Posts Tagged ‘stock market’

INDIAN ECONOMY – GAINING STRENGTH Part 1

Stock market reflects & discounts the overall conditions in the economy.Besides, stock prices in the market are also governed by the investor behavior & valuations. Sometimes investor’s optimism takes the market valuation to a level that it does not matches up with the actual future growth, thus becoming the basis for correction & vice- versa. It is said that “ markets may remain irrational till the life of human being”. Now let us have a look at the economy to see what lies in the future & how it is shaping up for the next leg of growth.

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Indian economy is expected to grow by 7.2% in the fiscal ended on 31st march 2010 & is projected to expand by 8.55 in the current fiscal year and 9% in the next year. The continued improvement in the sentiments of the manufacturing sector which currently contributes around 15% in GDP is likely to play a major role in taking GDP growth to double digits.

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Strong industrial recovery has been the key underlying strength behind the recovery of GDP. During April- December 2009, the index of industrial production (IIP) increased by 8.6% over the corresponding period. Factors that will drive the growth in the industrial production are:

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  • Improvement in agriculture output- Tokyo-based Research institute for global change has predicted normal monsoon rains in india for the current year. On the belief of climatic conditions will remain normal during the year we expect the improved availability of agricultural output to push up production of manufactured food products..

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  • Rising consumer demand – as the business conditions are improving & corporate are giving wage hikes, we believe this will strengthen the sense of financial security in the minds of urban middle-class. A rise in purchasing power and availability of easy and affordable loans are expected to increase the demand for durable goods like auto, consumer appliances.

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  • More availability of mining products- we expect natural gas & crude oil output would increase as the result of the efforts that are being done by companies like Reliance & Cairn India. Coal Production will also rise owing to the allocation of new coal blocks by the government. Fertilizer & Electricity sector would be the key & direct beneficiary with the improvement in the gas & coal availability.

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    Stay tuned for more on this 🙂

    GM (GENETICALLY MODIFIED) CROP

    What is a GM crop?

    As the name suggests, a genetically modified crop is produced by bringing about a change in the genetic structure of the plant. Essentially, the term refers to food sourced from plants (or animals) whose DNA has been engineered –artificially altered in a way that does not occur naturally. In conventional hybridisation, two or more varieties of the same crop are cross-bred, through cross-pollination or some other method, to develop a hybrid variety with some desired characteristic.

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    Where the world stands…

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    Planting of genetically modified crops fell in Europe in 2009, as countries elsewhere increased adoption, and in the most significant breakthrough China approved biotech food crops for the first time. In November 2009 there was a landmark decision when China issued bio-safety certificates for biotech insect-resistant rice and phytase maize. Germany discontinued its planting. Spain planted 80 per cent of all the Bt maize in the EU in 2009 and maintained its record adoption rate of 22 per cent from the previous year.

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    What are their advantages? 🙂

    Ensuring an adequate food supply for this booming population is going to be a major challenge in the years to come. GM foods promise to meet this need in a number of ways:

    • Pest resistant: Crop losses from insect pests can be staggering; It is beneficial for the farmers to reduce their cost of production by avoiding using tons of chemical pesticides annually. There are also healt benefits for the consumers do not wish to eat food that has been treated with pesticides because of potential health hazards.

    • Disease resistance: There are many viruses, fungi and bacteria that cause plant diseases. Plant biologists are working to create plants with genetically-engineered resistance to these diseases.

    • Cold tolerance: With this antifreeze gene, these plants are able to tolerate cold temperatures that normally would kill unmodified seedlings.

    • Medicinal Use: Another potential use of GM foods is to create plants that are modified to contain vaccines against common diseases as an effective and easy means of immunization against these diseases, especially in third world countries.

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    Bt Brinjal experience in deep freeze

    A US based multinational agricultural biotechnology corporation had promoted GM crops in India through Mahyco-Monsanto Biotech. Bt cotton was the first transgenic crop to be released in India in the year 2002. Bt Brinjal is a trans-genic variety developed by inserting a gene (Cry 1Ac) from the soil bacterium Bacillus thuringenisis (Bt) into brinjal. There were many debates taking differing views on the matter. While a section supports it as it gives the plant resistance against insects like brinjal fruit and shoot borer, another section is opposed to it raising concern about the impact of a possible cross-pollination between Bt and ordinary brinjal and the consequences there upon. They also fear about the long-term impact on human health in the absence of long-term trials on the new variety.

