Posts Tagged ‘financial market’

Weekly Update 2nd – 6th August 2010

Asian markets saw buying as more than half of the companies that announced results in the MSCI Asia Pacific Index have exceeded the analyst’s estimates, boosting confidence about the strength of the recovery. U.S. economy expanded at a 2.4 percent annual pace in the second quarter less than forecast, indicating that the world largest economy will see a moderate recovery.

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The jobless recovery is curbing household purchases as consumer spending that accounts for about 70 percent of the economy rose 1.6 percent in last quarter, compared with a 1.9 percent rate in the previous three months. U.S. financial system recovery is fragile and as per IMF stress tests banks may need as much as $76 billion in capital. In India, as per expectations RBI hiked the policy rates and indicated that monetary steps will continue in order to moderate inflationary pressures.

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RBI chief said that despite of the monetary measures, monsoon rains would play a critical role in moderating food prices. Now RBI will release eight monetary policy statements in a year that will cut short the time of monetary policy adjustments. The central Bank also revised its estimates for inflation and economic growth to 6 percent and 8.5 percent from earlier estimates of 5 percent and 8 percent respectively.

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The annual monsoon rains bounced back from a 17-percent deficit in the previous week to 38 percent above normal in the week to 28 July 2010.Heavy, well distributed showers in the past week helped total rainfall rise to normal during July have raised the farm sector prospects thereby indicating a pickup in rural demand.

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Till now the results announced so far have shown a mixed picture with some disappointment coming from the large caps.The combined net profit of a total of 1,085 companies declined 12.6 percent to `47280 crore on 23.1 percent increase in sales to 609368 crore in Q1 June 2010 over Q1 June 2009. Going next week some of the top companies like SBI, Bharti Airtel, Tata Motors, Tata steel, etc will announce their quarterly numbers and would help in setting the undertone of the market.

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Indian Stock Markets are holding on to the gains though the momentum for rise is lacking. But the world stock markets are slowly inching up with base metals commodities also showing strength. The rise in Rupee and the midcap stocks rally in the week gone by gives a hope of further rally. It seems the market would take a clearer direction in the coming week. Nifty has support between 5315-5250 levels and Sensex between 17700-17500 levels.

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It is quite visible that good corporate earnings have propped up the sentiments of financial market and commodity is not an exception. Hence we have seen that capital inflow switched to riskier asset from safe asset like gold and dollar index.

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Base metals are the major beneficiary and they are trading at multi months high whereas crude is reacting on stocks pile up in US and ignoring other positive cues. If positive outcome of economic indicators and earnings continue to come in near future then all base metals will trade in a range with upside bias and vice a versa.

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Even in crude oil some lower level buying may occur this week. Expect further fall in gold and if it breaches the mark of 17500 then we may see some spurt in physical buying. In agro commodities, spices may trade in a range on mix fundamentals.

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RBI, Monetary Projections And Indian Economy

Hello Friends,

Just an extension of our previous blog ”RBI And Its Policies – Part 1″.

RBI, Monetary Projections And Indian Economy

RBI, Monetary Projections And Indian Economy

In this Blog we would touch upon the aspects as that of Monetary projection from RBI, assessment of economy scenario at present and relevance of RBI policy on economy.

Monetary projection:

For policy purposes, money supply (M3) growth for 2009-10 is placed at 17.0 per cent, down from 18.0 per cent projected in the Annual Policy Statement.

Consistent with this, aggregate deposits of scheduled commercial banks are projected to grow by 18.0 per cent.

The growth in adjusted nonfood credit, including investment in bonds/debentures/shares of public sector undertakings and private corporate sector and Commercial Papers (CPs), has been revised downwards at 18.0 per cent as in the Annual Policy Statement.

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Economy:

Since the last review in July 2009, there has been a discernable improvement in the global economy.

The recovery is underpinned by output expansion in emerging market economies, particularly in Asia.

World output has improved in the second quarter, manufacturing activity has picked up, trade is recovering, financial market conditions are improving, and risk appetite is returning.

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A sharp recovery in equity markets has enabled banks to raise capital to repair their balance sheets.

If we talk about the home country then there are definitive indications of the economy attaining the ‘escape velocity‘ and reverting to the growth track.

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The performance of the industrial sector has improved markedly in recent months.

Domestic and external financing conditions are on the upturn.

Capital inflows have revived.

Moreover activity in the primary capital market has picked up and funding from non-bank domestic sources has eased.

Liquidity conditions have remained easy and interest rates have softened in the money and credit markets.

Growth projection for GDP for 2009-10 on current assessment is placed at 6.0% with an upward bias, the same as the previous policy review.

But some darker parts also persist.

There are clear signs of rising inflation stemming largely from the supply side, particularly from food prices.

Private consumption demand is yet to pick up.

Agricultural production is expected to decline.

Services sector growth remains below trend.

Bank credit growth continues to be sluggish.

The central bank has warned of possible asset price bubbles, raised banks’ provisioning requirements for commercial real estate loans and lifted inflation forecast.

WPI inflation for end-March 2010 is projected at 6.5 per cent with an upward bias.

This is once again higher than the projection of 5.0 per cent made in the Annual Policy Statement in July 2009.

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Stay Tuned for more on the topic.

We would look into Monetary Policy stance, more facts about economic indicators and Analysis from the Analyst from monetary point of view.

Note : For More Finance Gyan, Latest Industry, Stock Market, Economy News and Updates, please click here

Bear and Bull – Part 1

Hello Friends here we come up with our another write up on “SMC Gyan Series” 🙂

Have you all ever wondered that what exactly this Bull and Bear Market is ?

 

Bull markets and bear markets...what are they?

Bull markets and bear markets...what are they?

What are they? What do they look like? What’s the origin of this terminologies?

Lets Talk about it

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When we talk about bull and bear stock markets it reminds us that it’s a zoo out there. And, like any zoo, there are quite a few wild species to be found 😉

The first two are the bulls and the bears.

Bull market is when stock prices are climbing strongly and a Bear market is when they’re languishing.

Bear Market

To be more precisely, in finance, a bear market is a market condition that occurs when the prices of shares decline or are about to decline.

Figures may vary, but if prices decrease by 15 to 20% then the market is assumed as a bear market.

In general, a bear market resumes if the government goes into recession and if the inflation rate is high.

Bull Market

A bull market is a condition of a financial market of a group of securities in which prices are rising or are expected to rise.

The term “bull market” is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities.

Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue.

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Myth About Bull and Bear Markets

One common myth is that the terms “bull market” and “bear market” are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward.

This is a useful mnemonic, but is not the true origin of the terms.

Long ago, “bear skin jobbers” were known for selling bear skins that they did not own; i.e., the bears had not yet been caught.

This was the original source of the term “bear”.

This term eventually was used to describe short sellers, speculators who sold shares that they did not own, bought after a price drop, and then delivered the shares.

Because bull and bear baiting were once popular sports, “bulls” was understood as the opposite of “bears.” I.e., the bulls were those people who bought in the expectation that a stock price would rise, not fall.

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Stay Tuned for more on this where we would touch upon if bull and bear markets are inevitable and what are the basics investors should keep in mind while trading in bear and bull market.