Exchange-traded funds (ETFs) have been gaining investor interest. ETFs are essentially index funds that are listed and traded on exchanges like stocks. They enable investors to get a broad exposure to the stock markets in different countries, and specific sectors, with relative ease, on a real-time basis. This also comes at a lower cost than many other forms of investments.
An ETF represents a basket of stocks that reflects the composition of an index, like metals index, BSE Sensex or the banking index. An ETF's trading value is based on the net asset value (NAV) of the underlying stocks that it represents.
It is similar to a mutual fund that one can buy and sell in real time at a price that changes during the trading session. In India, the two popular ETFs are index ETFs and commodity ETFs. Most ETFs in India are index funds that hold securities. They try to mirror the performance of a stock market index.
As the ETFs are listed on the exchanges, distribution and other operational expenses are significantly lower as compared to investing in a commodity. ETFs can be easily bought and sold like stocks during trading hours using your demat account with no additional paperwork. They have a lower expense ratio and the minimum investment is one unit.
To buy and sell ETFs you need a trading account. ETFs are bought through a broker. So, every time you trade you also end up paying brokerage for your transaction. However, ETFs allow investors to take the benefits of intra-day movements in the markets, which is not possible with open-ended funds.
Unlike regular open-ended mutual funds, ETFs can be bought and sold throughout the trading day like any stock. These funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the NAVs of their underlying portfolios.
In order to let the mechanism work, the potential arbitragers need to have full, timely knowledge of a fund's holdings. ETF units are continuously created and redeemed based on investor demand.
Investors may use ETFs to invest, trade or arbitrage. The price of the ETF tracks the value of the underlying index. This provides an opportunity to investors to compare the value of an underlying index with the price of the ETF units prevailing on the exchange.
Source:Economictimes.indiatimes.com
Posted by : Mayur Naik
Wednesday, June 30, 2010
Tuesday, June 29, 2010
IPO of Hindustan Media Ventures Limited
Issue Size: Rs. 270 Crs
QIB Category 60% of issue size
Retail Category 30% of issue size
HNI Category 10% of issue size
Issue Period: 5th July 2010 to 7th July 2010
Price Band: Will be announced later
Lot Size: Will be announced later
BRLM: Edelweiss Capital Ltd/Kotak Mahindra Capital Co Ltd
Syndicate Member: Edelweiss Securities/ Kotak Securities
Registrar: Karvy Computershare Private Limited
Posted by: Rishma Shetty
QIB Category 60% of issue size
Retail Category 30% of issue size
HNI Category 10% of issue size
Issue Period: 5th July 2010 to 7th July 2010
Price Band: Will be announced later
Lot Size: Will be announced later
BRLM: Edelweiss Capital Ltd/Kotak Mahindra Capital Co Ltd
Syndicate Member: Edelweiss Securities/ Kotak Securities
Registrar: Karvy Computershare Private Limited
Posted by: Rishma Shetty
IPO of Aster Silicates Ltd
IPO of Aster Silicates Ltd - End of Issue Collection Figures are as under:-
QIB Category - 0.01 times
HNI Category - 12.46 times
Retail Category - 7.41 times
Overall Issue :- 4.47 times
Total Applicaions :- 15,500 (Approx)
Posted by: Rishma Shetty
QIB Category - 0.01 times
HNI Category - 12.46 times
Retail Category - 7.41 times
Overall Issue :- 4.47 times
Total Applicaions :- 15,500 (Approx)
Posted by: Rishma Shetty
Off-cycle rate hike unlikely
The probability of an interest rate hike before the Reserve Bank of India's (RBI) July 27 monetary policy review is "very low", a deputy governor said on Monday.
K.C. Chakrabarty's comments follow Friday's move by the government to free-up petrol prices and raise prices of state-subsidised diesel, kerosene and cooking gas, which is expected to add to inflation.
"Possibility is there ... but whether it will happen or not I don't know. We will continue to monitor this ... but probability of rate action before policy is very low," he said, adding that the RBI was monitoring global developments.
Chakrabarty, who is not directly involved in monetary policy setting, said earlier that interest rates can be raised at any time.
"Interest rates can be hiked anytime. Before the policy, at the policy or after the policy," Chakrabarty told reporters, adding he expects inflation to come down over a period of time.
The yield on the 10-year bond rose 2 basis points after his comment that rate hikes can come at any time but later dropped 3 basis points to 7.59 percent after he said that the probability of a rate hike before the policy review was low.
Chakrabarty, who is one of four RBI deputy governors, also said that he expects inflation, which was in double digits in May, to come down over a period of time.
The Reserve Bank of India is widely expected to increase interest rates at its July 27 policy review. It raised rates by 25 basis points in March and again in April.
Source: Reuters
Posted by: Rishma Shetty
SBI to announce base rate today, may set it at 8%
State Bank of India, the country’s largest lender, has signalled it may fix the base rate for lending at 8% or less, which may prompt some
private banks to offer lower rates to ensure corporate borrowers remain loyal.
“The bank plans to announce its base rate by Tuesday. It would be 8% or less, not more,” said OP Bhatt, chairman of the bank which controls a fifth of the market. He was speaking to reporters after a meeting of bank chairmen with finance minister Pranab Mukherjee.
The SBI management is debating whether to peg the base rate at 7.5% or at a slightly higher 7.75% to retain the edge over some private banks. SBI can well afford to do this since it has access to a big chunk of relatively low-cost deposits, thanks to its pan-India footprint.
In a bid to end the practice of retailers and small enterprises subsiding large companies, the Reserve Bank of India has mandated that all banks arrive at a base rate for lending below which no loans can be extended. Once this rule comes into force on July 1, large corporates, who benefited from so-called sub-prime lending rate (PLR) lending, will have to pay at least the base rate.
Most state-run banks may fix their base rate at between 8% and 9% since their cost of funds does not vary significantly, unlike the private banks. For India’s top private lenders, the challenge will now be to fix the base rate close to SBI or even lower if they have to woo blue chip corporates who are used to shopping around for bargain rates.
Bank of Baroda chairman & managing director MD Mallya said his bank’s base rate would be in the range of 8-8.5%, while Bank of India CMD Alok
Misra said the bank’s asset-liability committee will meet soon to fix the rate. Punjab National Bank chairman & managing director KR Kamath said its rate may be below 8.5%. India’s largest private sector lender ICICI Bank said it plans to announce its base rate on Wednesday. “We will announce our base rate on June 30,” ICICI Bank managing director & chief executive Chanda Kochhar told reporters on Monday.
SBI’s rate would be key as all banks would factor that in while setting their own rates. “We have worked out 3-4 options. But the final decision will depend on the rate fixed by SBI,” said a bank chairman on condition of anonymity.
Banks used to set a PLR, but in most cases funds were given to top corporates below that, leading to others indirectly subsiding the loans. To lure customers, banks also indulged in special offers that were unrelated to the benchmark rates. When the interest rates were cut by the central bank to stimulate demand, many did not pass on the benefits to existing customers, but used that to lure new ones, blunting the RBI’s objectives.
