Daily Market Outlook - Oct 3 2008

Daily Market Outlook - Oct 3 2008

Daily Technicals - Oct 3 2008

Daily Technicals - Oct 3 2008

Alchemist - BUY

We recommend a buy in Alchemist from a short-term trading perspective. It is apparent from the charts of Alchemist that it was on a medium-term downtrend from its early August high of Rs 105 to September low of Rs 71.

However, after taking support at around Rs 70 recently, the stock bounced up sharply. On October 1, the stock surged 6 per cent, breaking through the medium-term down trendline. Moreover, the stock’s surge has also penetrated the 21-, 50-, 200-day moving averages compression conclusively. We notice very high volume over the past 6 weeks.

The daily relative strength index is on the verge of entering in to the bullish zone from the bearish region. The moving average convergence and divergence is signalling a buy. We are bullish on the stock from a short-term perspective and expect it to move up until it hits our price target of Rs 100 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 84.

Market may resume weak

The market may exhibit cautious trend after taking a strong dip on Thursday. Also major Asian gauges like the Hang Seng index, the Kospi index, Straits Times and the Jakarta index have declined in current trades and may drag down the indices in early trades. Among the local indices, the Nifty has an intra-day support at 3900 and on a break below 3900 the next support is at 3850. On the upside there is a resistance at 4000. The Sensex has a likely support at 12900 and may face resistance at 13150.

US indices declined on Thursday, as frozen credit markets and weak economic reports amplified jitters ahead of the House vote on the $700 billion bank rescue plan. The Dowjones lost 348 points to close at 10483 while the Nasdaq ended 93 points lower at 1977.

However, Indian ADRs were largely weak on the US bourses. Infosys dropped over 5% while MTNL, Rediff, Satyam, Wipro, VSNL, Dr Reddy's, Tata Motors, ICICI Bank, Patni Computer and HDFC Bank were down around 1-4% each. ICICI Bank and VSNL, however, ended with modest gains.

Crude oil prices in the global market moved down, with the Nymex light crude oil for November series sliding by $4.56 at $93.97 a barrel. In the commodity segment, the Comex gold for December delivery lost $43 to settle at $844.30 an ounce.

Daily Call - Oct 3 2008

The US Senate did pass the bail out package on Wednesday, as expected. But the bill now needs to be passed by the House of Representatives before President Bush can sign this. Chances of this bill being passed are brighter than last time, but never the less, uncertain. If the bill is not passed, there could be deep gashes in the indices and the credit markets will further squeeze and Gold could make a comeback.

The US markets closed in the red and the Asian ones have followed suit. The weakness is not so much a comment on the chances of the package being cleared but on the very weak economic data that showed de-growth in manufacturing and rise in unemployment claims. There is going to be severe curtailment in the Q3 GDP from the 2.8% seen in Q2 and recession is almost knocking on the doors in the US. Those who are fully invested should buy the 3800 Put for October, while those who are sitting on cash can consider buying a call in the Nift

