hand, banks are expected to square short positions initiated to benefit from weekend swap difference and on the other, there might be a slipover
of yesterday's import cancellations and dollar sales by exporters. Rupee is also seen aided by positive sentiments because of strong portfolio numbers from Foreign Institutional Investors.

The government securities market was range bound on a cautious note. Bond prices remained choppy with not much trading interest evinced by market players. Prices of short and medium term g-secs rose as most of the markets were in wait and watch mode ahead of the auction
result. The auction of 11.43% 2015 bond for a notified amount of Rs30bn was almost in line
with the market expectations, with RBI fixing the cut-off at 103.70 rupees. The issue devolved
to the tune of Rs19.1bn on Pd. GDP growth rate down to 5.7% in Q3. A decline in growth
rates in the manufacturing and services sectors, pushed down the GDP rate to 5.7% vis 6.5% Prices of actively traded government papers jumped up further as buying activity was seen in medium to long tenor papers. Buying has revived because of bargain hunting.