As per the new norms, existing customers will have to migrate to the base rate when their loan contract comes up for renewal. The new rule does not apply to finance companies, including mortgage firms such as Housing Development Finance Corp. They may continue with the PLR mechanism while charging interest rates. But HDFC has decided to do away with the so-called teaser rates, where cost is low in the early years of the loan but climbs progressively.
Source : Economic Times
Posted by: Rishma Shetty
private banks to offer lower rates to ensure corporate borrowers remain loyal.
“The bank plans to announce its base rate by Tuesday. It would be 8% or less, not more,” said OP Bhatt, chairman of the bank which controls a fifth of the market. He was speaking to reporters after a meeting of bank chairmen with finance minister Pranab Mukherjee.
The SBI management is debating whether to peg the base rate at 7.5% or at a slightly higher 7.75% to retain the edge over some private banks. SBI can well afford to do this since it has access to a big chunk of relatively low-cost deposits, thanks to its pan-India footprint.
In a bid to end the practice of retailers and small enterprises subsiding large companies, the Reserve Bank of India has mandated that all banks arrive at a base rate for lending below which no loans can be extended. Once this rule comes into force on July 1, large corporates, who benefited from so-called sub-prime lending rate (PLR) lending, will have to pay at least the base rate.
Most state-run banks may fix their base rate at between 8% and 9% since their cost of funds does not vary significantly, unlike the private banks. For India’s top private lenders, the challenge will now be to fix the base rate close to SBI or even lower if they have to woo blue chip corporates who are used to shopping around for bargain rates.
Bank of Baroda chairman & managing director MD Mallya said his bank’s base rate would be in the range of 8-8.5%, while Bank of India CMD Alok
Misra said the bank’s asset-liability committee will meet soon to fix the rate. Punjab National Bank chairman & managing director KR Kamath said its rate may be below 8.5%. India’s largest private sector lender ICICI Bank said it plans to announce its base rate on Wednesday. “We will announce our base rate on June 30,” ICICI Bank managing director & chief executive Chanda Kochhar told reporters on Monday.
SBI’s rate would be key as all banks would factor that in while setting their own rates. “We have worked out 3-4 options. But the final decision will depend on the rate fixed by SBI,” said a bank chairman on condition of anonymity.
Banks used to set a PLR, but in most cases funds were given to top corporates below that, leading to others indirectly subsiding the loans. To lure customers, banks also indulged in special offers that were unrelated to the benchmark rates. When the interest rates were cut by the central bank to stimulate demand, many did not pass on the benefits to existing customers, but used that to lure new ones, blunting the RBI’s objectives.
As per the new norms, existing customers will have to migrate to the base rate when their loan contract comes up for renewal. The new rule does not apply to finance companies, including mortgage firms such as Housing Development Finance Corp. They may continue with the PLR mechanism while charging interest rates. But HDFC has decided to do away with the so-called teaser rates, where cost is low in the early years of the loan but climbs progressively.
Source : Economic Times
Posted by: Rishma Shetty
Monday, June 28, 2010
Markets Today - 28/6/2010 - Disclaimer Post Applies
Implications: Decrease in volatility, lower put writing than calls at higher levels indicates market losing its current momentum and would see some correction in coming treading sessions. However, at current scenario correction may not be larger on account of strong put writing and concentration at 5,200 levels. So, we expect the market to trade above 5,200 and below 5,500. So, derivative strategy to be adopted by traders can be sell 5,500 CE and 5,200 PE and stay invested for whole series.
Option Analysis
· Call Writing: Higher fresh writing was witnessed between 5,400 and 5,600 strike prices. 5,400 CE added open interest of 2.81 lakh shares and 3.31 lakh shares at 5,500. Concentration is being observed at 5,500 strike price of 55.93 lakh shares.
· Put Writing: On the other hand, major writing was observed at lower levels. Higher addition was seen at 5,200 of 6.6 lakh shares and 5.9 lakh shares at 5,300. Major concentration is being observed at 5,200 strike price of 67.81 lakh shares.
Implications: Concentration and strong put writing at 5,200 levels indicates this as to act as a strong support for June Series and 5,300 for the near term. Whereas call writing at higher level indicates Nifty losing its current momentum and looks stress at current levels. We expect market to trade between 5,500 and 5,200 for July series on account of concentration.
FIIs and DIIs activity in capital market segment
· FIIs were net buyers of Rs 792 crore with Gross buyers of Rs 2,219 crore and Gross Sellers of Rs 1,426 crore.
· DIIs were net sellers of Rs 94 crore with Gross buyers of Rs 1,416 crore and Gross sellers of Rs 1,510 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 28th June, 2010 close at 19.55 which is 2.25% lower as compared to previous close, after touching an intraday high of 20.84 and low of 19.55.
Implications: Indian VIX is trading at its support closed at its low in today’s trading session. We expect it to move up and are “Bullish” on the same.
How to make exit decisions in volatile market
The stock markets have gone up significantly over the last few quarters. The markets have been volatile during this run-up phase and had a couple of profit booking correction phases. Profit booking (or exit) is a very sensitive factor and the decision to book profits is personal to an investor. Many investors are sentimental about their investments and therefore miss an opportunity to book profits (or cut loss) at the appropriate time.
These are some strategies for investors to book profits and avoid missing out on opportunities: Set target and phase exit Booking profits at regular stages is one of the most basic strategies. Wealth managers suggest maintaining a 'book profits' and 'cut loss' target on investments and keeping track of them. However, many investors do not follow it or lose track of the targets.
It is therefore advisable to keep booking profits regularly, whenever the price moves significantly. Smaller milestones can be set in steps of 10 to 20 percent price movements.
Regular selling and booking profits enables investors to average out the opportunities and use them in a systematic manner.
Identify sell signals:
Identifying sell signals is a bit more difficult. This takes time and investors need to keep tracking developments around their sectors and markets in general.
These are some of the basic but important factors that investors can track to identify signals for profit booking: Quarterly results Investors can track the quarterly results of companies.
Sometimes, the results clearly indicate the business conditions and challenges, which indicate a clear-cut sell signal. At other times, investors should research deeper to figure out a way forward from the management interviews, analysts' views, etc.
Market trends:
The market is divided into various sectors. These sectors have well-defined trends based on past data. The general performances of stocks from various sectors vary according to the market conditions.
For example, FMCG and pharma are treated as defensive sectors. These stocks perform well in negative market conditions whereas they under-perform during good market conditions.
Similarly, there are different tendencies for different sectors, and investors can take a decision based on the general market and sectoral conditions.
Sharp run-up:
If a stock runs up significantly in the short term, it can be treated as a signal for profit booking. Most of the time, investors do not book profits (or exit) due to their sentimental attachment to a stock and lose an opportunity.
