Posts Tagged ‘IMD’

Weekly Update 26th – 30th July 2010

The markets witnessed good buying in the week gone by as the corporates from U.S. to Europe showed good performance raising the confidence in the strength of the global economic growth. Continuous buying by the foreign institutions and the strength in the developed markets helped stocks to scale 29 months high. U.S. Fed chief Ben S. Bernanke said that central bank would take additional action if the world’s largest economy does not continue to improve.

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European Banks Stress test result showed that from a sample of 91 European banks, representing 65% of the European market in terms of total assets, 7 banks would see their Tier 1 capital ratios fall below 6%. The focus of the test was mainly to assess the ability of the banks to absorb possible shocks on credit and market risks, including sovereign risks over a 2 years horizon, until the end of 2011. The test revealed that the aggregate Tier 1 ratio, used as a common measure of banks’ resilience to shocks, under the adverse scenario would decrease from 10.3 percent in 2009 to 9.2 percent by the end of 2011 (compared to the regulatory minimum of 4 percent and to the threshold of 6 percent set up for this exercise). However investors are still ambiguous about the credibility of the test as it ignores the majority of banks’ holdings of sovereign debt assuming a case of no default by Greece or any other European country.

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India Inc. has so far shown good performance. The net profit of 339 companies that have declared results has grown by 25.5 percent and sales have shot up by 17.8 percent compared to corresponding quarter last year. The annual monsoon rains improved 24 percent from the deficit in the previous week, but were still 17 percent below normal in the week to 21July 2010, as per the data of the India Meteorological Department on Thursday, 22 July 2010. The seasonal monsoon rains during 1 June to 22 July 2010 were 12 percent below normal.

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The expectation of another 25bps hike in policy rates has already been built in the market. Market would take a cue from what RBI says in its monetary policy on 27th July about the health of domestic market and the steps in its act of balancing growth while anchoring inflationary expectations.

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Trend of Indian Stock Markets is up since a month and now the world markets are also participating in the rally. The rise in Base metal commodities is giving more steam to the rally as that is a reflection of increasing demand for metals in the industry. Nifty has support between 5315-5250 levels and Sensex between 17700- 17500 levels.

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Better than expected earnings amid optimistic equity market bestowed the much needed direction to the commodity market and thus it headed for biggest gain since March. In the meantime, dollar is going down and likely to trade in a negative territory as investors are moving back to the risky asset, which is appearing more promising in current context. Gold is narrating the same story and it is moving in a range with downside bias. Gold silver ratio has declined as silver outperformed gold, getting support from terrific rise in base metals prices. Energy complex has ignored the negative news and shore up on better results and strong technicals. But yes, it’s a time to book profit in spices as they are overbought now, especially pepper.

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Weekly Update 19th – 23rd July 2010

The concerns over recovery in global economy resurfaced in investors mind as China economy grew 10.3 percent in the second quarter showing moderation from 11.9 percent expansion in the first quarter. In U.S., consumer confidence dropped in July to the lowest level in the year to 66.5 from 76 in previous month and factory output too fell by 0.4 percent in June.

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The minutes released by the office of the Federal Reserve said that “The economic outlook had softened somewhat and a number of members saw the risks to the outlook as having shifted to the downside”. The statement and weak data only added to the worries and led to the decline in most of the global markets.

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India’s Industrial Production growth came surprisingly low to 11.5 percent in May from a year earlier and the April growth was revised downward to 16.5 percent from 17.6 percent. It is expected that the Industrial Production will remain close to double digits as some of the leading indicators like vehicle sales remained buoyant in June.

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Keeping a vigil on the liquidity and in order to ensure smooth credit lines for both government and corporate to sustain the growth momentum, RBI has further extended the second liquidity adjustment facility (SLAF) on a daily basis till July 30, 2010. Strong credit growth in Banking system and Industrial production together with high food inflation may influence RBI to raise policy rates by another 25 bps in its first quarter review on 27th July.

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The latest statement by the IMD that the monsoon up to 15 July has so far been 14 percent below the long period average is a cause of concern.July, especially being the most important month for sowing the Kharif crops has led to the alteration of earlier beliefs that going ahead food inflation will moderate.

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Mostly world markets are in downtrend though Indian stock market is still in uptrend. The base metal commodities are not able to rise which is showing the underlying uncertainty in the markets. One should be cautious in such markets.

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Nifty has support between 5280-5220 levels and Sensex between 17600-17400 levels.Indian markets have gone up substantially in last one and half month and dollar index has fallen sharply from higher levels but the Indian rupee has not moved much which is a sign of concern as rupee should have strengthened in such an environment.

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Lack of clarity with reference to the direction of world economy is painting a hazy picture for commodity market. Even uncertain outcome of economic releases and result of second quarter is giving little direction to the commodities. Investors are refraining to make large position in current situation. This week, we have important data form UK and Canada. Housing data can give further direction to base metals. Bullions can trade in a slim spread. Expiry of July contract in NCDEX may result in more volatility in all agro commodities. After witnessing a multi week high some spices may see a pause in rally.

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Weekly Update 5th – 9th July 2010

The global markets fell in the week gone by as the manufacturing growth exhibited weakness from China to U.S. The investor’s across the globe became nervous with the fading signs of global recovery. G20 leaders said that the limited demand in advanced economies has left the world reliant on emerging markets, led by China, to drive a recovery is “uneven and fragile.”

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China’s manufacturing growth slowed more than expected in June adding to the concerns that the fastest- growing major economy is cooling. The government’s Purchasing Managers’ Index declined to 52.1 from 53.9 in May. In the U.S., manufacturing slowed in June with the cooling demand from rest of the world.