Trading Calls - Oct 3 2008

Nifty (3951) Sup 3850 Res 4030

Buy NTPC (169-175) SL 167
Tgt 181, 183

Buy ITC (190-193) SL 188
Tgt 198, 200

Buy SBI (1492-1505) SL 1475
Tgt 1535, 1545

Sell JSW Steel (451-456) SL 460 Tgt 443, 440

Sell Mah Seamless (272-276) SL 279 Tgt 265, 263

Daily News Roundup - Oct 3 2008

Tata Steel to buy 20% stake in Canadian iron-ore firm. (BS)
Axon board to recommend HCL Tech buy-out offer of 441.1mn pounds to its shareholders. (ET)
Tata Sons has offered to buy or make arrangements to buy any unsold ordinary shares in Tata Motors' ongoing rights issue. (Mint)
SEC’s decision to suspend mark-to-market accounting for hard-to-sell assets of banks will have a positive rub-off on Indian banks listed abroad, including ICICI Bank, HDFC Bank and State Bank of India. (FE)
L&T has been awarded a construction contract worth Rs5.5bn by Hyderabad-based property developer PBEL Property Development (India) Pvt. Ltd. (Mint)
ONGC to invest Rs50bn in next four years to revamp its three main assets and one sub-asset. (BL)
Daimler to retain its 6.64% stake in Tata Motors. (ET)
JSW Steel to cut prices of its product’s for the second time in recent months. (FE)
The US Department of Justice may withdraw the motion against Ranbaxy next week in a local court in the US. (ET)
Tata Tea is hiking its ad budget by 15% to promote both its tea and mineral water brands this fiscal. (FE)
Ten major IT companies including Wipro, Tech M and HCL Tech among others to bid for Rs40bn BSNL project. (BL)
Footmart Retail, JV between Pantaloon Retail and Liberty Shoes, is on shaky grounds due to few operational issues. (ET)
Pantaloon Retail says malls are waiving rents and offering to pay for interior decoration as excess supply and slowing economic growth has eroded demand. (BS)
Hindalco Industries’ rights offer is likely to sail through as the issue has received commitment from merchant bankers and financial institutions and the GDR entitlement has also been fully subscribed. (FE)
HCL expects entry of third bidder for Axon. (ET)
Gremach Infrastructure is in talks to sell 5-10% of its equity stake in a Mozambique coal JV, where it owns about 75% stake. (ET)
According to data from market research firm AC Nielsen, HUL is now just 100bps behind Tata Tea in terms of market share in volumes. (Mint)
Welspun India has put on hold its overseas acquisition plans. (Mint)
NDTV's board has approved the proposal to demerge the news and entertainment businesses of the firm. (Mint)
WWIL plans to foray into broadband services. (ET)
Elder Pharma hikes stake in its Nepalese JV to 49%. (ET)
Sun Pharma to extend its tender offer for Taro Pharma which expires on October 3, 2008. (ET)
ONGC-Mittal JV’s combined oil block in Nigeria under scrutiny for alleged irregularities in its allotment. (ET)
LIC hikes stake in Siemens, PTC India, Tata Power and Cipla. (ET)
ICICI and Kotak Bank to consider a 100bps hike in car loan rates. (ET)
Provogue India to spend Rs900mn for expansion. (ET)
HCL-Infosystems sets up ticket vending machines for railways at 390 locations across the country. (BL)
Maytas Infra plans to enter the power sector, lines up four plants. (DNA)
Future group drops plans to hive-off its hyper market division Big Bazaar into a separate company. (ET)
TDSAT refuses to stay TRAI order on renewal of ADC (access deficit charge) to BSNL. (ET)
FIPB has denied approval for a stake sale by JSW Infrastructure Ltd to a Mauritius-based firm more than two years back, citing lack of information on the investor’s source of funds. (Mint)

India’s trade deficit widened to US$14bn in August this year, rising by 94% yoy. (BL)
The textiles ministry has moved a Cabinet note advocating 2% increase in duty drawback to the textiles sector. (FE)
Japan Tabacco Inc has submitted a proposal to increase its stake in Camel and Winston cigarettes brands. (BS)
RBI unlikely to cut CRR. (BL)
Major steel companies are considering a cut in their output to counter slowing demand and falling international prices. (ET)
Trai has sought data from all telcos in a bid to review the mobile termination charges. (ET)
The government is framing a new policy for test marketing by foreign retailers to prevent these companies from circumventing curbs on FDI in retail trade. (ET)
Government may consider removing the cap of 51% in single brand retail. (ET)
RBI has asked banks to disclose their exposure in AIG, Lehman Brothers, Fortis, Washington Mutual and Wachovia Bank. (ET)
Petroleum Minister may announce a dual pricing policy for fuel. (ET)
Sugar mills come under government scanner for alleged excise duty evasion. (ET)
Ministry of communication to meet telecom companies to resolve disputes pertaining to dual technology for mobile services. (BS)

A difference in opinion!

Honest differences are often a healthy sign of progress – Mahatma Gandhi.