In case an investor can't make an exit decision, he should look at opportunities to book part profits at least. This helps in making best use of an opportunity.
Be objective:
Investors should be careful while investing in equity-related instruments, especially if they are investing in stocks themselves. It is important to put emotions and sentiments out of the way while taking decisions (especially exit decisions) related to investments.
Sometimes, in case of bad investments, the investor should be ready to take a cut and make a loss exit. This hard move enables him to protect the capital which can be reinvested in stocks or instruments with better prospects of growth, rather than losing the entire capital in a bad investment.
Posted By:
Kartik Gala
(Business Development)
Saturday, June 26, 2010
FUEL PRICE HIKE A BOON OR A CURSE TO COMMON MAN
Petrol and diesel will cost up to Rs 3.73 per litre more, households will have to pay an additional Rs 35 per cylinder and poor man's cooking medium kerosene will be dearer by Rs 3 a litre from midnight.
In a major decision to bring petroleum products in line with market rates, the government today freed petrol from all pricing controls and hiked diesel prices by Rs two a litre, Oil Secretary S Sundareshan announced after the meeting of the Empowered Group of Ministers.
Even diesel prices will be eventually freed of all administrative controls, Sundareshan said.
The decisions, taken by the EGoM headed by Finance Minister Pranab Mukherjee, were timed appropriately to take advantage of relatively lower global crude prices, which are hovering around $77 a barrel. The decision will help to rein in the fiscal deficit, which is projected at 5.5 percent of the gross domestic product in 2010/11 and free up revenues for other programmes.
Besides, this would also help cut down on the government's huge subsidy bills, as also relieve the oil marketing PSUs of staggering burden on account of selling these fuels much below the market prices.
Sundareshan said that the government would, however, continue to "heavily subsidise" the cooking fuels.
Oil Minister Murli Deora had, on more than one occasion, briefed the Prime Minister Manmohan Singh and Mukherjee on the crisis that would befall oil PSUs if no decision was taken on hiking prices. He has asked states to lower sales tax on petrol and diesel to cushion consumers from the impact of fuel price hike.
The decision would cause core inflation, already in double digits, to shoot up further.
In May, WPI-based inflation provisionally entered double digits at 10.16 per cent.
State oil firms currently lose about Rs 215 crores per day on selling fuel below the imported cost. At present, petrol is being sold at Rs 3.73 a litre below its cost, diesel at a loss of Rs 3.80 per litre, kerosene at Rs 18.82 a litre and domestic LPG at a discount of Rs 261.90 on every 14.2-kg cylinder.
Impact on Transportation Sector
The Petrol rates have been hiked by Rs 3.5 per litre and the diesel rates have been hiked by Rs 2 per litre. This move has affected the transportation sector as a whole. The rickshaw fare has been raised by Rs. 2 from Rs 9 to Rs 11. It means if you travel twice by rickshaw daily then it costs you Rs 4 more per day which sums up to be Rs 120 per month. So for a family of four people its costs around Rs 480 more per month.
The Commercial vehicles owners have gone on strike since last night in order to protest against the hike in diesel prices which is cutting their pockets deeply as for commercial transport diesel is the direct raw material.
But freeing of petrol prices would reduce the Rs 74,300 crore deficits by about Rs 5,000 crore. A one rupee per litre hike in diesel prices would cut the losses by Rs 3,800-4,000 crore.
Impact on the Banking sector
The price rise will have an impact of 100 basis points in inflation as the first round of impact following the fuel price hike. The second round of impact could add another 30-40 basis points.
Inflationary pressures in the economy will build up leading to interest rate hikes. The fuel price hike has increased the probability of a rate hike before the July monetary policy review.
Also a high possibility of a rise in interest rates in the near-term.
And if not, then rate increases could be heftier by 50 basis points in July.There could be some relief on the fiscal side for the government. We are expecting a reduction of Rs 250 billion in under-recoveries.
Impact on the Auto sector
The government's decision to increase petrol, diesel prices is likely to impact growth of the automotive industry.The impact will be felt in the long run as the inflation rate, which will climb further in the wake of the decision, is likely to hit the purchasing power of potential buyers. Almost all the segments including cars, commercial vehicles, tractors, and two wheelers will get impacted
Fuel price hike will impact the overall running cost of the vehicle including the freight cost.
Some automakers believe that the hike will mean increased focus on alternative fuel for vehicles. The demand for LPG or CNG powered vehicles will gradually rise as a result.The impact will be felt more on fuel guzzling vehicles than on smaller cars, which are more fuel efficient. More manufacturers may launch LPG-driven vehicles as it will naturally attract a large amount of buyers.
The hike has got nothing to do with the long run as a person buying a car will still buy a car even if he has to pay that extra amount. Cost of rate of interest has a much higher impact on car buying decision than fuel hikes.
Impact on Common Man
The decontrolling of fuel prices which has led to a big hike in petrol, diesel, LPG and kerosene prices has multiplied the woes of the common man. While the industry has hailed the move, millions of people are criticizing the government's decision and the timing of the hike with inflation already at a record high.
Is the government right when it says it cannot go on subsidizing fuel prices? Why a hike when there has been no change in the international crude prices? Is this an attack on the common man? These are questions people are raising. At a time when inflation is at the peak, this petrol hike has agitated people across the country.
'We live in a country where Sim card is free and dal is sold at Rs 120;
Where politicians make a mockery of justice and people vote them to power;
Where law makers are all rogues and thieves;
Where it takes more than a LIFE to get justice;
Where it's a crime to be poor;
Where corporates have money to buy an IPL team but no money for the poor;
Where netas are garlanded with currency, and common man dies in a stampede where food is distributed.’
Also the price rise will lead to an increase in all the FMCG’s & the regular necessities affecting the common man the most.
IMPACT ON THE ECONOMY
The increase in fuel prices will help oil marketing companies cut under-recoveries by Rs 22,000 crores this year, thereby easing pressure on government finances and bringing down the fiscal deficit.
“These changes will help the fiscal and revenue deficits to decline,” finance ministry’s chief economic adviser Kaushik Basu said on Friday after an empowered group of ministers led by finance minister Pranab Mukherjee decided to free petrol prices and raise prices of kerosene, diesel and cooking gas.
The government has projected a fiscal deficit of 5.5% of the GDP in 2010-11, but finance secretary Ashok Chawla had earlier said it could shrink to 4.5% of GDP if fuel prices are deregulated and bonanza from 3G spectrum auction is factored in.
The lower under-recoveries will also help the stick to its borrowing target of Rs 3, 45,000 crores for the fiscal. It is scheduled to borrow 63% of its full year target between April and September.
There may be some short-term pain, but it will result in long-term gain. The fuel price hike will help the government cut down the subsidy bill and control the deficit.
We can sum up that the rise:
1) Will lead to rise in inflation sharply which is around 10.16 % already in double digit.
