Posts Tagged ‘world markets’

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 10th – 14th May

The stock markets around the world are more or less trying to top out at higher levels. World markets are falling like ninepins on the back of fear that Europe’s debt crisis could spread in other European Union countries and may upset the global economic recovery. The hope of some rescue package tabled down when Trichet made the statement that the ECB’s 22-member Governing Council didn’t discuss buying government debt to stem the contagion.

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Markets from Europe to US tumbled as high as 11 percent during the week. Indian markets too ended their journey in deep red in the week gone by after concerns of sovereign debts in Europe sparked sharp sell-off in global equities.

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The worst hit were sectors like metal, realty, cap good and banks while oil & gas bucked the trend. In another event, Fitch downgraded the ratings for Chinese banks and has improved outlook for Indian banks. Quality of growth & large speculative investments funding by Chinese banks is the concern area. Whereas the tighter provisioning norms by Indian banks regulator has led to the improvement in Indian bank’s outlook. As a matter of fact European Union comprising of 27 countries accounts close to 19 percent share in India’s total exports & thus may affect the manufacturing sector.

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The European crisis may also affect the overall sentiments of the industry and could affect the fund raising plans of companies in India & abroad. The risk aversion in global equity markets resulted in large withdrawal by foreign institutions & the money sought its place in safe haven like bonds & gold.

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Now all are eying how European leaders will come forward to halt the fiscal worries & prevent a sovereign debt crisis after European Commission President Jose Barroso said that they will defend Euro, whatever it takes.With the crisis looming, Inflation, a major concern may not be a worry factor with the metals & crude prices coming down. And the central banks in world over may keep up the liquidity & may not tinker with the interest rates for an extended term.

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The week went by saw a sharp rise in volatility along with a major fall in stock markets around the world. Even the Base metal commodities tanked down though precious metals that is Gold and Silver saw a sharp rally in times of uncertainty. Overall trend of all world markets including ours is down now. Nifty faces resistance between 5200-5100 levels and Sensex between 17500-17000 levels.

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On the commodity front, continued debt contagion fears in Europe triggered blood bath in some commodities, especially in metals and energy. It also resulted in terrific rally in gold, which is not a general phenomenon. Expected hung parliament in UK may also give boost up to dollar index. Back at home, depreciation in local currency also added volatility. As regards trend of metals and energy in short run, after witnessing a razor sharp fall, these commodities may trade in range, however, overall trend is still down, except gold and silver.

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Agro commodities performed better on improved fundamentals. Buy at dip could be a good strategy for agro commodities.

Weekly Update of The Market (08th-12th February)

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and  latest global business and industry updates.

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Weekly Update of The Market (08th-12th February)

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After starting the year on a good note & Indices making fresh highs within few weeks many Asian markets have corrected between 7 to 10%.

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The global sell off over sovereign debt problems in Europe and an unexpected rise in jobless claims in US put investors on the defensive mode.

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The anxiety about sovereign debt in Greece, Portugal and Spain sparked a sell-off in the Euro & has led strength to US dollar.

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Foreign investors sell off is an outcome of dollar-carry-trade unwinding as when they borrowed the dollar was cheap & now it is recovering.

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Investors viewed the markets in year 2010 with confidence in view of recovery gaining momentum is now shaken over the debt problems, nascent economic recovery & confidence of the governments that stand behind the euro.

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Efforts of China to curb lending preventing overheating in economy also pose a risk to derail the global recovery.

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Back at home, the effect of turmoil in the international market also made government to think its strategy on ambitious disinvestment programme.

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🙂

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Lukewarm response to the NTPC, the much awaited issue managed to get subscription of just 1.2 times on its closing day.

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The maximum bid of 20.87 crore shares was put by Indian institution under the first time adopted French Auction route.

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This has challenged the finance Ministry hopes on the proceeds from disinvestments to make up the sliding revenue & rising expenditure.

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While it looks that PSU disinvestment may not yield desired results on market weakness, the 3G auction i.e. expected to garner Rs. 35,000 crore could be postponed to next fiscal year.

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🙂

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The fate of some of the IPO’s like NMDC, Satluj Jal Vidyut Nigam Ltd and Rural Electrification Corporation that are on the disinvestment agenda before March 31, looks tough to sail through, if the stock markets do not rise and big investors do not come back.

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On the contrary, Banks like Bank of Baroda & Indian Bank that were expected to raise money overseas have put now their plans on hold.

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🙂

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The good news from the external sector continued as the data showed a 9.3% annual increase in exports in December to $14.6 billion, a second consecutive month rise.

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While imports increased by 27.2% from a year earlier to $24.75 billion.

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Food inflation remained at high levels & rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week on the back of rising pulses & potato prices.

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Markets are likely to take a closer view of the advance estimates on economic growth for the current fiscal ending March 2010 scheduled to be released on Monday.

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🙂

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In the days to come an activity in the sectors like railways, fertiliser, textiles, pharma, education, power and infrastructure may be seen on expected positive policy announcements and budgetary sops.

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It was clearly mentioned last week that world markets are going in downtrend and one should be careful in such a scenario and that one should be moving in cash.

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Now the markets have taken a very sharp fall last week due to rise in Dollar Index and fall in all asset classes.

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🙂

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The coming week might see some counter rally from lower levels.

Nifty faces resistance between 4900-5000 levels and Sensex between 16400-17000 levels.

