Indian equities finished at the best level....>

INDIA: Indian equities finished at the best level since August last year and, on

an intraday basis, rallied to just a few points shy of all-time highs. Markets

are sporadically closed across India for holidays today, with USD/INR closed for

trading but some equity indices open. The RBI chose today to announce another

$5bln USD/INR swap auction due to take place on April 23rd, a fortnight or so

following the beginning of the general election process (final results are due

May 23rd).

-The operation is very similar (again, the contracts will have a 3yr tenor) to

the swap auction operation held in late March and the timing should help quell

some of concerns over INR strength. This may raise speculation that a third

auction could be held to coincide with the end of elections in May to quash any

liquidity issues surrounding the event, ahead of which foreign funds have piled

into local corporate, sovereign bonds and equities (although local funds remain

net sellers of Indian equities).

-The RBI rate decision takes focus from here, due on Thursday, with a 25bps cut

to the repo rate and reverse repo rate expected.