    The government’s Genetic Engineering Approval Committee (GEAC) cleared Bt brinjal for commercial release in October last claiming that it would result in lower usage of pesticides and higher yields. Finally, on February 9, 2010 the government of India officially announced that it needs some more time to release Bt brinjal.

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    Are GM foods safe?

    Different GM organisms include different genes inserted in different ways. This means that individual GM foods and their safety should be assessed on a case-by-case basis and that however, the lack of evidence of negative effects does not mean that new genetically modified foods are without risk. GM foods currently available on the international market have passed risk assessments and have been judged safe to eat, and the methods used to test them have been deemed appropriate.

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    In addition, no effects on human health have been shown as a result of the consumption of such foods by the general population in the countries where they have been approved.

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    News

    The government will continue to monitor the release of genetically modified (GM) crops, at least until 2012, said officials in the science ministry.

    Stay Tuned for More updates :)

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

    How To Get Started in Online Investing? Final Part

    Hello Friends here we come up with an extension of our previous blog “How To Get Started in Online Investing?” Part 1.

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    How To Get Started in Online Investing?

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    In previous blog, we have touched upon the questions, any beginner investors do have in their mind while going for investing.

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    At the same time we had also tried to look in previous blog that what is Online Trading, resources needed first of all to invest online, few steps to start investing online and how SMC ONLINE helps investors in reaping the benefits of online trading.

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    In this Blog, we would try to discuss about what are the further steps an investors need to take once the initial registrations are done with.

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    🙂

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    Once the registration formalities are done with, you would be required to load your online investing trading account with funds.

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    Once Funds would be deposited you would need to look out for the stocks on which you would like to invest prima facie.

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    One thing you should bear in mind that before investing, you should do the in-depth research about the company’s profile, performances and services.

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    In this respect investing firms like SMC ONLINE comes to your rescue usually by helping you with their excellent research support, stocks recommendations and quality statistics.

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    These things are really very important while you invest in buying the shares of any company.

    As a wise investor you should keep your eyes open, and don’t blindly trust anyone.

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    Another very important thing is RISK FACTOR.

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    You’ll have to take the risk in terms of investing your money in the stock market.

    Stock market is a bit similar to gambling.

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    But there is a big difference between the risk and calculated risk.

    For a beginner, you should only go for calculated risk.

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    Don’t put your entire money in terms of buying the shares of a new company, even if the future potential of that company seems very high.

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    Start slowly, understand the market, earn some decent amount of money first of all and then go for big trading.

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    Once you have gotten started, you should start by learning a little bit about chart reading.

    If you can read the charts you will have a good idea what is going on.

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    And as I said earlier, I would conclude this topic by saying that any beginner investor should look for a broker firm that gives good value for money with their commission fees.

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    Stay Tuned for more and more on this 🙂

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    However For More latest Industry,Stock Market and Economy News Updates, Click Here

    Domestic Economy Rolls as Corporate India Offers 40% More Bonus Shares

    Domestic Economy Rolls as Corporate India Offers 40% More Bonus Shares

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    Issue of bonus shares by Corporate India to its shareholders in the first 10 months of the fiscal has shot up 40% over the total during the fiscal ended March ‘09, after declining for two straight years.

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    This interesting jump in bonus issues indicates positive sentiment of the corporate sector to serve a larger equity base.

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    Companies like Britannia, TCS, Reliance Industries, Adani Enterprises, Jindal Steel, Divi’s Lab, JP Associates etc  have  issued bonus shares in the April ‘09-January ‘10 period.

    There are as many as 61 companies which have done so.

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    Jagannadham Thunuguntla, equity head with Delhi-based merchant bank SMC Capitals, said:  “The increase in companies doling out bonus equity to its shareholders reflects that the domestic economy is on the path of recovery.”

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    Corporate India has got the confidence to expand equity capital base and issue bonus shares owing to the fact that they have performed very well this fiscal.

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    Bonus issue is an offer of free additional shares to existing shareholders.

    This is one of the ways of rewarding shareholders, who largely benefit from capital gains.

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    A company may decide to distribute further shares as an alternative to increasing the dividend payout.

    It is also known as a “scrip issue” or “capitalization issue”.

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    The number of companies issuing bonus shares declined more than a quarter after hitting a peak in 2006-07 to 72 firms in 2007-08 and shrunk further to just 44 companies for the year ended March ‘09.

