Posts Tagged ‘global market’

Weekly Update 20th – 24th September 2010

Global market rallied in the week gone by after Japan intervened in the currency market to weaken yen and Chinese and U.S. economic reports raised the confidence of global growth. Stocks rallied in Japan after it intervened in the currency market to stem the Yen appreciation. The yenweakened to 85.85 per dollar after climbing as high as 82.88 per dollar earlier inthe week, the strongest level since May 1995.

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Continuous reversal in Yen may leadto more investment in exporter companies in the region. The concerns overmoderate expansion in China got erased as the data showed that Industrial Production expanded 13.9 percent in August. The data gave optimism on global growth and led to rally in metals.

Consumer sentiment in U.S. fell to one year lowof 66.6 from 68.9 in August increasing the risk that consumer will cut back on theirpurchases.In India, RBI, in order to anchor inflationary expectations and as a step tocontinue the process of normalisation of the monetary policy instruments raisedborrowing costs for the fifth time this year.

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It raised Repurchase (repo) Rate to 6percent from 5.75 percent, and the reverse-repurchase rate to 5 percent from4.5 percent. It seems that for now, RBI has done enough to contain inflationarypressures and as the repo rate is the operative policy rate therefore thetransmission from policy rates to market rates has strengthened.

Going forward,we expect that RBI would give due weigh to the macro economic situation ratherthan only inflationary pressures before doing any adjustment in monetary policyinstruments.We expect the market to remain firm as even advance tax numbers were higherthan that of last year. Next week U.S. Federal Reserve is expected to give stimuluspackage in its meeting scheduled on 31st September seeing the worrisomesituation of high unemployment and weakness in construction activity asindicated by the latest Fed Beige book finding.

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With the positivity from the global front, we are steadily approaching near the alltime high zone and likely to extend the up move in the coming weeks withrequired consolidation for the sustainable move. Nifty has support between 5700-5550 and sensex between 19200-18800.Another round of quantitative easing by the fed amid falling dollar proved supportive to the bullions and once again lovable gold made life time high acrossthe bourses. Though it made life time high on MCX as well but upside was limiteddue to appreciation in local currency. Silver is also rocking on heavy investmentdemand. Even base metals recovered as many central banks maintained low borrowing cost but slow recovery is capping the upside of industrial metals. Evenfalling crude oil is indicating ambiguous trend. This week, bullions may see aconfident move further on fundamental and technical support.

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Nevertheless,appreciation in currency may lock the price movements to some extent on domestic bourses. FOMC meet regarding interest rate will provide further direction to commodities. Expect a volatile week for agro commodities as expiryof September contract is scheduled on Monday.

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WEEKLY Update 22nd – 26th March

Global market sentiments together with continued buying by foreign institutional investors led domestic markets to pose one of the best six consecutive weekly gains after almost a year. The fact behind such a move is that market participants are gaining a lot of confidence & believe that the domestic economic activity is getting stronger & stronger over the period.

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Encouraging advance tax payments for the Q4 March 2010 also assured the market participants for better than expected corporates profit. As expected Standard & Poor’s (S&P), the credit rating agency revised India’s outlook to ‘stable’ from ‘negative’ with the government’s pledge to reduce fiscal deficit over the next three years in the budget.

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The move complemented overall sentiments of the market post the S&P upgrade as some foreign investors who were restricted from investing in countries below a certain degree of credit worthiness would now come to the market. On the expected lines of monetary tightening, RBI surprised the markets on the last day of trading by increasing both policy rates by 25 bps, a month before its quarterly meeting scheduled in April.

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In the light of sustained pickup in economic activity & headline inflation passing through the baseline projection of 8.5 for end-March 2010 has induced RBI to come up with such stronger action. Moreover, non-food manufacturing products that constitutes 52.2 per cent weight in WPI has seen sustained rise from negative (-0.4 per cent) in November 2009 to 4.3 per cent in February 2010.