2) Will Lead to rise in prices in almost all sectors major sectors affected will be Transport, Auto, FMCG, Textiles.
3) The rise in LPG gas will cut the common man’s pocket deeply.
4) It will also have an impact on banking sectors as the hike may lead to rise in inflation which will urge RBI to rise interest rates thus affecting banks due to tightening of CRR.
5) The decision will help to rein in the fiscal deficit, which is projected at 5.5 percent of the gross domestic product in 2010/11 and free up revenues for other progammes.
6) State oil firms currently lose about Rs 215 crores per day on selling fuel below the imported cost. Thus it will help these companies to make profits.
Thus looking at the macroeconomic view the move is beneficial for the country and the Oil marketing companies, but is going to directly hurt common man who fights inflation day in day out.
Source - www.economictimes.indiatimes.com
www.rediff.com
Posted By - Chintan Dedhia
In a major decision to bring petroleum products in line with market rates, the government today freed petrol from all pricing controls and hiked diesel prices by Rs two a litre, Oil Secretary S Sundareshan announced after the meeting of the Empowered Group of Ministers.
Even diesel prices will be eventually freed of all administrative controls, Sundareshan said.
The decisions, taken by the EGoM headed by Finance Minister Pranab Mukherjee, were timed appropriately to take advantage of relatively lower global crude prices, which are hovering around $77 a barrel. The decision will help to rein in the fiscal deficit, which is projected at 5.5 percent of the gross domestic product in 2010/11 and free up revenues for other programmes.
Besides, this would also help cut down on the government's huge subsidy bills, as also relieve the oil marketing PSUs of staggering burden on account of selling these fuels much below the market prices.
Sundareshan said that the government would, however, continue to "heavily subsidise" the cooking fuels.
Oil Minister Murli Deora had, on more than one occasion, briefed the Prime Minister Manmohan Singh and Mukherjee on the crisis that would befall oil PSUs if no decision was taken on hiking prices. He has asked states to lower sales tax on petrol and diesel to cushion consumers from the impact of fuel price hike.
The decision would cause core inflation, already in double digits, to shoot up further.
In May, WPI-based inflation provisionally entered double digits at 10.16 per cent.
State oil firms currently lose about Rs 215 crores per day on selling fuel below the imported cost. At present, petrol is being sold at Rs 3.73 a litre below its cost, diesel at a loss of Rs 3.80 per litre, kerosene at Rs 18.82 a litre and domestic LPG at a discount of Rs 261.90 on every 14.2-kg cylinder.
Impact on Transportation Sector
The Petrol rates have been hiked by Rs 3.5 per litre and the diesel rates have been hiked by Rs 2 per litre. This move has affected the transportation sector as a whole. The rickshaw fare has been raised by Rs. 2 from Rs 9 to Rs 11. It means if you travel twice by rickshaw daily then it costs you Rs 4 more per day which sums up to be Rs 120 per month. So for a family of four people its costs around Rs 480 more per month.
The Commercial vehicles owners have gone on strike since last night in order to protest against the hike in diesel prices which is cutting their pockets deeply as for commercial transport diesel is the direct raw material.
But freeing of petrol prices would reduce the Rs 74,300 crore deficits by about Rs 5,000 crore. A one rupee per litre hike in diesel prices would cut the losses by Rs 3,800-4,000 crore.
Impact on the Banking sector
The price rise will have an impact of 100 basis points in inflation as the first round of impact following the fuel price hike. The second round of impact could add another 30-40 basis points.
Inflationary pressures in the economy will build up leading to interest rate hikes. The fuel price hike has increased the probability of a rate hike before the July monetary policy review.
Also a high possibility of a rise in interest rates in the near-term.
And if not, then rate increases could be heftier by 50 basis points in July.There could be some relief on the fiscal side for the government. We are expecting a reduction of Rs 250 billion in under-recoveries.
Impact on the Auto sector
The government's decision to increase petrol, diesel prices is likely to impact growth of the automotive industry.The impact will be felt in the long run as the inflation rate, which will climb further in the wake of the decision, is likely to hit the purchasing power of potential buyers. Almost all the segments including cars, commercial vehicles, tractors, and two wheelers will get impacted
Fuel price hike will impact the overall running cost of the vehicle including the freight cost.
Some automakers believe that the hike will mean increased focus on alternative fuel for vehicles. The demand for LPG or CNG powered vehicles will gradually rise as a result.The impact will be felt more on fuel guzzling vehicles than on smaller cars, which are more fuel efficient. More manufacturers may launch LPG-driven vehicles as it will naturally attract a large amount of buyers.
The hike has got nothing to do with the long run as a person buying a car will still buy a car even if he has to pay that extra amount. Cost of rate of interest has a much higher impact on car buying decision than fuel hikes.
Impact on Common Man
The decontrolling of fuel prices which has led to a big hike in petrol, diesel, LPG and kerosene prices has multiplied the woes of the common man. While the industry has hailed the move, millions of people are criticizing the government's decision and the timing of the hike with inflation already at a record high.
Is the government right when it says it cannot go on subsidizing fuel prices? Why a hike when there has been no change in the international crude prices? Is this an attack on the common man? These are questions people are raising. At a time when inflation is at the peak, this petrol hike has agitated people across the country.
'We live in a country where Sim card is free and dal is sold at Rs 120;
Where politicians make a mockery of justice and people vote them to power;
Where law makers are all rogues and thieves;
Where it takes more than a LIFE to get justice;
Where it's a crime to be poor;
Where corporates have money to buy an IPL team but no money for the poor;
Where netas are garlanded with currency, and common man dies in a stampede where food is distributed.’
Also the price rise will lead to an increase in all the FMCG’s & the regular necessities affecting the common man the most.
IMPACT ON THE ECONOMY
The increase in fuel prices will help oil marketing companies cut under-recoveries by Rs 22,000 crores this year, thereby easing pressure on government finances and bringing down the fiscal deficit.
“These changes will help the fiscal and revenue deficits to decline,” finance ministry’s chief economic adviser Kaushik Basu said on Friday after an empowered group of ministers led by finance minister Pranab Mukherjee decided to free petrol prices and raise prices of kerosene, diesel and cooking gas.
The government has projected a fiscal deficit of 5.5% of the GDP in 2010-11, but finance secretary Ashok Chawla had earlier said it could shrink to 4.5% of GDP if fuel prices are deregulated and bonanza from 3G spectrum auction is factored in.
The lower under-recoveries will also help the stick to its borrowing target of Rs 3, 45,000 crores for the fiscal. It is scheduled to borrow 63% of its full year target between April and September.
There may be some short-term pain, but it will result in long-term gain. The fuel price hike will help the government cut down the subsidy bill and control the deficit.
We can sum up that the rise:
1) Will lead to rise in inflation sharply which is around 10.16 % already in double digit.
2) Will Lead to rise in prices in almost all sectors major sectors affected will be Transport, Auto, FMCG, Textiles.