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    This came after three consecutive years of rise in number of bonus issues, when more listed firms announced a bonus bonanza in line with the bull run of the stock market.

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    Bonus shares are issued by companies through capitalization of their free reserves.

    When a company announces bonus issue, it is an indication of its management’s confidence to serve a larger equity base.

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    🙂

    India Inc Set to Raise Rs.50k Crores Through IPOs in 2010: SMC Capital

    India Inc Set to Raise Rs.50k Crores Through IPOs in 2010:SMC Capital

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    Domestic companies seems set to get on with the huge fund raising exercise this year with plans to raise over Rs 50,000 crore via public offers, driven by the sharp recovery in the stock market.

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    Almost 50 companies have already filed the draft prospectus with the market regulator, the Securities and Exchange Board of India (SEBI).

    This depicts at the healthy prospect of the strong IPO market after the encouraging revival of IPO market in 2009.

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    Indian companies had raised about Rs 20,000 crore through IPOs in 2009.

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    Market Experts feel that fund raising can go up to Rs 50,000 crore this year since Government has already planned to sell shares in a host of public sector companies by way of IPOs and follow-on public offers (FPOs).

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    Five companies aiming to raise over Rs 300 crore have already received the regulator’s clearance for the IPO, if draft prospectus filed with the SEBI is anything to go by.

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    “The IPO pipeline looks strong in 2010.

    Also the way the government is pushing ahead with the disinvestment plan, fund raising can go up to Rs 50,000 crore by the end of the year,” SMC Capitals Equity Head Jagannadham Thunuguntla said.

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    As part of its disinvestment plans the government intends to raise over Rs 20,000 crore by way of FPOs of NMDC, SAIL, NTPC, and REC.

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    Some of the prominent private companies which have their IPOs lined up, beside this, include Jindal Power, BPTP, Reliance Infratel, Emaar MGF etc;

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    “Of the total IPOs that are in the pipeline, as many as 16 are from real estate sector. However, their success is a bit doubtful as the appetite for realty IPOs are currently less,” Thunuguntla added.

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    Primary market fund raising in 2008 saw 30 IPOs mopping up Rs 17,000 crore, but shares of many these companies gave the investors modest-to-good returns.

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

    India Inc Set to Raise Rs.50k Crores Through IPOs in 2010

    India Inc Set to Raise Rs.50k Crores Through IPOs in 2010.

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    Domestic companies seems set to get on with the huge fund raising exercise this year with plans to raise over Rs 50,000 crore via public offers, driven by the sharp recovery in the stock market.

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    Almost 50 companies have already filed the draft prospectus with the market regulator, the Securities and Exchange Board of India (SEBI).

    This depicts at the healthy prospect of the strong IPO market after the encouraging revival of IPO market in 2009.

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    Indian companies had raised about Rs 20,000 crore through IPOs in 2009.

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    Market Experts feel that fund raising can go up to Rs 50,000 crore this year since Government has already planned to sell shares in a host of public sector companies by way of IPOs and follow-on public offers (FPOs).

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    Five companies aiming to raise over Rs 300 crore have already received the regulator’s clearance for the IPO, if draft prospectus filed with the SEBI is anything to go by.

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    “The IPO pipeline looks strong in 2010.

    Also the way the government is pushing ahead with the disinvestment plan, fund raising can go up to Rs 50,000 crore by the end of the year,” SMC Capitals Equity Head Jagannadham Thunuguntla said.

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    As part of its disinvestment plans the government intends to raise over Rs 20,000 crore by way of FPOs of NMDC, SAIL, NTPC, and REC.

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    Some of the prominent private companies which have their IPOs lined up, beside this, include Jindal Power, BPTP, Reliance Infratel, Emaar MGF etc;

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    “Of the total IPOs that are in the pipeline, as many as 16 are from real estate sector. However, their success is a bit doubtful as the appetite for realty IPOs are currently less,” Thunuguntla added.

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    Primary market fund raising in 2008 saw 30 IPOs mopping up Rs 17,000 crore, but shares of many these companies gave the investors modest-to-good returns.

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    FLASHBACK 2009


    For India, 2009, been a great year with the return of a stable government at centre, good FII inflow, 80% increase in the Indian stock market and less terror attacks. But globally, H1N1 influenza and a series of bankruptcy by some big international giants are some events, which we never want to happen again.

