>GOLD PRICE TO HOLD EVEN IF US APPROVES IMF GOLD SALE

London - The U.S. Congress could approve International Monetary Fund gold sales as early as next week, but that decision shouldn't cause a drop in gold prices, analysts said Friday.

"This issue appears now fully priced into the gold market and any announcement confirming sales should not move the market - apart from perhaps a knee-jerk reaction," said John Reade, an analyst at UBS.

Gold hit a three month high Friday due to U.S. dollar weakness across a number of currencies such as the euro and pound. Traders and analysts said the metal is heading towards $1,000 a troy ounce with speculative buying reentering the market and the dollar weakening.

At 1116 GMT spot gold was trading at $974.90/oz, up 1.7% from Thursday's close.

The approval to sell gold, along with an increase in U.S. funding to the IMF, is scheduled for a debate beginning Monday as part of the 2009 Supplemental.

An initial version of the Supplemental, which includes a wider number of issues such as defense spending, was passed by both the House of Representatives and the Senate earlier this month.

The version passed by the House didn't include the IMF provision but the Senate did approve the limited sale as long as it is done in a way that won't disrupt the market.

Discussions over a final draft between representatives from each house are due to begin next week with a vote possible by next Friday.

At the G20 summit in London in April, nation participants agreed the IMF could sell 403.3 metric tons of gold as part of efforts to leverage up to $6 billion in concessional loans for low-income countries over the next few years.

In order for the sale to proceed, 85% of IMF shareholders need to approve the proposal. Since the U.S. has 17% of the votes, it has a de facto veto over the proposal, which requires Congressional approval, but IMF Managing Director Dominique Strauss-Kahn told Dow Jones Newswires this week he expects Congress will soon approve the sale.

"We do not believe the sales, should they occur, will harm gold prices," said HSBC analyst James Steel.

Other member states must also approve the sales plan, which may take many months, HSBC's Steel said, adding the sales are likely to be included in a new Central Bank Gold Agreement, or CBGA. The current CBGA agreement expires in September and analysts expect a new one to be announced soon.

Under the CBGA, 17 European central banks agreed to limit gold sales to 500 tons a year. The pact is adhered to on an informal basis by the U.S., the Bank of International Settlements and the IMF.

Source: COMMODITIESCONTROL

>INDIA GOLD IMPORTS SEEN DN 50% IN MAY; HIGH PRICES

Mumbai - India's gold imports in May will fall by nearly 50% on year to around 15 metric tons, as high prices limit local demand, a top industry official said.

The rally in equity markets have also hit investment demand in gold, said Suresh Hundia, president of the Bombay Bullion Association.

Rising stock prices since early March have spooked investment interest in gold in the world's largest market for the yellow metal, he said in an interview.

Gold imports between January and March were only about 10 tons, but shot up in April to 29 tons because of a dip in prices and strong demand during the Akshaya Trithya festival, which Hindu's consider an auspicious time to buy gold.

But "import demand in May has not improved," Hundia said. Part of the reason was the recent strength in gold prices.

"Demand will pick up only if prices fall to around INR14,000/10 grams," Hundia said, adding that level is likely to be reached by May-end.

Currently, gold is trading around INR14,600/10 grams in the local market.

Stronger Rupee To Lower Local Prices

A stronger rupee, which has risen by over 5% against the dollar since April 1, is likely to bring down the local price of gold, Hundia said.

So far, the impact of a stronger local currency has been marginal as gold has risen in the global market in recent weeks.

"Spot gold prices have risen to $960/oz from about $860/oz, so a correction is likely," he said.

"I expect prices to drop to $912/oz to $932/oz by the end of this month. Once that happens, Indian prices will automatically fall to INR14,000/10 grams and local demand will start picking up," Hundia said.

He said he expects the rupee to strengthen further to about 46.00 to a dollar, in the coming weeks. At 0815 GMT, the rupee was trading around 47.65 to a dollar.

India imports more than 90% of the 700 tons to 800 tons of gold sold in the country annually.

Hundia said gold imports in 2009 are likely to be in line with last year's imports of 396 tons.

The chance of an increase in demand looks remote as investment buying in gold has disappeared with few willing to bet on the yellow metal at prices above INR12,000/10 grams.

However, banks in India, which had imported gold in April just ahead of the Akshaya Trithya festival, have been able to sell most of their stocks, Hundia said.

Scrap gold sales are also thin at the moment and volumes are likely to pickup only when prices rise to INR15,000/10 grams, Hundia said.

Source: COMMODITIESCONTROL

>JYOTI STRUCTURES LIMITED (ELARA CAPITAL)

Key Takeaways

■ In line with our expectations Net Sales for FY09 stood at Rs 1,717.1 crores (Elara estimate Rs 1717.3 crores) against Rs 1,370.4 crores in FY08 (up 25%).

■ The order book for the company as at end of FY09 stands at Rs 3,606 croes (2.1x FY09 sales) with new order intakes of Rs570 crores (2.1x FY09 sales) with new order intakes of Rs570 crores in Q4FY09 from PGCIL (Rs 247 crores) and Maharashtra State Electricity Distribution (Rs 323croes). Of the current order book 65% are for tranmission lines, Substations 15% and Rural Electrification 20%. The order book addition was subdued in the H2FY09 but we expect it to improve with order visibility of up to Rs 3,000 crores for the sector in next two months. JSL would also bid for orders worth Rs 1,300 - 1,500 crores internationally for Gulf Jyoti and JSL Africa.

To see full report: JYOTI STRUCTURES LIMITED

>INDIA EQUITY STRATEGY (CITI)

Owning India Inc.: Foreign Ownership – Ebb...Before the Swell?

■ Market EBB: Foreign ownership at a 6-year low of 15.03% — Foreign ownership in the Indian market has hit a 6-year low of 15.03% as at March 2009 (latest data), valuing foreign ownership at c.$86bn, but falling 56bps in the quarter ($1.3bn outflow). This is a long way from the September 2007 peak of 21% ownership, a value high of $260bn, and an annual inflow peak of $17bn (CY2007).

■ Market SWELL: There has been a foreign flood — We estimate inflows from April-to date of $4.1bn have raised foreign ownership levels to c.15.6% of India’s Top500 companies, and that this portfolio value is now c.$130bn. This is amongst the most concentrated foreign inflows (Sept-Oct 2007 ($9.1bn) was the biggest, but there were outflows thereafter). This flood of funds is almost all foreign with domestic MFs negative in current quarter. Domestic Insurance (over a third of foreign money now) should be positive and stable (but no reliable intra-quarter data).

■ Underweight India/Equities: Domestic getting more defensive than foreigners — Institutional investors started the April quarter relatively defensively: a) FII’s underweight MSCI 46bps, b) Domestics with estimated 14-15% cash weightage, and c) Overall portfolio bias more defensive than at January 2009. Within portfolios, Foreigners are positioning less defensively than domestics in Jan-Mar 2009 quarter.

■ Sector Positioning — Financials and Industrials are key Overweights with foreigners and domestics. Energy (Reliance effect) and IT are consensus Underweights. Domestics are significantly Overweight Consumer Staples and foreigners are Overweight Telecom (Bharti effect). Relatively few changes in sector positioning in Jan-Mar 2009, although significant outperformance in beta sectors/stocks in Apr- May 2009 suggests the current quarter should see significant portfolio o re-casts.

To see full report: INDIA EQUITY STRATEGY