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Increasing capacity utilisation and rising commodity and energy prices are exerting pressure on overall inflation. The small hike of 25 bps in policy rates is considered only as a signal & if needed, RBI may come out with more of such steps in case of sustained inflationary conditions in the economy. In the coming week, interest rate sensitive like, Auto & Real estate stocks may see some pressure on the expectation of dearer loans in the future.

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Overall trend of world markets is still up but the rise in dollar index every now and then gives some fear to the rally in commodities. Dollar index, which is at current levels of 80.75, if closes above its key resistance level of 81, can give jitters to various commodities and stock markets so one should take care. Nifty has support between 5150-5050 levels and Sensex between  17200-16800 levels.

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Range trading from last few weeks has kept investors in a fix. Ambiguity over the next move is refraining investors to take large positions in commodities. Currency has become crucial here. Greece concern is capping the upside of euro and dollar index is not breaking its range.

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Furthermore, there is no as such big fundamental news which can give a clear cut direction to commodities. Some supply disruption in copper and nickel can support the prices at higher side. Hence, cautious trading is advised for investors.

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Even in agro commodities, arrival pressure in many commodities is limiting the upside despite the steady demand. Once arrivals get clear, bottom formation is expected in many agro commodities.

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Precious Metals are on Record Setting Spree :)

Precious Metals are on Record Setting Spree

 

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As gold rallied by Rs 80 per ten grams to Rs 17,095 and silver firmed up by Rs 110 per kilo to Rs 28,510 due to constant demand from stockiest on account of rising trend  in global market, both gold and silver resumed at a record high on the bullion market.

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However, due to worries about future inflation and economic uncertaintiesanother record high in the Asian marketgold hit , while Asian stocks bounced back as the bearish dollar kept assets in demand.

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Meanwhile, spot gold increased as high as $1,143.95 per ounce in early Asia trade, settling just above $1,140 while standard gold rose by Rs 80 per ten grams to resume Rs 17,095 from the overnight closing level of Rs 17,015.

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On the other hand, pure gold also firmed up to Rs 17,185 from Rs 17,105 while silver ready too hardened by Rs 110 per kilo to Rs 28,510 from Rs 28,400 previously.

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Earlier due to frantic buying by jewellers in the midst of firming global trend, gold prices touched a record high of Rs 17,300 per 10 gram in the bullion market and Silver coins also set a record by adding Rs 400 to Rs 33,900 for buying and Rs 34,000 for selling of 100 pieces.

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Moreover yesterday silver also rose by Rs 1,000 to Rs 28,350 per kg.

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Sudden Surge and the record setting spree in the precious metals can be attributed to frantic buying of gold in marriage season.

In between, gold in international markets too has climbed to a record high along with the weakening of dollar.

Rising Sugar Prices Threatens to Make Coming Festival Season Bitter :(

Skyrocket prices of Sugar

Rising sugar prices are threatening to make the coming festival season bitter and are causing concerns for many consumers.

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Moreover, in order to meet increasing demand, India will be forced to import sugar in large quantities and this in all possibility will further increase sugar prices.

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However, local production has plunged to 14.5 million tonnes in the 2008-09 with demand at 23 million tonnes, the deadline for duty-free raw sugar imports has been extended by nine months to December 2010.

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Additionally, the government is going to start a fortnightly sale of non-levy sugar with the September quota set at 2.11 lakh tonnes 🙂

This year most deficits have been met by opening stocks and next year they’ll need much larger imports of about 6 million tonnes of raw sugar and 1 million tonnes of white sugar.

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Moreover, nearly 4 million tonnes of sugar have been already purchased by the Indian industry, while India’s sugar shopping spree abroad has sent prices of refined sugar in the global market skyrocketing.

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Additionally, it is said that the world market has recorded a 28-year high and has shot up 60% to $610 per tonne in August 2009 from a level of $380 per tonne in October 2008.

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