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    Putting behind the worst annual performance ever, Indian equities were on a roll in 2009, catapulting a key index by more than 80 percent, to close the year with one of the best gains among emerging markets.

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    At closing bell Thursday, the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling at 17,464.81 points with an impressive gain of 7,817.5 points, or 81.03 percent, over the previous year’s close at 9,647.31 points.

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    This was the best annual performance since 1999 and was in sharp contrast to 2008, when the Sensex ended with a hefty loss of 10,639.68 points or 52.45 percent making it the third-worst performing equities index among emerging markets.

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    The story was no different at the National Stock Exchange (NSE), the other major bourse in the country, where the broader 50-scrip S&P CNX Nifty gained a hefty 2,241.9 points or 75.76 percent when it closed at 5,201.05 points Thursday.

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    The main factors that made key indices rise like a Phoenix was resilience of the Indian economy and impressive growth despite global slowdown that also reflected in corporate earnings and the return of the foreign institutional funds.

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    According to markets watchdog, the Securities and Exchange Board of India, such overseas funds pumped about $17.46 billion into the Indian stock markets in 2009, as opposed to a net sale worth $13.135 billion for the first time in over a decade..

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    ‘The performance in 2009 surpassed the expectations of even the most optimistic person. There were not many places left for foreign funds to invest and India was among the few attractive destinations,’ said Jagannadham Thunuguntla, equity head at SMC Capitals.

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    Even as the Sensex gained 7,817.5 points, some of the 13 sector-specific indices stood out because of their performance — the metals index appreciated the most, up 233.68 percent, while auto followed with a gain of 204.16 points..

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    Similarly, the indices for information technology was up 132.78 percent, capital goods gained 104.26 percent, consumer durables rose 97.8 percent, banking gained 83.9 percent, state-run enterprises inflated 80.54 percent, power moved up by 74.3 percent.

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    On the whole, the year started on a promising note with the government unveiling a second dose of fiscal stimulus to help the economy weather the adverse impact of a slowdown in the global economy — touted as the worst in eight decades.

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    As a result, the Sensex rallied till Jan 6 and gained 7.13 percent in just three days of trading. But then came the confession of a multi-million dollar fraud by Satyam Computer founder B. Ramalinga Raju, triggering a 7.25 percent fall in just one session.

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    Till February, the barometer index was oscillating between 9,000-odd points and 10,300-levels. But as signs of a prolonged economic recession receded the world over, Indian equities found more takers and reflected in steady rise in the index.

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    By the beginning of May it was trading comfortably around the 12,000-point mark and gave a thumping welcome to the electoral victory of the Congress party-led United Progressive Alliance — that even saw suspension of trading as indices hit the upper circuit twice.

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    On that eventful day of May 18, the Sensex stood at 14,284.21 points, gaining 2,110.79 points, or 17.33 percent, over the previous close, while Nifty also rose 17.3 percent, or 636.4 points, to close at 4,308.05 points.

    The remaining months of the year saw a steady rise in the index with interim corrections even as events like the presentation of an industry-friendly national budget and a high growth for the economy during the second quarter boosted investor sentiments.

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    Looking at individual stocks that go into the Sensex basket, the top five gainers during 2009 were Tata Motors, up 398.33 percent at Rs.792.60; Mahindra and Mahindra, up 293.23 percent at Rs.1,080.80; Sterlite Industries, up 230.45 percent at Rs.861.65; Hindalco, up 211.23 percent at Rs.160.75; and Maruti Suzuki, up 199.88 percent at Rs.1,559.65.

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    Only three stocks ended lower — Bharti Airtel was down 54.02 percent at Rs.328.80; Reliance Communications was down 23.92 percent at Rs.172.90; and Reliance Industries which ended lower since the company declared a 1:1 bonus.

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    Looking ahead, the markets expect some more action once the government’s divestment programme gets underway even as investors have their fingers crossed on when the Sensex will breach the magical 21,000 mark.

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    So, overall, the year 2009 has been one of the most significant chapters in the stock market growth with an increase of 80% in its value. Further, we keep our spirits high on FM’s comment that Indian economy can grow at 7.75% in FY10.

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    FII investment, this year, is the highest ever inflow in India

    FDI inflow India Last year Touched 80 Thousand crores

    The FII investment of Rs 80,500 crore in 2009 is the highest ever inflow in the country in rupee terms in a single year and comes a year after they pulled out over Rs 50,000 crore.

