Worried over liquidity crunch in the economy estimated at around Rs 50,000 crore, the RBI on Saturday said the situation has worsened and it was taking measures to ease it.
"...during the last couple of weeks the number (deficit) has been clearly above that. That number was clearly about Rs 50,000 crore," RBI Deputy Governor Subir Gokarn said.
The RBI's policy statement on November 2 had tried to explain a comfortable liquidity band, which is plus or minus one per cent of the net demand and time liabilities (NDTL), Gokarn said.
The economy has been experiencing liquidity shortfall due to a spurt in festive demand coupled with an over Rs 20,000 crore absorption on account of the recent share sale offer of public sector undertaking Coal India and Power Grid Corporation (PGCIL).
"We moved to a deficit liquidity situation in end May or early June. But in the last few weeks it has gone beyond what we think is a normal or a positive liquidity deficit," Gokarn said in his address at a CII event here.
Stating that some deficit in liquidity is desirable, the RBI official, however, observed that in the last few weeks the liquidity situation has gone beyond the comfort zone.
To ease the pressure on liquidity, the RBI earlier this week announced special measures.
Under this banks would be able to avail more funds under the liquidity adjustment facility (LAF) for up to one per cent more on their deposits.
Gokarn pointed out that since the past few weeks, RBI has been taking measures to infuse liquidity into the system.
"During the past few weeks, we have relaxed the statutory liquidity ratio limits, did some open market operations and restructured the buyback and auctions of government bonds, to handle short-term liquidity problems, he said"
Liquidity deficit is desirable from the monetary policy transmission point of view, he said, adding the economy had earlier moved into a surplus liquidity mode.
This had been after the injection of money in the post-slowdown monetary measures adopted by the central bank and fiscal steps initiated by the government.
"An excessive liquidity deficit tends to bring about volatility in the short-term rates...that makes for some possible disruption for banking activities and credit flows," the RBI Deputy Governor said.
Bankers have also been saying that liquidity has been tight in the system but this is the first time a senior central bank official has flagged it as an issue of concern. For the past few weeks, the call money rates have been ruling at historic highs.
Gokarn, however, said, "the process of policy normalisation" is almost complete. There will not be further hikes in key rates in the immediate future, and "growth and inflation" will be the main factors while RBI firms up its responses.
It may be recalled that though food inflation has been on a southward spiral for the past one month, it is still at an elevated level of 12.30 per cent for the week ended October 30.
On inflation, Gokarn said it is still a mixed bag as food inflation has been waning.
Monday, November 15, 2010
Friday, November 5, 2010
Nifty climbs past 6300; JPAsso,M&M,Hindalco gain
Equities began Mahurat trading, first day of trade of Samvat 2067 (first day of Hindu calendar), on a bullish note as investors took positions across the board. All the sectoral indices were in the green led by auto, healthcare and banks while IT stocks were modestly higher.
At 6.30 pm; Bombay Stock Exchange’s Sensex was at 21018.98, up 125.30 points or 0.60 per cent. The index hit a high of 21108.64 and low of 21014.46 in trade so far.
National Stock Exchange’s Nifty was at 6313.65, up 31.85 points or 0.51 per cent. The broader index touched high of 6338.50 and low of 6310 in early trade.
BSE Midcap Index was up 0.81 per cent and BSE Smallcap Index gained 1.43 per cent.
Amongst the sectoral indices, BSE Auto Index jumped 0.85 per cent, BSE Healthcare Index rose 0.78 per cent and BSE Bankex advanced 0.76 per cent.
Jaiprakash Associates (4.32%), M&M (1.82 %), Hindalco Industries (1.72%), SBI (1.51%) and Sun Pharma (1.18%) were the top Nifty gainers.
Losers included Jindal Steel (-0.29%), Reliance Communications (-0.14%),HDFC (-0.10%), Suzlon Energy (-0.09%) and Ambuja Cement (-0.03%).
Shares of Coal India continued to soar higher on the back of sustained demand from investors. The stock was at Rs 352.25, up Rs 9.70 or 2.83 per cent. It touched intraday high of Rs 356.50 and low of Rs 343.
At 6.30 pm; Bombay Stock Exchange’s Sensex was at 21018.98, up 125.30 points or 0.60 per cent. The index hit a high of 21108.64 and low of 21014.46 in trade so far.
National Stock Exchange’s Nifty was at 6313.65, up 31.85 points or 0.51 per cent. The broader index touched high of 6338.50 and low of 6310 in early trade.
BSE Midcap Index was up 0.81 per cent and BSE Smallcap Index gained 1.43 per cent.
Amongst the sectoral indices, BSE Auto Index jumped 0.85 per cent, BSE Healthcare Index rose 0.78 per cent and BSE Bankex advanced 0.76 per cent.
