Markets Can Pressure Three-day Rally Asian Stocks Lower

The markets may take three days of weak Asian stocks rally 2.83%, which fell after the meeting with the finance ministers of the European Union in Poland, did not break new ground to address the debt crisis in the euro area. Trading in the S & P CNX Nifty futures in Singapore Stock Exchange down 58.50 points to show the opening bell.

The key benchmark indices managed small gains around intraday volatility, Friday, September 16, 2011, after the central bank was again 25 basis points hike in repo rate – the rate in the short term – in the middle of review quarter curb inflationary expectations. The BSE Sensex rose 57.29 points or 0.34% to 16933.83, its highest close since September 8, 2011. From a recent low of 16,467.44 Tuesday, September 13, 2011, the Sensex rose 466.39 points or 2.83% in three trading sessions.

Debt worries in the euro zone was dragged lower by Indians before the three-day rebound. The five weeks to close high 17,165.54 Thursday, September 8, 2011, Sensex was down 698.10 points or 4.06% in three sessions dealing day to two weeks of closing the bottom of 16,467.44, September 13, 2011. Previously, the market staged a strong rebound after a sharp drop in August 2011.

Foreign institutional investors (IIE) bought shares worth Rs 395.16 crore Friday, September 16, 2011, according to provisional figures. FII inflows amounted to Rs 531.71 crore in two negotiating sessions in 15 and September 16, 2011, according to the bag.

With Q2 September 2011 drawing to a close, the focus can switch to the expectations of the second first-quarter results of individual companies. Advance tax payments made by the 100 largest companies based in the financial statements of the country in Mumbai on capital would have increased by 18% in the second district in September 2011. The tax collection are not uniformly good or bad in companies and sectors with the exception of oil marketing companies, which experienced a decline in taxes paid.

A recent report from India Investor Survey prepared by JP Morgan Asset Management notes expect Sensex value reference to trade between 20,000 and 22,000 by the end of this year. According to the report, the investment sentiments influenced by the fear that a recession increases the frequency of interest rates and volatility in the domestic investment environment. Despite seeing a decrease of 4.2 points from last quarter, the confidence index of retail investors’ ranks the highest in 137.5 points. Private investment activity in mutual funds has increased by 11% since the last quarter, according to the survey. The survey was conducted from 22 August to 4 Juillet 2011 e

The study also shows that investors are still cautious to preserve capital, increase investment strategy popular among small investors (40%). However, 40% for investors, compared to 57% in March 2011, is expected to become a little ‘aggressive in their investment strategy over the next six months.

At that time, reported by 25 basis points rate hike, the Reserve Bank of India (RBI) on Friday, 16 In September 2011, said it was necessary to continue the current anti-inflation stance, because the change in the lines too early guide may harden in inflation expectations, which dilutes the impact of policy actions of the past.

In recent weeks, because of global risk aversion, the rupee has weakened, which may have adverse effects on inflation, RBI said. Inflation remains high, widespread and far ahead of the comfort zone of the Reserve Bank of India, he said. The central bank said on Friday (September 16, 2011) ‘s repo rate hike is expected to confirm the effect of the policy to anchor inflation expectations and past actions of inflation. Since monetary policy acts as a delay, the cumulative effect of policy measures should now be increasingly in demand appears to remain moderate and inflation to reverse the trajectory towards the later part of 2011-12, RBI said.

Now, the position of the IMF be affected by signs of downward movement path of inflation, where the slowdown in demand is expected to contribute, and the impact of global developments, RBI said.

Although exports of India have fared well in recent times, this trend is unlikely to be sustained in light of weaker global demand, the RBI said. This, combined with the slowdown in domestic demand, monetary policy also helps to suggest that the risks to the projection of growth for 2011-12 made in July 2011 review of monetary policy is oriented downward, the RBI said.

Firms’ margins in Q1 June 2011 compared to moderate levels in many areas in Q4 March 2011. However, except for a few areas of significant pass-through increases in production costs are still visible, RBI said.

State fiscal imbalances widened during April-July 2011, mainly reflecting the impact of the decline in revenue receipts, combined with the pressure of the non-plan expenses due to higher oil revenues and fertilizer subsidies. The budget deficit of 55.4% of the budget in the first four months of this fiscal year was significantly higher than 42.5% during the same period last year (after adjusting for the over budgeted income spectrum ).

Reacting to the latest prices of RBI hiking, Navneet Munot, Office of Investment (DPI), the SBI Mutual Fund said, the delayed effect of past actions and the global environment moderate domestic demand and the path of inflation in the future, in our opinion. Our feeling is that the RBI is likely to take a break from the rate of today’s action. This should be viewed positively by the stock and bond markets. Feelings about the stock market should improve the visible signs of a peak rate cycle. Markets follow the global evolution and the movement of raw material prices.

Bank of America Merrill Lynch in a research note after the last race of the producer is still considered that the rate cycle in India is that growth could fall below 7.5% in the second half of 2011 and inflation is 7% in Q1 2012. The RBI will pause after a final 25 basis points (bps) rate hike October 25, 2011 and reduced the policy rate by 100 basis points since April 2012, he said. Increases in lending rates are almost done, and we expect a 75 bps from April to September 2012 season, of that note.

Reaction to the latest RBI rate hike, said Dhawal Dalal, vice-president and head fixed income, DSP Black Rock Mutual Funds, RBI is likely to increase the repo rate by 25 basis points by another at the next revision Policy 25 October 2011. We expect the RBI to pay much more attention to the trajectory of inflation going forward with a focus on core inflation. RBI was not unduly concerned about the slowdown in the future in the GDP figures and are sure of the elastic nature of the economy, said Dalal.