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The Institute for Supply Management’s gauge of manufacturing fell to 56.2 from 59.7 a month earlier.

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As anticipated in our last two editions, RBI raised the policy rates i.e. Repurchase and Reverse Repurchase rate by 25 bps taking it to 5.50 percent and 4 percent respectively as a part of the calibrated exit from the expansionary monetary policy. The strong growth shown by manufacturing sector especially capital goods sector, acceleration in credit growth and the widening current account deficit helped RBI to take such a step in order to anchor inflationary expectations going forward. In order to address the liquidity situation which is currently in deficit mode under LAF operations, RBI allowed banks to borrow to 0.5 per cent of their net demand and time liabilities (NDTL) even in case of a shortfall in maintenance of statutory liquidity ratio (SLR) till July 16, 2010.

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The expectation of hike in policy rates by RBI was very much priced in and will not have any bearing effect on the stock markets. However expecting good monsoon, the market was in the belief that inflation will come down in the months to come. But the recent numbers from IMD suggests a relook as so far the monsoon was 16 percent below normal in June 2010.

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Indian stock markets were holding on when all the world stock markets are falling but one should be very cautious when world markets are falling so much as Banking and IT sector are showing some weakness. Nifty has support between 5200-5100 levels and Sensex between 17300-17000 levels.

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Gone was wholly a brutal week for commodities. After the fourth quarter of 2008, first time commodities witnessed quarterly decline. Even the topmost hot favorite of investors gold and dollar index toppled down as money manager’s shifted their attentions towards euro, which saw a decent rise last week. Poor economic data’s in a row further pave the path for selling. At present one should wait for the clear trend. Base metals and energy have already seen a steep decline, may trade in a range for the time being. Similar story is of gold and silver.

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Weekly Update 5th-9th April

Domestic markets continued to build on the gains for the eighth consecutive week. The undertone remained buoyant as the growth signs are becoming clearer. A closer look on the gains gives impression that emerging economies would continue as a favorite investment destination. Hopes of good result season, continued buying by foreign institutional investors & recent upgrade of India’s credit rating are some of the factors that are keeping up the investment momentum in the market. On the global front, in US the recent payroll data has further boosted the confidence among the investors as it looks the deepest recession has ended.

Payrolls, a major indicator rose by 162,000 workers, the third gain in the past five months and the most since March 2007. Home prices in US unexpectedly rose in January for an eighth month. Home prices in 20 US cities rose 0.3% in January, indicating the housing market is stabilizing as the economy expands.

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According to some estimates US economy probably grew by 2.8 percent in the first quarter of 2010 after a 5.6 percent pace of expansion in the fourth quarter of 2009. Apart from the tightening in monitory policy by RBI the other trigger for the markets would be monsoon forecast. A healthy monsoon would improve agriculture output & thereby rural incomes. It would also be crucial from the inflation point of view, as it is still a worry factor & may affect the growth momentum.

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Tokyo-based Research Institute for Global Change has predicted normal monsoon rains in India for the current year. The Indian Meteorological Department (IMD) issues a monsoon forecast, usually in the second half of April after considering weather observations in different parts of the world and extrapolating statistical data.

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Overall trend of world stock markets is up and Commodities which were under pressure some time back also had a good rally last week. It seems now the mid cap and small cap are leading with mainline Nifty or Sensex lagging behind. The global liquidity is leading to various asset classes being chased by investors at every reaction. Nifty has support between 5150-5050 levels and Sensex between 17200-16800 levels.

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Firm U.S., Chinese and European manufacturing figures along with decline in SHFE and LME stockpiles may continue to keep the base metals on upbeat note. Lack of clear risk sentiment may keep gold directionless. Drop in U.S. jobless claims may lend further support to crude prices. Oil prices have risen about 23 percent from early February as the industrial sector leads a gradual recovery in the US economy. Possible new round of sanctions against Iran, maybe within weeks rather than months, could be underpinning the crude market.

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Spices pack may extend further gains while oilseeds may witness some short covering.

Rabi Crops Get a Lifeline on Late Rains :)

Lets Get to know of the latest Agri updates in the country 😀

agri-update-smc

Rabi Crops Get a Lifeline on Late Rains:

Considering cumulative rainfall from June to September, expected retention of moisture in soil between October and December, and recharge in the ground water level, the agriculture ministry expects no major dip in the coverage of food crops in the coming rabi season.

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As for other rabi crops in 2009, the ministry sets the rice production target at 14.5 mt, for jowar at 3.9 mt and barley at 1.6 mt, which are almost similar to the last year’s level.

According to the fourth round of estimate by the ministry, rice production in the last rabi season was 14.6 mt, barley 1.5 mt and jowar 4.2 mt.

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At the same time, it has asked all wheat growing states to ensure that sowing of wheat is completed by the end of November and to see that maximum areas are covered with high yielding and high temperature tolerant varieties.

In Other major Agri Updates we can see that Monsoon has withdrawn and has left 22% shortfall in the country.

An erratic monsoon, which left the country 22 per cent short of normal seasonal rainfall and caused concern about the kharif harvest, has finally begun to withdraw, almost three weeks later than normal.

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The total monsoon rainfall this year till September 23 was estimated by the IMD at 66.83 cm, about 22 per cent below the normal level of 85.87 cm for the period.

According to the India Meteorological Department (IMD), the withdrawal line today passed through Ganganagar, Churu, Jodhpur and Barmer in Rajasthan.

However, many other parts of the country will still continue to get rain.

The maximum deficiency is in the north-west (34 per cent), followed by the north-east (25 per cent), central India (19 per cent) and southern peninsula (8 per cent).

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