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    FII inflow so far this year has broken the previous high of Rs 71,486 crore parked by foreign fund houses in domestic equities in 2007.

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    Market analysts believe that the FII inflow in India may continue in the next year as well, if the liquidity conditions remain strong.

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    As per Market experts, FIIs are expected to continue to be positive on domestic markets and in general Indian markets seems to fare well in 2010.

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    Delhi-based SMC Capitals Ltd’s Equity Head Jagannadham Thunuguntla has supported the view, saying,

    “If liquidity conditions remain strong next year, one can expect FII inflow to remain strong into India even in 2010 as well.”

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    The Bombay Stock Exchange’s benchmark sensex, comprising 30 bluechip stocks, has gained more than 70% so far in 2009, one of the best performers among leading global bourses.

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    “However, if dollar-carrytrade-unwinding starts, then one can expect rush of FII outflow from the country, resulting in pressure on Indian markets,” he cautioned.

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    Significantly, last year the FIIs had pulled out a net Rs 52,900 crore from the domestic bourses — a trend triggered with the collapse of global financial services icon Lehman Brothers in the middle of September 2008.

    This selling trend continued till the first two months of the passing year.

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    Global Market Outlook 2009 and 2010 :)

    SMC Market Outlook

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    With markets giving returns on investment more than 79% in 2009 and showing a strong sign of recovery from mid 2009 on the back of strong domestic demand, policy reforms and stimulus packages, 2009 calendar year emerged as the best year for investors since 2000.

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    FII’s have once again proved to be the front runners in terms of the inflow, pumping more than Rs 82,000 crore in the Indian market this calendar.

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    But 2010 promises to be another testing year as fiscal and monetary stimulus in many of the world’s major economies begins to wane.

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    After being in consolidation for most of the month, in the week gone by the domestic markets suddenly jumped back to life and closed at their highest in 19 months as investors rushed to buy stocks on renewed optimism, after foreign direct investment into the nation jumped 60% in the first eight months of this fiscal year.

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    The FM`s comments on GDP growth and encouraging cues from global markets also boosted the market.

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    Both the indices, Sensex and Nifty made a new high for 2009 on the eve of Christmas, rekindling the festive spirit.

    Bulls were in a mood of rejoice as Christmas took Nifty to a new high of 5,197.90.

    The year ends with more than a spark of hope, and next year seems to be a stable and profitable one.

    However, we believe that markets would continue to be volatile and hence it is important to manage risk in the coming year too.


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    For the forthcoming week, markets may remain volatile as traders will roll their positions in the derivative segment from December 2009 series to January 2010 series ahead of the expiry of the near month December 2009 contracts on Thursday, 31 December 2009.

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    On the flip side higher advance tax figures by India Inc which suggests better Q3 December 2009 results, may support the market.

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    Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter.

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    The global developments also need to be seen for any further directions.

    Furthermore, food price index data for the year to 19 December 2009 will be closely watched which is going to release on Thursday, 31 December 2009.

    The high food price inflation is a major worry for the policymakers as they contemplate a right approach to tame hike in inflation which seems to be more of a supply side issue.

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    The next quarterly review of monetary policy is scheduled on 29 January 2010 which may also give some direction to the markets.

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    On the global economic front, the US economy grew at a revised annual growth rate of 2.2% in the third quarter, much slower than initially projected.

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    Japan’s unemployment rate rose to 5.2 percent from 5.1 percent in October, for the first time in four months in November, an indication job growth may not be strong enough to support the economy’s recovery from its deepest postwar recession.

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    The world stock markets are not ready to react on the downside and after every consolidation they are moving up only.

    4960 on nifty is strong support as was mentioned in last week magazine and the nifty touched there and moved up sharply.

    Even the base metals and stocks are not reacting to the strong dollar.

    Till the trend of stock markets is up, one should be playing from the long side of it.

    Nifty has support between 5050-4970 and Sensex between 17100-16700 levels.

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    New Year celebration may result in thin trading this week.It may impact domestic bourses as well.

    Regarding outlook, dollar index will give next direction to precious metals. If it notices a pause in its rally then precious metals may trade in a range or vice a versa.

    Base metals will remain volatile.

    Gap between lead and zinc should shrink gradually.

    Fresh buying in steel may keep nickel at higher side.

    If US crude and other inventories continue to decline then fresh buying will stimulate in crude oil.

    However, it already saw spiky moves hence upside is limited.

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