Secretary for Economic Affairs R. In Gopalan on Thursday 15 September 2011, said that the government raised the limit on loans from foreign companies $ 750 million $ 500 million. Indian companies can now borrow up to $ 1 billion Chinese yuan, Mr. Gopalan said. Relaxation of the rules of borrowing abroad to help Indian companies take advantage of cheaper foreign money in the midst of the credit will increase the cost of the local market. The United States and European countries have rates close the offer to support a weak economy.

Finance Minister Pranab Mukherjee on Tuesday 13 In September 2011, said the central banks of emerging countries have been forced to raise interest rates several times, as they battle high inflation, exposing them to volatile capital flows. The question of immediate interest to emerging economies, is the management of large inflows of capital, he said. Large capital flows and volatility of emerging markets can be volatile, because they lead to large fluctuations in exchange rates and in some cases, make a consolidated maintain high foreign currency reserves in case of sudden and large capital flight international.

Given the modest initial response to the IFI the government sharply increase the ceiling for FII investments in long-term corporate bonds issued by companies in the infrastructure sector in March 2011 that the government Monday, September 12, 2011, further relaxed Standards FII investment in such bonds. Ministry of Finance said in a statement that FIIs can now invest in infrastructure bonds in the long run, however, capped at $ 5 billion limit, which has an initial term of five years or older at the time of the issue and maturity of one year when the first purchase by FIIs. These investments are subject to a vesting period of one year. FIIs allowed to trade in these bonds, but can not sell to domestic investors in jail during a year.

IFI can now invest in, subject to no more than $ 17 billion long-term infrastructure bonds, which have an initial term of five years or more with this and the remaining maturity is three years for the first time to buy IFI. These investments are subject to a lock-in period of three years. The three-year lock-in during the IFI can sell to each other, but can not sell to domestic investors. Securities & Exchange Board of India (SEBI) is expected to include announcements of these changes in the system no later than October 15, 2011.

SEBI had, in early August 2011 has allowed qualified foreign investors (QFIs) to endorse the plan’s debt mutual funds that invest in the sector subject to a maximum cumulative total of infrastructure $ 3 billion in the overall ceiling of 25 billion dollars.

Vice President Planning Commission Montek Singh Ahluwalia, Monday, September 12, 2011, told a conference that private financing account for half of investment in infrastructure planned $ 1 billion for five years during the years 2012-2017. Indian Prime Minister Manmohan Singh, told the conference that to overcome the crisis of funding for infrastructure projects, the government proposes the creation of a $ 11 million to help finance infrastructure projects. We have also established a high-level committee to propose the necessary measures to fund our ambitious program of infrastructure development, Mr. Singh said.

Prolonged rainfall in the latter part of the season helped ease concerns that the monsoon this year could fall below the long-term average after a brief lull in July, when the country usually receives one third its monsoon rains. The first advance estimates for 2011-12 kharif season point to a record production of rice, oilseeds and cotton, while the pulse output may decrease.

A good monsoon season can generally raise farm incomes in rural areas and has an influence on the overall economy through higher spending on consumer goods and reduced prices of food. But food prices are not necessarily decrease if delayed, and too much rain in some areas affecting crop yields.

Moody’s Investors Services confirmed its rating of Baa3 foreign currency debt rating of India and the Ba1 local currency debt annual credit analysis was published earlier this month. Votes for the company given the positive outlook for bonds denominated in Indian rupees, saying it is considering a rating of Baa3 uniform for all bonds if India is to improve the fiscal position and its commitment to strengthen the market inside. Currency debt outlook is stable.

The report was optimistic about India’s ability to withstand a global economic slowdown. Although it is not immune to a slowdown in international growth, strong domestic demand and economic diversity provides protection against a downturn in the areas of overall risk, the report said. He noted that India’s foreign exchange reserves equal to four times its external debt.

Debt ratio of 71% is worrisome, because the interest on this debt eats 25% of annual sales in India. However, Moody’s expects continued growth and gradual fiscal consolidation reduces the debt / GDP of the government, the report said.

Asian stocks fell Monday, September 19, 2011, in connection with a defect of Greek returned to the fore amid signs that Europe is losing patience with the country’s efforts to reduce its debt pile. The key benchmark indices in China, Hong Kong, Indonesia, Singapore, South Korea and Taiwan fell between 0.89% to 2.32%. Japanese markets were closed for holidays equity.

Debt-zone debt worries resurfaced after the negotiations, one of Europe’s finance ministers to try to avert the growing debt crisis ended the weekend just a little progress. In addition, reports that Europe has warned Greece that financial assistance be refused if Athens to meet savings targets do little to help sentiment. Without the money, Greece would run out next month, according to reports. Greek Prime Minister George Papandreou, has decided to stay home rather than travel to the U.S. plans to preside over the emergency meetings with the greek government, reports said

U.S. stocks rose for a fifth day on Friday and the S & P 500 scored its best week since early July, the leaders of euro zone signs were acting together to limit the damage to the sovereign debt crisis. U.S. economic data showed that consumer confidence rose slightly in early September, but the Americans were pessimistic about the future. An indicator of expectations fell to its lowest level since 1980.

Federal Open Market Committee (FOMC) is scheduled to conduct a policy review of US two-day yields of 20 and 21 September 2011. It is unclear whether the Federal Reserve announced new measures to boost the U.S. economy. Among the possibilities that the Fed might consider including a second round of the quantitative easing or EQ3, Twist operation, which is the purchase of long verse sells short-term bonds, so that lower rates long-term interest, and interest rates lower on excess reserves held by banks at the Fed to increase the monetary aggregates.


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  1. Surikf, 6 years ago

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