Jaiprakash Associates (4.32%), M&M (1.82 %), Hindalco Industries (1.72%), SBI (1.51%) and Sun Pharma (1.18%) were the top Nifty gainers.
Losers included Jindal Steel (-0.29%), Reliance Communications (-0.14%),HDFC (-0.10%), Suzlon Energy (-0.09%) and Ambuja Cement (-0.03%).
Shares of Coal India continued to soar higher on the back of sustained demand from investors. The stock was at Rs 352.25, up Rs 9.70 or 2.83 per cent. It touched intraday high of Rs 356.50 and low of Rs 343.
Wednesday, November 3, 2010
Ahead of CIL debut, Sensex climbs 120 pts on 'Dhanteras'
Stock market benchmark Sensex climbed 120 points today on the auspicious occasion of 'Dhanteras', and ahead of Coal India's debut tomorrow, to close at its highest level in three weeks on strong capital inflows.
In sync with the firm global sentiment, the Bombay stock Exchange's 30-share sensitive index settled the day higher by 120.05 points, or 0.59 per cent, at 20,465.74-- its best close since October 14, when the index had ended at 20,497.64.
The wide-based 50-share Nifty Index of the National Stock Exchange gained 0.68 per cent to finish the day at 6,160.50.
The upswing was led by metals, auto and financial stocks. The only laggard was oil & gas sector, with index heavyweight Reliance Industries Ltd among the major drags. RIL shed 0.8 per cent.
Analysts said all eyes are now on decision from the US Fed meet on its policy, especially on further economic stimulus to boost global economy and review from central banks in the UK, EU and Japan.
"Markets managed to garner smart gains on the auspicious occasion of 'Dhanteras', which is synonymous with wealth and prosperity. Besides, CIL's performance will decide the movement on the Street tomorrow," India Infoline Head of Research Amar Ambani said.
Metal stocks attracted strong buying and BSE Metal Index was the top performer among 13 sectoral indices. Sterlite rose 3.7 per cent, the most on Sensex, Tata Steel and Jindal Steel both 1.8 per cent and Hindalco 1.5 per cent.
Analysts said sector saw buying after Indian steel makers announced price cut of 2-3 per cent effective from November 1.
Major auto companies too were in demand, as most of the auto makers reported the highest ever monthly sales in October that was supported by the underlying momentum and a push from the ensuing festive season.
Tata Motors jumped 2.7 per cent, Hero Honda 0.7 per cent and M&M 0.32 per cent.
"This is seasonal trend and around this time of the year, manufacturers usually clear their channel inventories to meet the strong demand emanating from festivals such as Dushera, Id and Dhanteras," Elara Securities analyst Amol Bhutada said.
Financial stocks gained as investors took sigh of relief, after the Reserve Bank of India's statement that likelihood of further rate hike in immediate future is low. The central bank yesterday announced short-term lending and borrowing rates by 25 basis points.
SBI gained 2.19 per cent, HDFC 1.91 per cent, ICICI Bank 0.58 per cent and HDFC Bank 0.24 per cent.
"Although the overall action was aggressive than expected, the accompanying statement was much milder, with the Reserve Bank acknowledging that the likelihood of further rate hike in immediate future is low,"Edelweiss Capital note said.
ACC advanced 2.51 per cent, after the company reported an impressive rise in cement dispatch for October, analysts said.
In sync with the firm global sentiment, the Bombay stock Exchange's 30-share sensitive index settled the day higher by 120.05 points, or 0.59 per cent, at 20,465.74-- its best close since October 14, when the index had ended at 20,497.64.
The wide-based 50-share Nifty Index of the National Stock Exchange gained 0.68 per cent to finish the day at 6,160.50.
The upswing was led by metals, auto and financial stocks. The only laggard was oil & gas sector, with index heavyweight Reliance Industries Ltd among the major drags. RIL shed 0.8 per cent.
Analysts said all eyes are now on decision from the US Fed meet on its policy, especially on further economic stimulus to boost global economy and review from central banks in the UK, EU and Japan.
"Markets managed to garner smart gains on the auspicious occasion of 'Dhanteras', which is synonymous with wealth and prosperity. Besides, CIL's performance will decide the movement on the Street tomorrow," India Infoline Head of Research Amar Ambani said.
Metal stocks attracted strong buying and BSE Metal Index was the top performer among 13 sectoral indices. Sterlite rose 3.7 per cent, the most on Sensex, Tata Steel and Jindal Steel both 1.8 per cent and Hindalco 1.5 per cent.
Analysts said sector saw buying after Indian steel makers announced price cut of 2-3 per cent effective from November 1.
Major auto companies too were in demand, as most of the auto makers reported the highest ever monthly sales in October that was supported by the underlying momentum and a push from the ensuing festive season.