3) The rise in LPG gas will cut the common man’s pocket deeply.
4) It will also have an impact on banking sectors as the hike may lead to rise in inflation which will urge RBI to rise interest rates thus affecting banks due to tightening of CRR.
5) The decision will help to rein in the fiscal deficit, which is projected at 5.5 percent of the gross domestic product in 2010/11 and free up revenues for other progammes.
6) State oil firms currently lose about Rs 215 crores per day on selling fuel below the imported cost. Thus it will help these companies to make profits.
Thus looking at the macroeconomic view the move is beneficial for the country and the Oil marketing companies, but is going to directly hurt common man who fights inflation day in day out.
Source - www.economictimes.indiatimes.com
www.rediff.com
Posted By - Chintan Dedhia
Reliance, Reliance Natural Sign Revised Gas Pact
MUMBAI -- India's Reliance Industries Ltd. and Reliance Natural Resources Ltd. Friday signed a revised gas supply pact, a month after an apex court order settled a five-year dispute between two of the country's biggest corporate houses.
Reliance Natural will now ask the federal government to allocate natural gas in a step towards implementing the pact, it said in a regulatory filing.
The gas supply master agreement complies with the Gas Utilization Policy and EGOM (empowered group of ministers) decisions, Reliance Industries said in a statement.
India's highest court on May 7--while ruling on a dispute between the two companies on a gas supply agreement--asked them to start negotiations in eight weeks' time on a pact within the framework of government policy regarding price, quantity and tenure for the supply of gas.
The talks had to be completed within six weeks of their commencement.
The Supreme Court of India ruled that a private natural gas supply agreement between the billionaire Ambani brothers wasn't binding and that the two companies had to agree to a state-set price.
The ruling allowed the Mukesh Ambani-controlled Reliance Industries, India's largest company by value, to sell natural gas from the D6 block in the Krishna Godavari basin off India's eastern coast at $4.20 per million British thermal units--as set earlier by a federal government panel.
Anil Ambani's Reliance Natural wanted to pay $2.34, citing a family agreement signed in June 2005 when the brothers divided the petrochemicals-to-telecommunications empire of their late father, Dhirubhai Ambani.
According to the pact between Mukesh--the world's fourth-richest man--and younger brother Anil, Reliance Industries was to supply 28 million metric standard cubic meters a day of gas from the D6 block at $2.34 per mBtu to Reliance Natural for 17 years.
Shares of Reliance Natural jumped after the news, while Reliance Industries shares stayed neutral.
"It is positive for RNRL as this pact makes it certain that their power plants will receive gas. However, for Reliance Industries, it does not make any difference," said Saeed Jaffery, analyst at Ambit Capital.
Source - www.online.wsj.com(Wall Street Journal)
Posted By - Chintan Dedhia
Friday, June 25, 2010
Markets Today - 25/6/2010 - Disclaimer Post Applies
Implications: Range Bound View: Nifty futures trading at premium to spot. Major put writing at 5,200 for last few trading sessions thus to act as major support for intermediate term and major call writing at higher levels with concentration at 5,500. Our main concern at present is volatility, which is trading at its support levels. The broad range for July series is 5,500 and 5,200 and we expect market to trade in this range.
Option Analysis
· Call Writing: During the week major writing was witnessed at higher strikes. The combined build up in open interest build up between 5,600 and 5,300 strike prices is ~1 crore shares with majority at 5,500 strike price. Concentration of open interest is observed at 5,500 of 52.61 lakh shares.
· Put Writing: On the other hand, fresh writing was observed in between 5,300 and 5,000 strike prices where the combined build up in opened interest is ~1.36 crores shares with maximum build up seen at 5,200 strike price. Major concentration is being observed at 5,200 strike price of 61.17 lakh shares.
Implications: Call writing at every higher strike price indicates Nifty would face stiff resistance at every upper level. Whereas, fresh put writing at lower levels with majority at 5,200 indicates strong support at this levels. We expect market to trade between 5,500 and 5,200 for July series on account of concentration.
FIIs and DIIs activity in capital market segment
· FIIs were net sellers of Rs 308 crore with Gross buyers of Rs 1,298 crore and Gross Sellers of Rs 1,605 crore.
· DIIs were net sellers of Rs 446 crore with Gross buyers of Rs 1,185 crore and Gross sellers of Rs 1,631 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 25th June, 2010 close at 20 which is almost flat as compared to previous close, after touching an intraday high of 20.68 and low of 19.45.
Implications: Indian VIX is trading at its support and dint change much for today’s trading session. We expect it to move up and are “Bullish” on the same.
Thanks for your Support.. DENIP's blog crosses 10000+ visits..
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We thank you for your support and follow up for making more than 10000+ visits to our blog in such a short time.. Hope you find the information usefull and we will keep posting usefull information regularly!!
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IPO OF Technofab Engineering Limited
IPO Details:
• The issue : Technofab Engineering Limited
• Sector : Capital goods
• Issue size : 29,90,000 equity shares of Rs.10 each
• IPO Dates : June 29th 2010 – July 2nd 2010
• Price Band : Rs.230/- to Rs.240/-
• Bid lot : 25 equity shares and multiple of 25
• Exchanges : BSE,NSE
• BRLM : Collins Stewert Inga Private Limited
• Registrar : Link Intime India Pvt.Ltd
Posted By: Mayur Naik
• The issue : Technofab Engineering Limited
• Sector : Capital goods
• Issue size : 29,90,000 equity shares of Rs.10 each
• IPO Dates : June 29th 2010 – July 2nd 2010
• Price Band : Rs.230/- to Rs.240/-
• Bid lot : 25 equity shares and multiple of 25
• Exchanges : BSE,NSE
• BRLM : Collins Stewert Inga Private Limited
• Registrar : Link Intime India Pvt.Ltd
Posted By: Mayur Naik
IMF proposes global bank tax plans
The International Monetary Fund has proposed two new global taxes on banks and other financial institutions to cover the cost of future bailouts, the BBC reported.
The measures would see all institutions pay a bank levy as well as a further tax on profits and pay, which would aim to protect against future financial meltdown, said the broadcaster Tuesday, citing a leaked IMF report.
Governments of the Group of 20 advanced and developing countries -- which account for more than 85 percent of the global economy -- received the documents Tuesday, said the BBC.
Finance ministers would discuss the proposals this weekend, it added.
Insurers, hedge funds and other financial institutions would also be required to pay the taxes under the IMF proposals, despite the fact they were less implicated in the recent financial crisis.
This was to prevent banks reclassifying activities they currently carry out as other services -- such as insurance or hedge-fund services -- in an effort to avoid the levy.
The general levy, called the "financial stability contribution," would start at a flat rate but would eventually be changed so businesses judged to be riskier paid more, said the broadcaster.
Several proposals have been put forward by different governments to cover the costs of future economic rescue packages, including a tax on financial transactions.