After two days of strong gains and a welcome break, (thanks to Gandhi Jayanthi) the bulls would love to walk ahead if not run. But, like the Mumbai climate this morning, everything seems pretty hazy. The newsflow is quite mixed. While the US Senate has done its bit by passing both, the nuke deal and the $700bn bank bailout plan, the overnight crash on Wall Street and weakness in other global markets could play spoilsport.

Should one invest now or wait for sharper dips. There is a clear difference in opinion all around. However, we can’t progress much debating on the same. Revisiting bear periods of the past may make one believe that the markets could see some upsurge this month and thereafter further pain before finding its bottom. But leave the future aside because we have to worry first for today.

We expect our market to soften at the opening bell. The key indices may turn choppy later in the day, as the global cues will continue to determine the overall market trend. The sentiment will remain jittery due to the uncertainty surrounding the US and other key global economies. What might add to the nervousness will be the inflation numbers and anxiety over the latest quarterly numbers.

Despite the US Senate passing the sweetened financial rescue package, there are concerns as to whether the Bush government's much-hyped measure will be able to avert a recession. With weekly jobless claims soaring to a 7-year high, and factory orders slumping to a 2-year low, the concerns seem to be legitimate. What's worse, some key industrialised economies in Europe and Japan too are staring at a recession. We also have to deal with the choked credit markets. As far as India is concerned, the macro picture remains far from pretty.

In Asian markets, Japan's benchmark Nikkei index sank below the 11,000 level for the first time three years, as export-related stocks and resource shares take a beating. Markets in China and South Korea closed for national holidays.

US stocks tumbled on Thursday, as rising jobless claims and slumping factory orders revived recession fears amid heightened concerns over the frozen credit markets and the fate of the $700bn bank bailout plan.

The S&P 500 Index fell 46.78 points, or 4%, to 1,114.28. The Dow Jones Industrial Average declined 348.22 points, or 3.2%, to 10,482.85. The Nasdaq Composite Index slipped 92 points or 4.5% to 1,976.72.

Market breadth was negative. Almost 14 stocks retreated for each that rose on the New York Stock Exchange.

News of rising weekly jobless claims ahead of Friday's key monthly employment report suggests that the world's biggest economy is now on a slippery road toward a consumer-led recession, said some analysts.

There are still concerns about whether or not the House will pass the financial rescue bill and, even if it does, whether it will be effective. A vote on the bill is expected on Friday. The House shot down the original version on Monday.

Billionaire investor Warren Buffett said that it is crucial to the global economy that the US bailout plan gets cleared by the Congress and added that the $700bn plan may not be enough.

Credit markets remained tight, with two closely watched measures of bank lending jitters at record highs. Treasury prices jumped, lowering the corresponding yields, as investors sought less risky places to put their money.

Weekly jobless claims soared to a seven-year high, alarming investors ahead of Friday's big monthly report. And factory orders slumped to a two-year low.

GE shares slid after the company sold $12bn in common stock Thursday at $22.25 per share, a 9% discount to Wednesday's closing price. The stock failed to benefit from late Wednesday news that Warren Buffett's Berkshire Hathaway will buy $3bn in preferred stock.

Oil prices continued to retreat on bets that slower global growth will keep hitting demand for oil. US light crude oil for November delivery fell $4.56 per barrel to settle at $93.97 a barrel on the New York Mercantile Exchange.

Gasoline prices fell for the 15th day in a row, according to a nationwide survey of credit card activity. COMEX gold for December delivery fell $43 to settle at $844.30 an ounce. In currency trading, the dollar gained against the euro and fell against the yen.

Stocks in Europe ended lower on Thursday. The pan-European Stoxx 600 index, after early gains, ended the session with a 1.4% loss to 254.24. UK's FTSE 100 dropped 1.8% to 4,870.34, while the French CAC-40 shed 2.3% to 3,963.28 and Germany's DAX 30 traded down 2.5% at 5,660.63.

The European Central Bank (ECB), as expected, left its key interest rate unchanged at 4.25% on Thursday.

US Republicans decision of considering a new version of bailout package and buying in the IT, banking, FMCG and select telecom stocks coupled with firm cues from the European markets lifted the BSE benchmark Sensex to close above the 13k mark. The BSE benchmark Sensex gained 205 points to close at 13,065 and the NSE Nifty index gained 29 points to close at 3,950.