Tata Motors jumped 2.7 per cent, Hero Honda 0.7 per cent and M&M 0.32 per cent.
"This is seasonal trend and around this time of the year, manufacturers usually clear their channel inventories to meet the strong demand emanating from festivals such as Dushera, Id and Dhanteras," Elara Securities analyst Amol Bhutada said.
Financial stocks gained as investors took sigh of relief, after the Reserve Bank of India's statement that likelihood of further rate hike in immediate future is low. The central bank yesterday announced short-term lending and borrowing rates by 25 basis points.
SBI gained 2.19 per cent, HDFC 1.91 per cent, ICICI Bank 0.58 per cent and HDFC Bank 0.24 per cent.
"Although the overall action was aggressive than expected, the accompanying statement was much milder, with the Reserve Bank acknowledging that the likelihood of further rate hike in immediate future is low,"Edelweiss Capital note said.
ACC advanced 2.51 per cent, after the company reported an impressive rise in cement dispatch for October, analysts said.
Tuesday, November 2, 2010
Smacked-around stocks usually are a good bet for the long term
Stocks that have been smacked around often make the best buys. I regularly compile a casualty list of stocks that have been beaten up in the previous quarter, and that I think have excellent recovery potential. This fits with my favourite investment technique, which is to buy stocks of good companies on bad news that I believe is temporary.
The Standard & Poor’s 500 Index rose 11% in the third quarter. A quarterly decline of 10% was enough to relegate a stock to casualty status this time.
Among approximately 2,100 US stocks with a market value of $500 million or more, 92 were down 10% or more in the third quarter. Most of them flunked my basic value criteria: a stock price 15 times earnings or less, and debt less than stockholders’ equity. Among the 19 banged-up stocks that met my criteria, I recommend four. Let’s start with Sanderson Farms Inc.
The Laurel, Mississippi-based chicken producer was down 15% in the third quarter, and 18% since I recommended it on February 21. Clearly, my recommendation was badly timed. A poor US harvest contributed to a 53% increase in the spot price of No 2 yellow corn in the past eight months. High prices for feed grains make the lives of chicken farmers harder. Also, the economy hasn’t rebounded as strongly as I thought it would.
Over the next few years, I believe corn prices will moderate, and some measure of prosperity will return to the US. Today, Sanderson Farms shares sell for about $42, which works out to less than nine times earnings and 0.5 times revenue. Those valuations make me feel very comfortable.
The price ratios at Skechers USA Inc are even better: six times earnings and 0.5 times revenue. Following a 36% decline in the third quarter, I consider Skechers is a better buy than it was when I wrote about it earlier. Analysts expect earnings to climb to about $2.90 a share this year compared with $1.16 in 2009. Now, the No 2 US sneaker-maker behind Nike Inc, Skechers is opening more stores this year, bringing its total to about 300.
Amedisys Inc , the largest US homenursing provider, fell 46% in the third quarter. Propelling the drop were allegations that the Baton Rouge, Louisiana, company may have improperly billed Medicare. The company is suffering through investigations by the Securities and Exchange Commission, the US Justice Department and the Senate Finance Committee. I predict the controversy will end in a negotiated settlement.
Health care in the US is too expensive. Amedisys and its competitors help to reduce the need for hospitalisations, thus saving the health-care system a lot of money. Amedisys had a 21% return on equity last year and has reported profits in 11 consecutive years. In the past five years, its earnings per share rose at a 29% annual clip. Yet, because of its legal woes, the stock now sells for less than six times earnings.
Beckman Coulter Inc, located in Brea, California, makes laboratory instruments. For the past five years, it has sold, on average, for 18 times earnings. Today, investors can buy it for 14 times earnings. The stock fell 19% in the third quarter, hit by a triple whammy. In June, the company received a warning letter from the US Food and Drug Administration concerning failure to pre-clear one of its medical-test products.
In July, it announced earnings that fell short of analysts’ expectations. And, in September, chief executive officer Scott Garrett resigned. A year from now, I suspect that all three of those adverse events will be forgotten.
The Standard & Poor’s 500 Index rose 11% in the third quarter. A quarterly decline of 10% was enough to relegate a stock to casualty status this time.
Among approximately 2,100 US stocks with a market value of $500 million or more, 92 were down 10% or more in the third quarter. Most of them flunked my basic value criteria: a stock price 15 times earnings or less, and debt less than stockholders’ equity. Among the 19 banged-up stocks that met my criteria, I recommend four. Let’s start with Sanderson Farms Inc.
The Laurel, Mississippi-based chicken producer was down 15% in the third quarter, and 18% since I recommended it on February 21. Clearly, my recommendation was badly timed. A poor US harvest contributed to a 53% increase in the spot price of No 2 yellow corn in the past eight months. High prices for feed grains make the lives of chicken farmers harder. Also, the economy hasn’t rebounded as strongly as I thought it would.