But many have been reluctant to unilaterally introduce taxes to pay for future bailouts, believing coordinated action is the only option.
If governments acted alone, it is feared that institutions would simply move their operations to places with less stringent financial regulation.
The IMF report, which will form the basis of a submission to the G20 summit in June, states international cooperation in the introduction of the new levies would be "beneficial".
"Countries' experiences in the recent crisis differ widely and so do their priorities as they emerge from it. But none is immune from the risk of a future -- and inevitably global -- financial crisis," it said.
"Unilateral actions by governments risk being undermined by tax and regulatory arbitrage."
Britain has been pressing for the introduction of a global bank tax, and Finance Minister Alistair Darling welcomed the contents of the leaked IMF proposals.
"The recognition that banks should make a contribution to the society in which they operate is right," he said.
Prime Minister Gordon Brown told the Financial Times newspaper earlier this month that the large economies were getting closer to a deal.
Britain, France and Germany were broadly agreed on the need for a levy, Brown told the paper, adding he hoped the United States would join them.
The leader said he wanted a deal to be struck at the G20 summit in Seoul in November.
Source - http://www.dalje.com
Psoted By - Chintan Dedhia
Thursday, June 24, 2010
Markets Today - 24/6/2010 - Disclaimer Post Applies
Market Snapshot for June Series – Gained of ~319 points in June series
Nifty June series settle with triple digit gain of ~317 points or 6.3% to Rs 5,321. The above gain was followed by positive Foreign Institutional Investors (FIIs) in derivative market of Rs 18,837 crore and Rs 4,535 crore in Index Futures.
Rollover– Positive Rollover cost of ~11bps in June series
Nifty rollover was weak as compared to market wide rollover by ~1000bps to 85.2% and positive rollover was observed with average cost of ~11bps. Current month expired contract was lower by ~16.9 lakh and rollover higher by ~500bps as compared to May series. Lower expired contract and higher rollover despite positive rollover cost indicates current momentum to continue for next few trading sessions.
Outlook for July Series – Range bound with less volatility
In July series, concentration of call is observed at 5,500 of ~50.8 lakh shares and put at 5,200 of ~52.3 lakh shares. By observing concentration, option premium, KRC derivative proprietary model and volatility, we expect next series Nifty may trade/settle between 5,550 and 4,850.
The strategy to be adopted by a trader should be to Sell 5,400 CE and 4,600 PE at combined premium of 95.10 with target of Rs 10, Stop-loss of Rs 194. Expected ROI would be 9.1% with investment of Rs 52,000.
Sector-wise Rollovers (See: Exhibit 1&2)
Highest long Roll: Bullish Signal
Infrastructure (89.8%), FMCG (88.9%), Finance (88.2%)
Highest Short Roll: Bearish Signal
Transport (88.7%), Cement (86.0%), Technology (85.2%)
Lowest Rollover
Banking (80.2%), Media (79.4%), Metals (76.8%)
Stocks Rollovers (Exhibit 4-6)
Highest long Roll: Bullish Signal
GTL (98.0%), GLAXO (95.3%), GMRINFRA (94.7%)
Highest Short Roll: Bearish Signal
INDIACEM (95.5%), CENTURYTEX (93.6%), ICSA (93.5%)
Lowest Rollover
BGRENERGY (52.9%), ABB (56.9%), ROLTA (57.0%)
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Before I joined DENIP Investment Academy for the Basic and Advance course, I was completely blank in the subject. So I got well versed with the topics. Apart from that, some information that I obtained in these sessions was a real learning. Post my retirement in April,it has helped me discover newer opportunities and business avenues.
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Larsen & Toubro
I have recommended DENIP to my son also. Both the trainers are young, energetic and humble. I am sure they are going to do very well together.
R.V.Pandya
(Sr. Deputy General Manager)
Larsen & Toubro
Coal India won't stick to 25% public float norm
Various wings of the government seem to be on a collision course with the finance ministry on the minimum public float norm for listing,
with the latest being Coal India that’s reluctant to sell more than 10% in an initial offer. Coal minister Sriprakash Jaiswal on Wednesday ruled out the possibility of selling more than 10% in the state-owned coal miner even after listing on the bourses.
“The disinvestment in CIL will not exceed 10% even if the government decides on 25% disinvestment in PSUs,” said Mr Jaiswal. “Any such decision will not be applicable to CIL. The 10% disinvestment was just a pre-condition to CIL getting navratna status.”
The Cabinet Committee on Economic Affairs had last week approved 10% disinvestment of government stake in Coal India. The finance ministry this month amended the Securities Contracts Regulation Act to mandate minimum 25% public holding for listed firms in a phased manner.
Nearly 175 companies, including 35 PSUs such as NMDC and Hindustan Copper, will have to offer shares to public to meet the new norms. Some are unhappy with this forced dilution. The amendment also provides for firms with a market cap over Rs 4,000 crore to sell 10% in an IPO and hike it to 25% gradually.
The disinvestment department has also sought a review of the guidelines as PSUs have expressed fears that the rule could discourage these companies from going public and also lead to forced disinvestment and impact valuations. Experts, too, have called for a review. “You can’t have one-size-fits-all,” said Prime Database MD Prithvi Haldea.
“The government will have to review the post listing norms for companies depending on their market cap. Large companies should be exempt.” “The guidelines are aimed at ensuring public participation, but there is no guarantee that retail investors will be interested,” said SMC Capitals equity head Jagannathan Thunuguntla. “So the norms will just put pressure on firms.”
Source: Economic Times
Posted by: Rishma Shetty
with the latest being Coal India that’s reluctant to sell more than 10% in an initial offer. Coal minister Sriprakash Jaiswal on Wednesday ruled out the possibility of selling more than 10% in the state-owned coal miner even after listing on the bourses.
“The disinvestment in CIL will not exceed 10% even if the government decides on 25% disinvestment in PSUs,” said Mr Jaiswal. “Any such decision will not be applicable to CIL. The 10% disinvestment was just a pre-condition to CIL getting navratna status.”
The Cabinet Committee on Economic Affairs had last week approved 10% disinvestment of government stake in Coal India. The finance ministry this month amended the Securities Contracts Regulation Act to mandate minimum 25% public holding for listed firms in a phased manner.
Nearly 175 companies, including 35 PSUs such as NMDC and Hindustan Copper, will have to offer shares to public to meet the new norms. Some are unhappy with this forced dilution. The amendment also provides for firms with a market cap over Rs 4,000 crore to sell 10% in an IPO and hike it to 25% gradually.
The disinvestment department has also sought a review of the guidelines as PSUs have expressed fears that the rule could discourage these companies from going public and also lead to forced disinvestment and impact valuations. Experts, too, have called for a review. “You can’t have one-size-fits-all,” said Prime Database MD Prithvi Haldea.
“The government will have to review the post listing norms for companies depending on their market cap. Large companies should be exempt.” “The guidelines are aimed at ensuring public participation, but there is no guarantee that retail investors will be interested,” said SMC Capitals equity head Jagannathan Thunuguntla. “So the norms will just put pressure on firms.”