Among the 30 components of the Sensex, 24 stocks ended in the green and 6 stock ended with negative bias. Infosys, HDFC Bank, ICICI Bank and HDFC were among the major gainers. However, among the top losers were, Reliance Industries, L&T and DLF.

Among the BSE Sectoral indices, BSE IT index (up 4%), BSE Bankex index (up 3.2%), BSE Consumer Durables index (up 3%) and BSE FMCG index (up 1.5%).

Gremach Infra was locked at 10% upper circuit at Rs54.8 after the company announced that it has found coal in Mozambique. The scrip touched an intra-day high of Rs54.8 and a low of Rs50.1 and recorded volumes of over 65,000 shares on BSE.

Omaxe fell from its high, on the back of profit booking, The stock fell 3% to close at Rs93. The company announced that M/s. Omaxe Infrastructure and Construction Pvt. Ltd, a subsidiary of the company secured a contract for development and construction of township for the new zinc smelter plant at Dariba, Udaipur of Hindustan Zinc Ltd.

Total Built-up Area for the township is 4,50,000 Sq.Fit in a 12.5 Acre Plot and the total Contract Value is Rs907.1mn.

The scrip touched an intra-day high of Rs99 and a low of Rs90 and recorded volumes of over 99, 000 shares on BSE.

Shares of XL Telecom surged by over 12% at Rs141 after 1.9% of its equity traded in a single transaction.

~358,370 shares were sold at Rs136.5 per piece on the BSE. The scrip touched an intra-day high of Rs143 and a low of Rs126 and recorded volumes of over 4,00,000 shares on BSE.

Shares of Alfa Laval surged by over 3% to Rs745 after the company announced that it won an order worth 150mn Swedish Krona (SEK) for three thermal evaporation systems from Vedanta Aluminum Ltd for their expansion project in India. The scrip touched an intra-day high of Rs755 and a low of Rs731 and recorded volumes of over 2,000 shares on BSE.

Aftek gained by 1.5% to Rs33 after reports stated that the board of directors of the company would consider spinning off real estate and infrastructure business. The scrip touched an intra-day high of Rs34 and a low of Rs33 and recorded volumes of over 2,00,000 shares on BSE.

Shares of Moser Baer rallied by over 3% to Rs112 after the company announced that secured customer sales orders worth US$500mn for solar modules. The scrip touched an intra-day high of Rs117.9 and a low of Rs109 and recorded volumes of over 19,00,000 shares on BSE.

Shares of Panacea Biotec gained by 2% to Rs244 after the company announced that that it entered into a strategic alliance with PharmAthene, Inc., Annapolis, MD, US, that includes a strategic equity investment by the company through its wholly-owned subsidiary, Kelisia Holdings Ltd., of US$13.1mn in exchange for the purchase of common stock and warrants in PharmAthene.

The company’s subsidiary has agreed to purchase ~3.73mn shares of PharmAthene common stock at a negotiated price of US$3.50/share. The scrip touched an intra-day high of Rs246 and a low of Rs230 and recorded volumes of over 11,000 shares on BSE.

Market may drift lower on weakness in Asian stocks

The market may edge lower tracking weakness in global markets. Caution may prevail ahead of the release of the weekly inflation data by the government after trading hours. US Senate’s nod for the Indo-US nuclear deal may lift shares of equipment makers for nuclear power plants.

Asian stocks dropped today, 3 October 2008, on fears that the global economy will worsen even if the US Congress passes a $700 billion bank rescue bill. Key benchmark indices in Hong Kong, Japan, Singapore and Taiwan were down by between 0.5% to 2.1%. Stock markets in China and South Korea were closed.

US stocks plunged on Thursday, 2 October 2008, as the number of people filing for unemployment benefits hit a seven-year high and another report showed steep drop in factory orders in August 2008.

European Central Bank President Jean-Claude Trichet said on Thursday, 2 October 2008, that Europe's economy was weakening.