Over the next few years, I believe corn prices will moderate, and some measure of prosperity will return to the US. Today, Sanderson Farms shares sell for about $42, which works out to less than nine times earnings and 0.5 times revenue. Those valuations make me feel very comfortable.
The price ratios at Skechers USA Inc are even better: six times earnings and 0.5 times revenue. Following a 36% decline in the third quarter, I consider Skechers is a better buy than it was when I wrote about it earlier. Analysts expect earnings to climb to about $2.90 a share this year compared with $1.16 in 2009. Now, the No 2 US sneaker-maker behind Nike Inc, Skechers is opening more stores this year, bringing its total to about 300.
Amedisys Inc , the largest US homenursing provider, fell 46% in the third quarter. Propelling the drop were allegations that the Baton Rouge, Louisiana, company may have improperly billed Medicare. The company is suffering through investigations by the Securities and Exchange Commission, the US Justice Department and the Senate Finance Committee. I predict the controversy will end in a negotiated settlement.
Health care in the US is too expensive. Amedisys and its competitors help to reduce the need for hospitalisations, thus saving the health-care system a lot of money. Amedisys had a 21% return on equity last year and has reported profits in 11 consecutive years. In the past five years, its earnings per share rose at a 29% annual clip. Yet, because of its legal woes, the stock now sells for less than six times earnings.
Beckman Coulter Inc, located in Brea, California, makes laboratory instruments. For the past five years, it has sold, on average, for 18 times earnings. Today, investors can buy it for 14 times earnings. The stock fell 19% in the third quarter, hit by a triple whammy. In June, the company received a warning letter from the US Food and Drug Administration concerning failure to pre-clear one of its medical-test products.
In July, it announced earnings that fell short of analysts’ expectations. And, in September, chief executive officer Scott Garrett resigned. A year from now, I suspect that all three of those adverse events will be forgotten.
Monday, November 1, 2010
Sensex to hit 21,000 mark on Diwali: Analysts
The Bombay Stock Exchange's benchmark Sensex is likely to hit the much awaited psychological level of 21,000 in the next week, driven by the smart RIL numbers and expectations of robust listing of the Coal India IPO, say analysts.
Sensex, which saw a subdued performance last week by shedding 0.66 per cent, mainly on account of tight liquidity, may bounce back by surging over a staggering 1,000 points.
"The country's most valued firm Reliance Industries has posted better-than-expected second quarter numbers, which will boost the investor sentiment and lead the market to the 21,000-mark on Diwali ," CNI ResearchChairman and Managing Director Kishore P Ostwal said.
On Saturday, Mukesh Ambani-led Reliance Industries had posted a robust growth of 27.8 per cent in its net profit for the second quarter ended September 30, at Rs 4,923 crore against Rs 3,852 crore in the year-ago period.
Besides, the Reserve Bank of India's (RBI's) quarterly review policy on November 2 and Coal India, which will list on the bourses on November 4, are the two big fat issues on which the market will heavily bank upon, feel marketmen.
Sensex, which saw a subdued performance last week by shedding 0.66 per cent, mainly on account of tight liquidity, may bounce back by surging over a staggering 1,000 points.
"The country's most valued firm Reliance Industries has posted better-than-expected second quarter numbers, which will boost the investor sentiment and lead the market to the 21,000-mark on Diwali ," CNI ResearchChairman and Managing Director Kishore P Ostwal said.
On Saturday, Mukesh Ambani-led Reliance Industries had posted a robust growth of 27.8 per cent in its net profit for the second quarter ended September 30, at Rs 4,923 crore against Rs 3,852 crore in the year-ago period.
Besides, the Reserve Bank of India's (RBI's) quarterly review policy on November 2 and Coal India, which will list on the bourses on November 4, are the two big fat issues on which the market will heavily bank upon, feel marketmen.
Tuesday, October 12, 2010
Coal India to raise Rs 15,000 cr from largest ever Indian IPO
NEW DELHI: The government will raise up to $3.5 billion from a price band of Rs 225 to Rs 245 for state-run Coal India's initial public offering, the largest in the country's corporate history. The government is selling 631.6 million shares, or 10 percent stake in the world's largest coal miner.
The share sale is part of the country's plan to divest its stakes in roughly 60 companies over the next few years. "I think the pricing is much better than what we were expecting. We were expecting it to be Rs 260 at the upper end," said Ambareesh Baliga, vice president of Karvy Stock Broking in Mumbai.
"The response from institutional investors is expected to be very good," he added. Priced at the top end of the band, the company would be valued at $35 billion, placing it among the top Indian firms by market value. It is the seventh-largest IPO in Asia this year.
Speaking to reporters on Tuesday, the country's coal minister said the IPO would raise more than Rs 15,000.
