Monday, December 31
Friday, December 28
Thursday, December 27
Wednesday, December 26
Monday, December 24
Thursday, December 20
Wednesday, December 19
Tuesday, December 18
Nifty Support Level at 5730
We expect Nifty support level at 5730 points. Market is expected to revert from here & not to breach this level.
Strong Dollar & Value buy after the 3.8% fall on Monday may move the market upside.
Monday, December 17
Friday, December 14
Thursday, December 13
Wednesday, December 12
Tuesday, December 11
Monday, December 10
Friday, December 7
Thursday, December 6
Wednesday, December 5
Tuesday, December 4
Monday, December 3
Friday, November 30
Thursday, November 29
Wednesday, November 28
Tuesday, November 27
Monday, November 26
Friday, November 23
Thursday, November 22
Wednesday, November 21
Tuesday, November 20
Market expected to correct by 1000pts this week
Ironical indicators pave way for correction of 800-1000 points
An ironical relationship is being witnessed in past couple of months between exchange rate and Indian market. India, typically being an export oriented economy loses its fundamental sheen on depreciation of dollar against rupee. However on the contrary foreign funds see an additional incentive in form of currency gain by investing in India and this increased interest helps market buoyancy. In effect weakening fundamentals and rising stock markets indicate an ironical picture.
Since such mismatch is difficult to continue as a long term trend in any economic market place, the adjustment has started being witnessed over last week and effect is largely visible from Monday’s market as well. We expect a further 4-5 % correction in the market i.e. 800-1000 point correction on the Sensex, depicting the broader stock market, till the market support levels come in play and value buying start playing its role.
During this calendar year, US dollar has depreciated about 10% against rupee and we have seen huge FII inflows in our markets. In addition to the growth story sold by Indian markets, this dollar depreciation has also helped in bringing foreign funds in the country. Since, handsome currency gain is a strong additional incentive for the foreign investors over and above the market growth, an increased interest amongst the foreign investors in the Indian markets seems obvious. Increased quantum of foreign flows leads to a further depreciation of US dollar against Indian rupee and vice-versa creating a vicious circle.
There have been large talks about the quantum of foreign funds finding there way in Indian stock markets and consequent depreciation of US dollar against rupee. However, investors are seeking strong fundamental story of Indian economy which is being adversely affected by depreciating dollar. India remains largely an export oriented country, as many sectors (including index heavy weights as well) largely depend on international markets, where US dollar being largely used as the trading currency.
Dollar depreciation has distorted there fundamentals especially in a competing global place. IT/ITES, textiles, auto and ancillary, engineering are the worst effected sectors. Apart from having large market capitalization, these sectors are also among the largest employers in the country. Thus, weakening business models of these sectors also have a large influence on domestic consumption and larger economy as well.
It is also to be recognized that there are other sectors which also contribute in a major way to the market capitalization, being oil & gas, telecom, banking, infrastructure being the dominant ones. However, one needs to appreciate that in the current rally these counters have witnessed huge surge stretching their valuations and normal correction seems to be inevitable.
In our view, we have reached a situation where dollar effect on export oriented industries has started unearthening and US dollar has stabilized in a range, markets are set to correct by about 4-5 % until the value investors comes in play. The signals are strong and clear - last week, US dollar oscillated between a range of 39.28-39.39 and net FII outflow of 1880 crores. We believe that Monday movements is start of at least a week long correction stretching to 800-1000 points on Sensex. Technically major supports available to Sensex are 19,000 and 17,500.
Monday, November 19
Friday, November 16
Thursday, November 15
Wednesday, November 14
Tuesday, November 13
Monday, November 12
Thursday, November 8
Wednesday, November 7
Tuesday, November 6
Monday, November 5
Friday, November 2
Thursday, November 1
Wednesday, October 31
Tuesday, October 30
Monday, October 29
Why Oil Prices shooting up??? (Above $93 bpd, Monday, 29 Oct)
U.S. crude oil hit a record high of above $93 a barrel on Monday.
Strong demand for crude and a weak U.S. dollar have fuelled the rally from a dip below $50 at the start of the year.
Adjusted for inflation, oil is still below the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.
The following points indicate Oil movement:
DOLLAR WEAKNESS
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
It has also reduced the purchasing power of OPEC's revenues and increased the purchasing power of some non-dollar consumers.
OPEC oil ministers have noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact.
The group's OPEC reference price in nominal terms was $74.18 in September, but was valued at $50.98 when adjusted for inflation and the weak dollar.
Some analysts say investors have been using oil as a hedge against the weaker dollar.
FUNDS
Since the Federal Reserve cut U.S. interest rates in mid-August and central banks pumped billions of dollars into financial markets to ease a credit crunch, oil prices have surged 30 percent and gold has risen 20 percent.
Investment flows from pension and hedge funds into commodities including oil have boomed, so has speculative trading. At the same time, the credit crunch has brought some other markets, notably the U.S. asset-backed commercial paper market, to a virtual standstill.
In the United States, the size of the asset-backed commercial paper market has fallen for 11 consecutive weeks, to $883.7 billion this week from a peak of $1.17 trillion at the end of July, according to data from the Federal Reserve.
In Europe, according to analysts at BNP Paribas, the market shrunk to $192 billion at the end of September from $297 billion at the end of July.
Some of that money has found its way into energy and commodities.
DEMAND
While previous price spikes have been triggered by supply disruptions, demand from top consumers the United States and China is a driver of the current rally.