Source: Economic Times
Posted by: Rishma Shetty
Markets Today - 23/6/2010 - Disclaimer POst Applies
Market Snapshot for June Series – Gained of ~319 points in June series
In June Series, Nifty has gained ~319 points or 6.3% to 5,323 points and FIIs were net were buyers in 16 trading sessions out of 17 of Rs 17,282 crore. We expect this series to settle below 5,300 but above 5,200.
Rollover– Positive Rollover cost of ~11bps.
As compared to market wide rollover, Nifty rollover was lower by 1191bps to 54% indicates activity more towards stock specific than Nifty. As compared to last 6 month average, current month rollover is lower by ~400bps indicates less volatility in coming month. We have observed “Long roll” on account of positive rollover cost of ~11 bps. In today trading sessions, we have seen built-up of fresh positions of ~35 lakh.
Outlook for July Series
In July series, concentration of call is observed at 5,400 of ~42 lakh shares and put at 5,100 of ~41.5 lakh shares. By observing concentration, option premium, KRC derivative proprietary model and volatility, we expect next series Nifty may trade/settle between 5,550 and 4,850.
Sector-wise Rollovers (See: Exhibit 1&2)
Highest long Roll: Bullish Signal
Infrastructure (71.1%), FMCG (68.4%), Finance (67.9%)
Highest Short Roll: Bearish Signal
Transport (78.3%), Technology (69.1%), Cement (66.8%)
Lowest Rollover
Banking (61.3%), Media (59.4%), Metals (53.5%)
Stocks Rollovers (Exhibit 4-6)
Highest long Roll: Bullish Signal
GTL (97.2%), GLAXO (84.5%), ULTRACEMCO (79.0%)
Highest Short Roll: Bearish Signal
INDIACEM (87.3%), AUROPHARMA (86.6%), UNIPHOS (86.0%)
Lowest Rollover
CHENNAPETRO (29.6%), JISLJALEQS (30.3%), ASIANPAINT (34.5%)
FIIs and DIIs activity in capital market segment
· FIIs were net buyers of Rs 265.33 crore with Gross buyers of Rs 1842 crore and Gross Sellers of Rs 1,576 crore.
· DIIs were net sellers of Rs 866 crore with Gross buyers of Rs 672 crore and Gross sellers of Rs 1,538 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 23rd June, 2010 close at 20.34 which is 1.45% lower as compared to previous close, after touching an intraday high of 21.86 and low of 20.28.
Implications: Indian VIX is trading at its support and thus we expect it to move up and are “Bullish” on the same.
Wednesday, June 23, 2010
9 Reasons Why Spain Is A Dead Economy Walking
Barring an economic bailout of mammoth proportions, the economy of Spain is completely and totally doomed. The socialist government of Spain is drowning in debt, unemployment is running rampant and everywhere you turn there are major economic problems. So will Spain be the next Greece? No. When the economy of Spain implodes it is going to be a whole lot worse for the world economy. The economy of Spain is more than four times the size of the economy of Greece.
Spain accounts for 11.5 percent of eurozone GDP while Greece only accounts for approximately 2.5 percent. Spain is the 4th largest economy in the 16 nation eurozone and it is the 10th largest economy in the world. If the economy of Spain fails it will cause a shockwave that will be felt in every corner of the globe. In fact, there are quite a few analysts that believe if Spain defaults it would ultimately lead to the breakup of the eurozone.
So will the EU step up and bail out Spain? Well, there are rumors that EU officials have begun work on a bailout package for Spain which is likely to run into the hundreds of billions of dollars, but on Monday the European Commission, the Spanish government and the German government all denied that the European Union was preparing a bailout for the Spanish economy.
Of course we all know that politicians don’t always tell us the truth.
So who knows what is going on over there right now.
But the reality is that the economy of Spain is not going to make it much longer without serious help, and some EU officials are already using apocalyptic language to describe what an economic collapse in Spain would mean.
For example, EU Commission President Jose Manuel Barroso recently warned that democracy could completely collapse in Greece, Spain and Portugal unless urgent action is taken to tackle the burgeoning European debt crisis.
So could democracy actually fail in those nations?
Well, considering the fact that Greece, Spain and Portugal only became democracies in the 1970s, and that all three of those countries have a history of military coups, such a scenario is not that far-fetched.
Without a doubt there would be serious public unrest in those nations if public services collapsed because their governments ran out of money.
So are there signs that the economy of Spain is about to collapse?
Well, yes, there are quite a few of them.
The following are 9 reasons why Spain is a dead economy walking….
1) Even before this most recent crisis, unemployment in Spain was approaching Great Depression levels. Spain now has the highest unemployment rate in the entire European Union. More than 20 percent of working age Spaniards were unemployed during the first quarter of 2010. If people aren’t working they can’t pay taxes and they can’t provide for their families.
2) In an effort to stimulate the economy, Spain’s socialist government has been spending unprecedented amounts of money and that skyrocketed the government budget deficit to a stunning 11.4 percent of GDP in 2009. That is completely unsustainable by any definition.
3) The total of all public and private debt in Spain has now reached 270 percent of GDP.
4) The Spanish government has accumulated way more debt than it can possibly handle, and this has forced two international ratings agencies, Fitch and Standard & Poor’s, to lower Spain’s long-term sovereign credit rating. These downgrades are making it much more expensive for Spain to finance its debt at a time when they simply can’t afford to pay more interest on their debt.
5) There are 1.6 million unsold properties in Spain. That is six times the level per capita in the United States. Considering how bad the U.S. real estate market is, that statistic is incredibly alarming.
6) The new “green economy” in Spain has been a total flop. Socialist leaders promised that implementing hardcore restrictions on carbon emissions and forcing the nation over to a “green economy” would result in a flood of “green jobs”. But that simply did not happen. In fact, a leaked internal assessment produced by the government of Spain reveals that the “green economy” has been an absolute economic nightmare for that nation. Energy prices have skyrocketed in Spain and the new “green economy” in that nation has actually lost more than two jobs for every job that it has created. But Spain so far seems unwilling to undo all of the crazy regulations that they have implemented.
7) Spain’s national debt is so onerous that they are now caught in a debt spiral where anything they do will harm the economy. If they cut government expenditures in an effort to get debt under control it will devastate economic growth and crush badly needed tax revenues. But if the Spanish government keeps borrowing money their credit rating will continue to decline and they will almost certainly default. The truth is that the Spanish government is caught in a “no win” situation.
8) But even now the IMF is projecting that the Spanish economy is going nowhere fast. The International Monetary Fund says there will be no positive GDP growth in Spain until 2011, at which point it will still be below one percent. As bleak as that forecast is, many analysts believe that it is way too optimistic considering the fact that Spain’s economy declined by about 3.6 percent in 2009 and things are rapidly getting worse.