Sources said the EGoM fixed the price band at Rs 225- Rs 245 a share to garner maximum from the four-day initial public offering (IPO), billed as the biggest ever to hit the Indian capital market on October 18.
The four-member EGoM includes Home Minister P Chidambaram, Coal Minister Sriprakash Jaiswal and Planning Commission Secretary Sudha Pillai.
Among other factors, EGoM considered the share prices of major global coal companies including China Shenhua Energy Company, the world's most valuable coal producer, to arrive at a figure, sources added.
CIL filed the prospectus (Red Herring Prospectus) for the issue with SEBI, after being cleared by the Registrar of Companies, in the last week of September. Its board cleared the revised papers incorporating 78 changes suggested by the market regulator.
With over 63 billion tonnes of coal reserves under its fold, CIL is targeting an output of 461.5 million tonnes in the current financial year.
The biggest IPO in India till date is that of Anil Ambani Group company Reliance Power . In January, 2008, it raised Rs 11,500 crore.
Coal India, based in Kolkata, holds a dominant position in the fast-growing Indian market. The state monopoly produced 431 million tonnes in 2009/10 and accounts for nearly 80 percent of coal output in Asia's third-largest economy.
Coal powers 75 percent of India's electricity output, and annual demand is expected to swell at 11 percent. The country, which faces a peak-hour power deficit of nearly 14 percent, plans to triple its generation capacity over the next decade. It reported earnings per share of Rs 15.60 for the fiscal ended March 2010. China's Shenhua Energy, the Indian miner's closest rival, trades at 16 times earnings, while smaller Indonesian peer Adaro Energy has a price-to-earnings ratio of 20 times.
U.S. miner Peabody Energy trades at 25 times earnings. The IPO opens on October 18 and closes on October 21. The listing on the Bombay Stock Exchange is expected by Nov 4. Morgan Stanley, Citigroup, Kotak Mahindra Capital, Enam Securities, Deutsche Bank, and Bank of America-Merrill Lynch are the managers for the offer.
The share sale is part of the country's plan to divest its stakes in roughly 60 companies over the next few years. "I think the pricing is much better than what we were expecting. We were expecting it to be Rs 260 at the upper end," said Ambareesh Baliga, vice president of Karvy Stock Broking in Mumbai.
"The response from institutional investors is expected to be very good," he added. Priced at the top end of the band, the company would be valued at $35 billion, placing it among the top Indian firms by market value. It is the seventh-largest IPO in Asia this year.
Speaking to reporters on Tuesday, the country's coal minister said the IPO would raise more than Rs 15,000.
Sources said the EGoM fixed the price band at Rs 225- Rs 245 a share to garner maximum from the four-day initial public offering (IPO), billed as the biggest ever to hit the Indian capital market on October 18.
The four-member EGoM includes Home Minister P Chidambaram, Coal Minister Sriprakash Jaiswal and Planning Commission Secretary Sudha Pillai.
Among other factors, EGoM considered the share prices of major global coal companies including China Shenhua Energy Company, the world's most valuable coal producer, to arrive at a figure, sources added.
CIL filed the prospectus (Red Herring Prospectus) for the issue with SEBI, after being cleared by the Registrar of Companies, in the last week of September. Its board cleared the revised papers incorporating 78 changes suggested by the market regulator.
With over 63 billion tonnes of coal reserves under its fold, CIL is targeting an output of 461.5 million tonnes in the current financial year.
The biggest IPO in India till date is that of Anil Ambani Group company Reliance Power . In January, 2008, it raised Rs 11,500 crore.
Coal India, based in Kolkata, holds a dominant position in the fast-growing Indian market. The state monopoly produced 431 million tonnes in 2009/10 and accounts for nearly 80 percent of coal output in Asia's third-largest economy.
Coal powers 75 percent of India's electricity output, and annual demand is expected to swell at 11 percent. The country, which faces a peak-hour power deficit of nearly 14 percent, plans to triple its generation capacity over the next decade. It reported earnings per share of Rs 15.60 for the fiscal ended March 2010. China's Shenhua Energy, the Indian miner's closest rival, trades at 16 times earnings, while smaller Indonesian peer Adaro Energy has a price-to-earnings ratio of 20 times.
U.S. miner Peabody Energy trades at 25 times earnings. The IPO opens on October 18 and closes on October 21. The listing on the Bombay Stock Exchange is expected by Nov 4. Morgan Stanley, Citigroup, Kotak Mahindra Capital, Enam Securities, Deutsche Bank, and Bank of America-Merrill Lynch are the managers for the offer.
Sunday, September 19, 2010
FII rally may propel Sensex towards 20K
Indian stocks rose to a fresh 32-week high on Friday, fuelling expectations of the benchmark Sensex topping the 20,000 mark as early as next week on the back of abundant foreign fund inflows.