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🙂

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If we talk about commodity markets then one can see that strengthening dollar and lack of firm global cues had pressurized commodities prices to move southward.

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Investors are selling riskier assets and putting their money in dollar as a safe haven buying.

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Debt concerns facing Greece, Portugal and Spain coupled with dollar index which is trading above the mark of 80 is most likely to compel commodities to trade lower.

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French and euro zone GDP, USD advance retail sales, USD U. of Michigan Confidence will give further direction to commodities.

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Investors should keep an eye on gold – silver ratio.

It was 58:1 few months back, now reached to 67:1 on MCX, heading towards the level of 70:1.

It is demonstrating more selling in silver.

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🙂

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Stay Tuned for More on weekly updates.

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China May Become World Largest Economy by 2030 : Report

China May Pip USA to Become World largest Economy by 2030

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As per the latest report by Deutsche Bank, the economic and financial status of emerging market economies such as India and China will continue to do well in the future and the recent downturn will help accelerate the trend.

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Report also suggests that the (BRIC) economies” increasing size will be making itself increasingly felt in the world markets, ranging from trade and investment to commodity markets.

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Meanwhile, the BRIC economies of Brazil, Russia, India and China are likely to achieve significant growth in future.

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Meanwhile, BRIC nations are already ranked among the top 10 on a PPP (Purchasing Power Parity) basis.

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The impressive economic growth rates and greater participation in global trade and financial flows by the BRIC economies are re-shaping the global economic and financial architecture of these economies.

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It is expected that with the constant present growth of the BRIC economies, political, economic and financial realities  of the world is going to change to the extent that China will replace the US as the World’’s largest economy by 2030.

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All the four big BRIC economies carry at least one investment grade rating, currently, at the same time.

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Moreover, China’’s and Russia’’s international status has been enhanced due to their substantial holdings of government controlled foreign assets.

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China May Pip USA to Become World largest Economy by 2030 : Report

China May Pip USA to Become World largest Economy by 2030

As per the latest report by Deutsche Bank, the economic and financial status of emerging market economies such as India and China will continue to do well in the future and the recent downturn will help accelerate the trend.

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Report also suggests that the (BRIC) economies” increasing size will be making itself increasingly felt in the world markets, ranging from trade and investment to commodity markets.

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Meanwhile, the BRIC economies of Brazil, Russia, India and China are likely to achieve significant growth in future.

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Meanwhile, BRIC nations are already ranked among the top 10 on a PPP (Purchasing Power Parity) basis.

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The impressive economic growth rates and greater participation in global trade and financial flows by the BRIC economies are re-shaping the global economic and financial architecture of these economies.

.

It is expected that with the constant present growth of the BRIC economies, political, economic and financial realities  of the world is going to change to the extent that China will replace the US as the World”s largest economy by 2030.

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All the four big BRIC economies carry at least one investment grade rating, currently, at the same time.

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Moreover, China”s and Russia”s international status has been enhanced due to their substantial holdings of government controlled foreign assets.

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🙂

WEEKLY MARKET OUTLOOK & NEWS CAPSULES :)

WEEKLY MARKET OUTLOOK

Market Outlook & News Round Up for the Week Gone By !

Market Outlook & News Round Up for the Week Gone By !

The trend of most world markets remains up.

However in coming days, domestic markets are likely to remain sideways with mostly a positive bias and its trajectory will hinge on FII inflows, external environment and also on the announcement made by G20 ministers that stimulus measures would continue until recovery is secured.

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Moreover Q2 results are just round the corner and there is optimism for results as advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter.

The US Dollar index movement last week kept all asset classes very volatile.

Nifty has support between 4750-4640 and Sensex between 16000-15500 levels.

As the markets are going higher, expect the volatility to increase.

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News Round Up

Economy

·Inflation further rose to 0.37 per cent for the week ended September 12, from 0.12 per cent in the previous week due to increasing prices of essential food items.

The wholesale price-based inflation stood at 12.42 per cent during the corresponding week a year ago.

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Capital Goods

·BHEL has bagged a Rs 365 crore order from the Nuclear Power Corporation of India Limited for supply of four steam generators for India’s second 700 MWe nuclear power station, being set up at Rajasthan Atomic Power Project, Kota.

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Automobile

·Mahindra & Mahindra (M&M), India’s largest tractor maker, is planning to consolidate its stake in Swaraj Engines, as part of a plan to expand the diesel engine business.

·Bajaj Auto Ltd is all set to launch the Kawasaki Ninja 250R motorcycle in India on October 5.

The Ninja 250R is considered to be an entry-level sports bike manufactured by Japanese two-wheeler maker Kawasaki.

The bike would be priced between Rs 1.50 lakh and Rs 2 lakh.

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Oil & Gas

·ONGC plans to invest nearly Rs 5,000 crore in appraisal of its oil and gas fields off the country’s east coast, where production is likely to start from mid-2010.

Tata Power, which is implementing the 4000 MW Mundra ultra mega power project, has said it will exceed the 2012 target by 800 MW.

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Retail

Future Group chief Kishore Biyani is looking to hive off hypermarket chain Big Bazaar and list it to unlock value as part of ambitious restructuring and growth plans to become a Rs 25,000-crore group in four years.

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MONEY MARKET & ECONOMIC INDICATORS

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