9) The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pay cuts, budget cuts to social programs and hefty tax increases easily. In fact, there is likely to be some very serious social unrest before all of this is said and done. On May 21st, thousands of public sector workers took to the streets of Spain to protest the government’s austerity plan. But that was only an appetizer. Spain’s two main unions are calling for a major one day general strike to protest the government’s planned reforms of the country’s labor market. The truth is that financial shock therapy does not go down very well in highly socialized nations such as Greece and Spain. In fact, the austerity measures that Spain has been pressured to implement by the IMF have proven so unpopular that many are now projecting that Spain’s socialist government will be forced to call early elections.
So what is going to happen in Spain?
The truth is that nobody can predict for sure how things are going to play out over the coming weeks and months.
But what everyone can agree on is that the stakes are incredibly high.
Speaking at the World Economic Forum in Davos, Switzerland, world famous economist Nouriel Roubini put it this way: “If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster.”
But right now the entire population of Spain (along with much of the rest of the world) is completely distracted by the World Cup. As long as the Spanish team does well, that is likely to keep the Spanish population sedated. But if the Spanish team gets knocked out of the tournament early that will put the entire Spanish population in a really, really bad mood and that could mean a really chaotic summer for the nation of Spain.
Posted By - Chintan Dedhia
Outlook on Equity Market
From here market looks cautious because of following reasons :
1. Baltic Index has fallen around 35% in last one month even then equity markets are in upward trend.
2. In July there is likelihood of stress tests results of European Banks because of which european banks may have to raise their capital which may reduce liquidity in markets.
3. In July there is an IPO of Agricultural Bank of China which is likely to be listed on Hongkong & Shanghai. The IPO is of around 20-22 billion US $ which may absorb liquidity from Asian market.
4. Today there is UK Budget:
There, govt may raise tax & reduce govt. spending.
5. FOMC meet tomorrow & dayafter; G20 meet on Saturday. Outcome of it.
6. Possible Rate Hike in India
7. Possible Delisting of Freddie Mac & Fannie Mae in July
Posted By - Chintan Dedhia
1. Baltic Index has fallen around 35% in last one month even then equity markets are in upward trend.
2. In July there is likelihood of stress tests results of European Banks because of which european banks may have to raise their capital which may reduce liquidity in markets.
3. In July there is an IPO of Agricultural Bank of China which is likely to be listed on Hongkong & Shanghai. The IPO is of around 20-22 billion US $ which may absorb liquidity from Asian market.
4. Today there is UK Budget:
There, govt may raise tax & reduce govt. spending.
5. FOMC meet tomorrow & dayafter; G20 meet on Saturday. Outcome of it.
6. Possible Rate Hike in India
7. Possible Delisting of Freddie Mac & Fannie Mae in July
Posted By - Chintan Dedhia
Infrastructure: India needs $1 trillion
India requires $1 trillion in the next five years to create infrastructure -- key to nine per cent plus growth -- but expects a funding gap of up to 30 per cent that it wants bridged by American investors.
"To sustain a growth rate of nine per cent, estimates indicate that investment in infrastructure will have to be in the order of $1 trillion over the next five years...
"With a potential funding gap of 25-30 per cent, needing to be bridged through innovative modes of financing," Finance Minister Pranab Mukherejee said at separate meetings with the industry shortly after his arrival in Washington on Monday.
He hoped that US companies would come forward to help India [ Images ] bridge this gap.
The Indian economy is expected to grow by 8.5 per cent this fiscal, up from 6.7 per cent in 2008-09 after the 2008 global economic crisis. In the three years preceding 2008-09, the country's economy had expanded by over nine per cent.
"When I took over as the finance minister, my primary concern was how to prevent the further deterioration of the growth," he said, in identical remarks, at separate meetings organised by the Institute of International Finance and the Confederation of Indian Industry.
High inflation has, however, become a cause of concern for the government, which is now betting on good monsoon for the rate of price rise to ease. Headline inflation for May provisionally crossed the double digit level.
He hoped that once it is clear that monsoon is normal, inflationary pressure would start to ease from mid-July.
Monsoon accounts for 80 per cent of rains India receives and 60 per cent of the area under cultivation is rain-fed.
Last year, the country's crop production was hit owing to poor rains, leading to an upward spiral in food prices.
The government has separately been pushing financial sector reforms to sustain high growth, and a bill to increase foreign direct investment cap in insurance sector is awaiting passage. Allowing infrastructure firms access to insurance funds was a key suggestion of a panel headed by Deepak Parekh in 2007.
"We do agree that it (reform) has been delayed," Mukherjee said, attributing the delay to consensus building.
During the last five years, India has initiated reforms in direct and indirect taxes, and is working closely with state governments, he said.
The finance minister said India's economic fundamentals are strong, giving rise to a well grounded optimism for medium and long-term prospects and noted that relatively high Savings and Investment rates should sustain a high growth momentum in the coming decades.
India's savings and investment rate is a healthy 35 per cent of GDP, second only to China's over 40 per cent.
Source - Business.rediff.com
Posted By - Chintan Dedhia
Tuesday, June 22, 2010
Markets Today - 22/6/2010 - Disclaimer Post applies
Market Snapshot for June Series – Gained of ~313 points in June series
In June Series, Nifty has gained ~313 points or 6.3% to 5,317 points and FIIs were net were buyers in 16 trading sessions out of 17 of Rs 17,282 crore.
In today trading sessions, more call writing than put at 5,300 and 5,400 strike prices. Currently, lower end concentration is observed at 4,800 and 5,400 at higher end. We expect next 2 trading sessions to be volatile on account of positive rollover cost and June series to settle between 5,100 and 5,250.
Rollover– Positive Rollover cost of ~13bps.
As compared to last 2 month and 6 month average, current month rollover is lower by ~400bps to ~40% on account of positive lower cost of ~0.12%. In today trading sessions, we have observed increase in fresh built of ~47 lakh which was seen in rollover increase of 13% as compared to Monday trading sessions.
Outlook for July Series
In July series, concentration of call is observed at 5,400 of ~34 lakh shares and put at 5,000 of ~33.8 lakh shares. By observing concentration, option premium, KRC derivative proprietary model and volatility, we expect next series Nifty may trade between 5,550 and 4,850.
FIIs and DIIs activity in capital market segment
· FIIs were net buyers of Rs 975 crore with Gross buyers of Rs 2,546 crore and Gross Sellers of Rs 1,157 crore.
· DIIs were net sellers of Rs 196 crore with Gross buyers of Rs 1,197 crore and Gross sellers of Rs 1,394 crore.
India VIX (Inverse relationship between Nifty and Indian VIX)
· Volatility for 22nd June, 2010 close at 20.64 which is 6.34% higher as compared to previous close, after touching an intraday high of 21.44 and low of 19.88.
Implications: Indian VIX is trading at its support and thus we expect it to move up and are “Bullish” on the same.
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