The Sensex had last touched the 20,000 mark over 32 months ago in January 2008, well before the start of the worst financial crisis that year marked by the collapse of storied-investment bank Lehman Brothers.
Over the last six months, foreign investors have been the primary drivers of the rally, buying at every given opportunity while local institutional investors, including mutual funds, have been offloading shares.
Provisional data on the websites of stock exchanges show that foreign funds have bought shares worth close to Rs 1,500 crore on a net basis on Friday alone. Dealers at foreign broking houses say a sizeable chunk of the money is coming through exchange-traded funds, which some view as hot money.
The 30-share Sensex hit a high of 19,639.18 intra-day, before settling at 19,594.75, up 177.26 points over Thursday’s close. The 50-share Nifty closed at 5,884.95, up 56.25 points, or 1%, over the previous close. Stock markets not just in India but also in other parts of Asia, including Sri Lanka and Pakistan, have been going up, taking a lead from Wall Street.
Foreign funds have been buying into Indian stocks given the growth potential in an economy that is projected to grow at over 8.5% this fiscal, rather than investing in other major economies in the West where growth is faltering.
“The fundamentals of the economy are strong, but the market is going a bit too fast, fuelled by foreign money,” said Nirmal Jain, chairman and managing director, IIFL. Mr Jain has a word of caution for those buying and selling shares. “Any event that could disrupt foreign fund flows could trigger a sharp correction and investors should brace for a choppy ride in the short term,” he warned.
Investors, however, continue to place faith in second-line stocks, pushing up the BSE Midcap index by 1.4%. This despite the fact that many brokers have advised their clients to pare exposure to mid- and small-cap shares in a rapidly rising market, since these stocks take a steep hit when the market corrects.
“There is a feeling of euphoria when you look at the rise in the last three weeks. But on a calendar basis, the market is up 12-13%, which is not much,” said Rashesh Shah, CMD, Edelweiss Capital.
Brokers say valuations are not exorbitant when compared to those at the peak of the bull run in early January 2008, when the Sensex was trading over 25 times one-year forward earnings. Yet the spate of share issuances by companies is a cause of worry, they say.
The Sensex had last touched the 20,000 mark over 32 months ago in January 2008, well before the start of the worst financial crisis that year marked by the collapse of storied-investment bank Lehman Brothers.
Over the last six months, foreign investors have been the primary drivers of the rally, buying at every given opportunity while local institutional investors, including mutual funds, have been offloading shares.
Provisional data on the websites of stock exchanges show that foreign funds have bought shares worth close to Rs 1,500 crore on a net basis on Friday alone. Dealers at foreign broking houses say a sizeable chunk of the money is coming through exchange-traded funds, which some view as hot money.
The 30-share Sensex hit a high of 19,639.18 intra-day, before settling at 19,594.75, up 177.26 points over Thursday’s close. The 50-share Nifty closed at 5,884.95, up 56.25 points, or 1%, over the previous close. Stock markets not just in India but also in other parts of Asia, including Sri Lanka and Pakistan, have been going up, taking a lead from Wall Street.
Foreign funds have been buying into Indian stocks given the growth potential in an economy that is projected to grow at over 8.5% this fiscal, rather than investing in other major economies in the West where growth is faltering.
“The fundamentals of the economy are strong, but the market is going a bit too fast, fuelled by foreign money,” said Nirmal Jain, chairman and managing director, IIFL. Mr Jain has a word of caution for those buying and selling shares. “Any event that could disrupt foreign fund flows could trigger a sharp correction and investors should brace for a choppy ride in the short term,” he warned.
Investors, however, continue to place faith in second-line stocks, pushing up the BSE Midcap index by 1.4%. This despite the fact that many brokers have advised their clients to pare exposure to mid- and small-cap shares in a rapidly rising market, since these stocks take a steep hit when the market corrects.
“There is a feeling of euphoria when you look at the rise in the last three weeks. But on a calendar basis, the market is up 12-13%, which is not much,” said Rashesh Shah, CMD, Edelweiss Capital.
Brokers say valuations are not exorbitant when compared to those at the peak of the bull run in early January 2008, when the Sensex was trading over 25 times one-year forward earnings. Yet the spate of share issuances by companies is a cause of worry, they say.
Monday, September 13, 2010
Nifty ends above 5750; banks, oil & gas, realty up
Indian equities closed near January 2008 high levels on Monday as foreign institutional investors remained bullish following better than expected economic data from across the globe.
National Stock Exchange’s Nifty ended at 5760, up 119.95 points or 2.12 per cent. The index touched high of 5770.60 and low of 5639.20 in today’s trade.
Bombay Stock Exchange’s Sensex closed at 19208.33, up 408.67 points or 2.20 per cent. The sensitive index hit intraday high of 19243.44 and low of 18845.31.