The US Senate on Wednesday, 1 October 2008, passed the government's financial rescue plan after the House of Representatives rejected it in its original form. The House is expected to vote on the revised bill on Friday, 3 October 2008.

Meanwhile, the India-US nuclear deal on Wednesday, 1 October 2008, secured the approval of the US Senate which overwhelmingly voted a bill rejecting all the killer amendments and paving the way for its implementation. The landmark civil nuclear cooperation agreement, entered into between Prime Minister Manmohan Singh and US President George W. Bush in 2005, secured 86 votes while 13 Senators voted against it. The legislation, which has already been cleared by the House of Representatives, will now head to the White House for Mr. Bush signing it into a law.

The Indian government will today, 3 October 2008, release the weekly inflation data after trading hours. Inflation based on the whole price index rose 12.14% in year through 13 September 2008. Last month, central bank governor Duvvuri Subbarao said inflation was showing signs of moderating but it was too early to conclude whether this was a trend.

As per provisional data released by the stock exchanges, foreign funds sold shares worth a net Rs 274.90 crore on Wednesday, 1 October 2008. Domestic funds bought shares worth a net Rs 48.65 crore.

Foreign institutional investors (FIIs) have been pulling out their investments from India and other emerging markets to shore up resources to beat the global liquidity crunch. In India, FIIs sold shares worth a net Rs 8278.10 crore last month. The outflow has reached Rs 36707.50 crore in calendar year 2008.

With the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India. However, there is not data available on the quantum of hedge funds’ investment in India.

The next major trigger for the market is Q2 September 2008 results. IT bellwether Infosys kickstarts the reporting season on 10 October 2008

Bullion metals register big drop

Strong dollar pushes precious metals to lowest levels in two weeks

Bullion metals ended lower on Thursday, 02 October, 2008. The yellow metal dropped today after the dollar strengthened once the US Senate passed the revised $700 bailout plan. Silver prices also fell today.

On Thursday, Comex Gold for December delivery lost $43 (4.8%) to close at $844.3 an ounce on the New York Mercantile Exchange. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly since then.

Gold prices ended 5.5% higher for month of September, 08. Prior to this, gold had lost 8.8% in August, 2008. In July, 2008, it ended lower by $11 (1.1%). For the year, gold has lost 2.9% till date in FY 2008.

For the third quarter, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.

On Thursday, Comex silver futures for December delivery fell $1.65 (12.9%) to $11.12 an ounce. Silver had ended month and quarter of September 2008 with a loss of 10%. It ended August with a loss of 2.4% and July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. Till date, silver has lost 7% this year. The metal also had gained for seven straight years.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices and vice versa.

At the currency markets on Thursday, the dollar strengthened after the Senate approved the revised plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. By a vote of 74-25, senators authorized the Treasury Secretary to buy bad assets from companies' books, allowed the Federal Deposit Insurance Corp (FDIC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.

The dollar rose against the euro, and the British pound. The dollar index, which tracks the value of the greenback against other major currencies, rose 1.2%.

Among economic news of the day at Wall Street, the Commerce Department at US reported today, Thursday, 02 October, 2008 that demand for U.S. factory goods dropped at the fastest rate in two years in August, 2008. The drop was due to the much lower orders for metals, machinery and vehicles. Factory orders fell 4%, worse than the 3% drop expected. Actual Orders had risen 0.7% in July, revised down from the 1.3% estimate given a month ago.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. The Federal Reserve halted cuts to its target bank lending rate in April, after slicing it in seven steps to 2% from 5.25% in September.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

Crude continues to plunge

Strong dollar and demand concerns push crude prices further lower

Crude oil prices fell by almost $5 on Thursday, 02 October, 2008 after the dollar strengthened putting pressure on several dollar denominated commodities across the market. Prices also softened on overall global energy demand concerns and after energy department yesterday reported buildup in crude supplies for the first time in six weeks..

Crude-oil futures for light sweet crude for November delivery closed at $93.97/barrel (lower by $4.56 or 4.6%) on the New York Mercantile Exchange. Prices fell to a low of $93.88 during intra day trading. Prices reached a high of $147 on 11 July but have dropped 40% since then.

