US DOWNGRADE MAY NOT BAD FOR INDIA

Written by HARIKRISHNAN.T
0 comments

Monkey see, monkey do is an old adage. The Indian Stock Market seems to have learnt the lesson well.

Though the events happening in the market are hardly cataclysmic for the Indian economy or it's companies, Indian markets are like that only, reacting in a knee jerk fashion to global market movers. Partly, this is because of the overwhelming reliance on FIIs for direction.

This trend has, in fact, gained pace over the past 2 years, as FIIs have been the sole drivers of market action, even as both retail investors and domestic institutions have been missing in action.

But I believe that this global downgrade may not bad for our country in the long term prospective. I have strong reasons to believe that. 

First thing is that slower global growth may be just what is needed to take the fizz off commodity prices, particularly crude oil, which have been moved up last year. Any sharp melt down in oil and other commodities will bring about an automatic solution to part of India's inflation problem, thus taking the pressure off the RBI to keep raising interest rates. Today petroleum ministry advised the government to cut down the price of petrol because the crude oil price went down to $80. 

Second thing is that though softer commodity prices may trim profit projections for the few commodity companies in the Sensex, it will signal better profitability for the multitudes of other companies which use commodities and energy as inputs.

And the most important thing is that if growth in the developed markets looks questionable once again, India, even with a 'low' 7 percent growth may begin to look more appealing to foreign investors deciding on their relative allocations across markets.

(Courtesy Business Line)  

Regards Hari " लोका समस्ता सुखिनो भवन्तु "




MARKET ON MONDAY: FIIs WILL BE THE KEY PLAYERS

Written by HARIKRISHNAN.T
0 comments

Let us briefly examine what was happened last week and what will be the expectation for the coming week.

Indian equities on Friday mirrored the fall in the global markets which were gripped by fears of a double dip-recession in the US and a funds crunch in the Euro zone.

In intraday trade, Sensex moved down 700 points while the Nifty fell by 205 points. At close, however, NSE had lost 120.55 points or 2.26 percent to close at 5211.25 while BSE lost 2.19 percent or 387.31 points to end at 17,305.87.

All indices on the BSE and NSE fell sharply and the only saving grace was the V shaped intraday recovery for the Sensex and the Nifty.




FIIs sold equities for a net of Rs.1788.96 crore on Friday. But DIIs were on the buying side. They bought equities for a net of Rs.1372.49 crore. Retail investors are also on the buying side. They purchased equities worth Rs.146.1 crore.

Stocks that LOST: 

  • IT Stocks (TCS, HCL Tech, Infosys, Wipro), on uncertainties about the global outlook.
  • Commodity stocks (RIL, Tata steel, Sterlite ind. etc), on weaker price outlook.
  • Small caps (Dhanlaxmi Bank, Everonn etc) on profit taking.


Stocks that GAINED:

  • Oil marketing stocks (BPCL, IOC, HPCL etc) on falling oil prices.
  • Pharma stocks on defensive theme
  • PSU banks (Cnara, Union Bank) on Value buying.


I think the negative news coming from the world economy especially from the US market and European markets definitely affect Indian markets also in the coming week.

Since the major key players in the market are FIIs, we have to watch whether they are on the buying side or selling side.

In the past week FIIs was totally on the selling side. But since the retail investors and DIIs are on the buying side the market maintained the crucial 5200 support Zone. This is a positive note.

I believe that markets are behaving like News driven market rather than Technical driven.

So retail investors should watch the behavior of FIIs and DIIs. Also the coming week's market will depend on the various news coming from the world economy. So observe the news also.

The major support zone of Nifty in the coming week will be 4930-4980. Watch this level carefully. If market stabilize in this level, we can expect a positive trend. But if Nifty loses that support, then market will drift further. We can expect a positive trend only when Nifty break the 5370 resistance level.

So make intelligent decisions by watching the world market news and observing the crucial support zone of Nifty.

Regards Hari " लोका समस्ता सुखिनो भवन्तु "




TERRIBLE REALITY OF UNEMPLOYMENT IN US

Written by HARIKRISHNAN.T
0 comments

The terrible news which came from the US Economy yesterday was S&P (Standard & Poor's) cut the credit rating of America from AAA to AA+. So this negative news, no doubt will affect not only US economy but also the world economy. 


In this context let us discuss the article written by Paul Krugman, Nobel prize winner in New York Times News Service. This explains how Unemployment affected the US Economy in the past 3 years. 

"In case you had any doubts, Thursday's more than 500-point plunge in the Dow Jones industrial average to near -record lows confirmed it. The economy isn't recovering, and Washington has been worrying about the wrong things. It's not just that the threat of a Double-dip recession has become real. It's now impossible to deny the obvious, which is that we are not now, and have never been, on the road to discovery.

For two years, officials at the Federal Reserve, international organisations and, even within the Obama administration have insisted that the economy was on the mend.

But the economy wasn't on the mend. Yes officially, the recession ended two years ago, and the economy did indeed pull out of a terrifying tailspin.

But at no point has growth looked remotely adequate, given the depth of the initial plunge. In particular, when employment falls as much as it did from 2007 to 2009, you need a lot of job growth to make up lost ground. And that just hasn't happened.

CRUCIAL MEASURE

Consider one crucial measure, the ratio of employment to population. In June 2007, around 63 percent of adults were employed. In June 2009, the official end of the recession, that number was down to 59.4 percent. As of June 2011, two years into the alleged recovery, the number was 58.2 percent.

These reflect a truly terrible reality. Not only are vast numbers of Americans unemployed or underemployed, for the first time since the Great Depression many American workers are facing the prospect of long-term unemployment. And why should we be surprised at this catastrophe.....????? Where was the growth supposed to come from...??? Consumers, still burdened by the debt they ran up during the housing bubble, aren't ready to spend. Businesses see no reason to expand given lack of consumer demand.

The point is that it's now time long past time to get serious about the real crisis the economy faces. The Fed needs to stop making excuses, while the President needs to come up with real job-creation proposals."
Paul Krugman

(This article was written by famous Economist Paul Krugman in New York Times News Service. Courtesy to Business Line.) 

Regards Hari " लोका समस्ता सुखिनो भवन्तु "