BSE Midcap Index was up 0.75 per cent and BSE Smallcap Index moved 0.18 per cent higher.
Amongst the sectoral indices, BSE Bankex gained 3.70 per cent, BSE Oil & gas Index advanced 2.56 per cent and BSE Realty Index advanced 2.32 per cent.
State Bank of India (5.83%), HDFC (5.60%), Kotak Bank (4.67%), Hindalco (4.61%) and Reliance Infrastructure (4.51%) were amongst the top Nifty gainers.
Idea Cellular (-2.48%), Reliance Communications (-2.02%), Wipro (-0.98%), Reliance Capital (-0.89%) and Suzlon Energy (-0.78%) resisted the upmove.
Market breadth was positive on the NSE with 1639 gainers against 1592 losers.
India’s Index of Industrial Production ((IP) for the month of July was reported Friday to have grown 13.8% beating market forecast of 8.4%. European markets also moved higher after Basel III norms for banks were announced. In the US, wholesale inventories rose 1.3% in July, much better than the forecasted 0.5% and US jobless claims fell to a two-month low.
Tuesday, September 7, 2010
India, China look top investment targets to 2012: UN
GENEVA: The world's biggest companies are planning to boost their international investments over the next two or three years, with most spending planned in major emerging economies, according to a United Nations study.
China, India and Brazil are the top three target countries for foreign direct investment (FDI) until the end of 2012 with the United States, for years number one, now in fourth place, the U.N. trade and development agency UNCTAD said.
The Geneva-based agency, which acts as a think-tank on economic trends in developing nations, said the global economic crisis from 2008 was less harmful than feared for investment.
The conclusions were based on a survey of the FDI climate among 236 leading multinational corporations and 116 investment promotion agencies.
Global investment flows slumped in 2008-09 as a result of the economic downturn but are expected to recover slowly in 2011 and 2012.
MERGERS AND ACQUISITIONS
Incoming FDI, mostly from richer countries like the United States and the bigger powers in the 27-nation European Union, is a key component in development plans for many poorer countries.
But in recent years big firms based in the more successful emerging economies have taken a growing role, investing in both rich and poor nations, often through mergers and acquisitions.
The crisis had accentuated a shift of the geographical focus of FDI towards developing and former communist economies.
These countries accounted for 9 of the top 15 priority FDI destinations for global firms, UNCTAD said.
China was the number one attraction for the second year, with India up from third in 2009 and Brazil up from fourth, pushing the United States down from second.
Russia was fifth, the same as in 2009, but Mexico leapt to sixth place from 12th last year, leapfrogging Britain at seventh, Vietnam at eighth and Indonesia at ninth. Germany, Europe's biggest economy, fell from seventh to 10th.
Thailand, Poland, Australia, France and Malaysia were the five countries next most favoured, the UNCTAD survey showed.
In July, UNCTAD predicted that total FDI flows could rise to $1.3-$1.5 trillion in 2011 after $1.2 trillion this year, and jump to $1.6-$2 trillion in 2012.
The highest total on record was $2.1 trillion in 2007, but this fell 16 percent in 2008, then a further 37 percent to $1.11 trillion in 2009 as the crisis left companies slashing spending.
UNCTAD said optimism that the worst of the crisis was over had encouraged companies to revise investment programmes, with some 58 percent saying they would boost FDI in 2011-12.
But it noted that optimism was greater among multinationals based in the developing world than among those in richer economies, especially those headquarted in Europe.
China, India and Brazil are the top three target countries for foreign direct investment (FDI) until the end of 2012 with the United States, for years number one, now in fourth place, the U.N. trade and development agency UNCTAD said.
The Geneva-based agency, which acts as a think-tank on economic trends in developing nations, said the global economic crisis from 2008 was less harmful than feared for investment.
The conclusions were based on a survey of the FDI climate among 236 leading multinational corporations and 116 investment promotion agencies.
Global investment flows slumped in 2008-09 as a result of the economic downturn but are expected to recover slowly in 2011 and 2012.
MERGERS AND ACQUISITIONS
Incoming FDI, mostly from richer countries like the United States and the bigger powers in the 27-nation European Union, is a key component in development plans for many poorer countries.
But in recent years big firms based in the more successful emerging economies have taken a growing role, investing in both rich and poor nations, often through mergers and acquisitions.
The crisis had accentuated a shift of the geographical focus of FDI towards developing and former communist economies.
These countries accounted for 9 of the top 15 priority FDI destinations for global firms, UNCTAD said.
China was the number one attraction for the second year, with India up from third in 2009 and Brazil up from fourth, pushing the United States down from second.
Russia was fifth, the same as in 2009, but Mexico leapt to sixth place from 12th last year, leapfrogging Britain at seventh, Vietnam at eighth and Indonesia at ninth. Germany, Europe's biggest economy, fell from seventh to 10th.