At the currency markets on Thursday, the dollar strengthened after the Senate approved the revised plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. By a vote of 74-25, senators authorized the Treasury Secretary to buy bad assets from companies' books, allowed the Federal Deposit Insurance Corp (FDIC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.

The dollar rose against the euro, and the British pound. The dollar index, which tracks the value of the greenback against other major currencies, rose 1.2%.

Yesterday, the EIA wing of the Energy Department had reported that at US, crude supplies rose for the first time in six weeks, by 4.3 million barrels for the week ended 26 September. They stood at 294.5 million barrels. Crude supplies had fallen a total of 15.7 million barrels in the prior five weeks. Refinery activity climbed as the Gulf of Mexico continued to recover from Hurricanes Gustav and Ike. Refinery utilization was at 72.3% compared with 66.7% of capacity a week earlier.

The report also showed that demand for petroleum products over the last four weeks has averaged 19 million barrels per day, down 7.1% from the same time a year ago. Of that, motor gasoline demand has averaged almost 8.9 million barrels per day, down 4.5% from the same time a year ago.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.

Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.

Against this background, November reformulated gasoline fell 10.5 cents to end at $2.255 a gallon and November heating oil dropped 13.7 cents to finish at $2.7095 a gallon.

Prices for natural gas sank after the EIA reported a bigger-than-expected climb in last week's supplies in storage. Natural-gas inventories rose by 87 billion cubic feet for the week ended 26 September. November natural gas futures fell 24.7 cents, or 3.2% to close at $7.481 per million British thermal units.

Interview - Warren Buffet - Oct 1 2008

Asian indices open negative

Asian markets opened negative on Friday, October 3, on rising concerns over the U.S. economy.

Toyota Motor Corp., the world`s second-largest automaker, lost 4.6% after U.S. factory orders dropped the most in two years in August. Rio Tinto Group, the world`s third-largest mining company, declined 4.7% as commodity prices tumbled.

Japanese benchmark index Nikkei fell 157.78 points, or 1.41%, to trade at 10,996.98.

Hong Kong`s Hang Seng index tanked 392.81 points, or 2.16%, to trade at 17,818.30.

Taiwan`s Taiex index fell 96.14 points, or 1.69%, to trade at 5,607.58.

South Korea`s Kospi index fell 20.02 points, or 1.39%, to trade at 1,419.65.

Singapore`s Straits Times lost 44.37 points, or 1.88%, to trade at 2,319.23. (7.55 a.m., IST)

State Bank of India

State Bank of India

RBI to Banks - tell us how much you are losing!

The Reserve Bank of India (RBI), concerned over the crisis in overseas markets, has asked commercial banks to provide data on their exposure to "troubled financial entities", two newspapers said on Thursday.

The RBI has asked banks to furnish details of their exposure to Wachovia Corporation, Fortis, American International Group Inc, Washington Mutual and Lehman Brothers Holdings Inc, the newspapers said.

"We have sent letters to the chief executive officers of all banks seeking information on their exposure to the troubled financial entities," a senior Reserve Bank of India official said, according to one daily.

It said the RBI was also planning a special audit of ICICI Bank, the country's largest private sector bank, to assess whether it has any exposure to these entities and the possible impact on its profit and loss account.

On Tuesday, the RBI joined ICICI Bank to reassure investors and customers about the financial health of India's second biggest lender, saying ICICI was well capitalised and has enough cash to meet depositor demand.

Separately, another daily reported that some large foreign institutional investors (FIIs) told the Securities and Exchange Board of India (SEBI), the country's stock market regulator, that they have not been aggressively short-selling ICICI's stock.

At a meeting convened by SEBI Chairman C B Bhave, quite a few of the FIIs said they had been buying ICICI's stock, it quoted a person familiar with the development as saying.

ICICI Bank's shares ended up 3.1 per cent at 551.45 rupees on Wednesday after hitting its lowest in more than two years on Tuesday. The markets are shut on Thursday for a local holiday.