Global demand growth has slowed after a surge in 2004 but is still rising and higher prices have so far had a very limited effect on economic growth.
Analysts say the world is coping well with high nominal prices because, adjusted for exchange rates and inflation, they are lower than during previous price spikes and some economies have become less energy intensive.
OPEC SUPPLY RESTRAINT
The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices.
Fewer OPEC barrels entering the market helped propel this year's rally and consumer nations led by the International Energy Agency for months urged OPEC to pump more oil.
At a meeting last month, OPEC agreed to increase oil output by 500,000 barrels per day from Nov. 1.
OPEC's heads of state summit in Riyadh next month may turn into a full-blown meeting to consider raising oil output, but few in the group believe there is much they can do to tame a market they say defies logic.
NIGERIA
Supply of crude from Nigeria, the world's eighth-largest oil exporter, has been cut since February 2006 because of militant attacks on the country's oil industry.
Oil companies have detailed about 547,000 bpd of shut Nigerian production due to militant attacks and sabotage.
IRAN
Oil consumers are concerned about supply disruption from Iran, the world's fourth-biggest exporter, which is locked in a dispute with the West over its nuclear programme.
Western governments suspect Iran is using its civilian nuclear programme as a cover to develop nuclear weapons. Iran denies this, saying it wants nuclear power to make electricity.
IRAQ
Iraq is struggling to get its oil industry back on its feet after decades of wars, sanctions and underinvestment.
Exports of Kirkuk crude from the country's north are sporadic as sabotage and technical problems have mostly idled the pipeline since the U.S.-led invasion of Iraq in March 2003, preventing exports returning to the pre-invasion rate.
REFINERY BOTTLENECKS
Refiners in the United States struggled with unexpected outages which drained inventories ahead of the summer, when motor fuel demand peaks.
In the latest weekly figures from the U.S. government, issued on Oct. 24, distillate stocks and heating oil inventories fell and are below their levels of a year ago.
Friday, October 26
SEBI Decision on P Notes
Securities and Exchange Board of India (SEBI) finally came out with the new P- Notes policy.The proposals made by the SEBI in the draft have been approved by the board and will come into immediate effect from October 25.
Following decision taken at the SEBI meet were made public by M Damodaran, Chairman, SEBI on Thursday:
1) Further issue of P-Notes by Sub A/C to be discontinued immediately. P-Notes can`t be issued with offshore derivative Instruments (ODIs) as underlying
2) Sub A/C to unwind their positions in 18 months.
3) Disallows issuance of P -Notes with underlying as derivative.
4) However, Proprietary, and corporate Sub A/C can continue their business till they get registered.
5) Of the 20 Sub A/C that applied for registration through the front door, few of them have been approved and the rest are under consideration which can however continue as normal during the transition period .
6) Pension funds can register as FIIs.
7) Those with notional value of P-Notes over 40% AUC (assets under custody) would issue P-Notes close to equivalent position.
8) Those with less than 40% AUC can issue 5% incremental P-Notes.
9) Those with greater than 40% AUC can stick to current exposure.
10) Date of calculation of AUC will be on September 30.
11) Broadbased sub accounts must have at least 20 investors. Broadbased Sub A/C can`t have a single person holding over 49% as against the 10% before.
12) Pension fund, charity, endowments will be treated as separated entities and they can get registered.
13) SEBI will form a committee of board that will focus on surveillance by independent members of the board. The board will enhance surveillance that will be done consistently.
14) SEBI cleared proponents enabling SMEs to access this category. A separate exchange for SME segment will be established for which a new policy framework needs to be set out.
The SEBI headed said that all those interested will be invited to set up exchange provided they meet the eligibility criteria.
Damodaran, clearly and firmly pointed out that P-Notes will be issued only to those who are regulated and registered as per the FII regulation of 2004. Earlier permission was given to those who were registered but not regulated.
The SEBI head put to rest all rumors, speculations and views with regards to the new P-Notes policy. In his elaborate speech he made clear that new policy had taken shape to filter out the anonymous foreign funds into the Indian share market, and was ready to speed up regulatory clearance for foreigners keen to invest transparently. The SEBI stand was all against the back door entry of FIIs and thereby it put an end to it with immediate effect.
The SEBI stand came out openly stating that on market surveillance was the key to all moves. Attempts will be made to make the Indian markets a safe place for trading. Damodaran also mentioned about forming a committee chaired by an independent member, a non-executed member of the board of directors of the concerned exchange.
He stressed that this was not the end of the announcements to be made by SEBI, FII regulation will continue to be under the SEBI focus taking into account three prominent issues;Firstly, access to Indian market, secondly, more products to be introduced and thirdly, better-cost competitiveness.
He elaborated that permitting access to Indian market will be under the focus of the regulatory body. Taking into consideration the consistent growth in the Indian market, wherein India has emerged as the leading player in the global economy, there should be far more products introduced in the market, which will be released in detail as per the expertise of the Ram Mohan Roy committee of derivatives.Along with the access and more products, cost competitiveness will hold major attention for time to time.
The SEBI stand was well backed by the Government wherein the Finance Minister P Chidambaram while commenting on the P-notes stand prior to SEBI clarifications had indicated that the SEBI proposals would become regulations with or without modifications.
Thus, on an overall basis SEBI went ahead with the proposal it had come out with. It has maintained its firm approach on the anonymous money entering the market and has initiated the moves to curb it.