Thailand, Poland, Australia, France and Malaysia were the five countries next most favoured, the UNCTAD survey showed.
In July, UNCTAD predicted that total FDI flows could rise to $1.3-$1.5 trillion in 2011 after $1.2 trillion this year, and jump to $1.6-$2 trillion in 2012.
The highest total on record was $2.1 trillion in 2007, but this fell 16 percent in 2008, then a further 37 percent to $1.11 trillion in 2009 as the crisis left companies slashing spending.
UNCTAD said optimism that the worst of the crisis was over had encouraged companies to revise investment programmes, with some 58 percent saying they would boost FDI in 2011-12.
But it noted that optimism was greater among multinationals based in the developing world than among those in richer economies, especially those headquarted in Europe.
Monday, September 6, 2010
Sensex gains 346 points to close at 18,567
Indian stock market indices ended Monday’s session sharply higher, as equities in Europe rose to a four-week high after factory production in UK grew at a record pace in the third quarter.
Stealing a march over other sectors were metal stocks, with the BSE Metal Index gaining the most by 3.42 per cent. Oil & gas came next with 2.08 per cent lead, followed by banking at 2.04 per cent.
Of the key indices, Nifty ended the day at provisional 5580.25, advancing 100.85 points or 1.84 per cent from the previous close. The 50-share National Stock Exchange index recorded a high of 5589.40 after opening at 5479.55.
Bombay Stock Exchange’s Sensex closed at 18,567.17, higher by 345.74 points or 1.90 per cent. The 30-share index touched a high of 18,600.30 after opening at 18,124.29.
Top Sensex gainers were Tata Steel (6.47%), Hindalco (4.61%), Sterlite (4.01%), ICICI Bank (3.60%), Jaiprakash Associates (3.41%), Reliance Industries (3.20%), State Bank of India (3.12%), Maruti Suzuki (3%), Infosys Tech (2.47%), BHEL (2.34%).
The only losers were Hero Honda (-1.62%), Reliance Communications (-0.37%), Hindustan Unilever (-0.26%) and NTPC (-0.08%).
Stealing a march over other sectors were metal stocks, with the BSE Metal Index gaining the most by 3.42 per cent. Oil & gas came next with 2.08 per cent lead, followed by banking at 2.04 per cent.
Of the key indices, Nifty ended the day at provisional 5580.25, advancing 100.85 points or 1.84 per cent from the previous close. The 50-share National Stock Exchange index recorded a high of 5589.40 after opening at 5479.55.
Bombay Stock Exchange’s Sensex closed at 18,567.17, higher by 345.74 points or 1.90 per cent. The 30-share index touched a high of 18,600.30 after opening at 18,124.29.
Top Sensex gainers were Tata Steel (6.47%), Hindalco (4.61%), Sterlite (4.01%), ICICI Bank (3.60%), Jaiprakash Associates (3.41%), Reliance Industries (3.20%), State Bank of India (3.12%), Maruti Suzuki (3%), Infosys Tech (2.47%), BHEL (2.34%).
The only losers were Hero Honda (-1.62%), Reliance Communications (-0.37%), Hindustan Unilever (-0.26%) and NTPC (-0.08%).
Sunday, September 5, 2010
Indian markets may decline in 12 months: Jim Walker
ET Now caught up with Jim Walker, Founder & MD, Asianomics, for his views on the Asian markets. Excerpts:
There is a real buzz in Asia right now as economies in the region here power head. How are you viewing the investing environment in Asian economies, particularly when it comes to India?
It is quite interesting to look at how people are viewing the region. You quite rightly said people are seeing it powering ahead, but this is very much on a year on year basis. Last year in the first half of the year, economic activity was weak. This year because of something about rebound looks as if the region is powering ahead, but some of the momentum is probably slipping though especially as we start to see problems arising in the US and in Europe going into the second half of this year.
India, in particular, the valuations are pretty stretched. The economy seems to be doing quite well. At the same time, interest rates are definitely going to go up further from and the export sector will be struggling. So if anything at the moment, we would actually be taking some trading profits in India.
Monsoon though in India has been normal this time around and Indian companies are reviving their capex plans as well. How do you see these two factors playing on rural and corporate incomes in the coming months?
Certainly the improvement in the monsoon this year is a huge benefit for India. It takes a lot of the pressure of consumer prices because the expectation will be a much better harvest, much better vegetable supply, some of the facts is behind the high CPI and the high PPI over the course of the last year.
So inflation will come off relatively sharply in India and that really improves disposable income rather than incomes per se. It means that Indians will have much more available money to spend on other things other than essentials, food in particular. So that is positive going forward for broadening of the demand base in India and of course an improvement in real incomes as food prices come down. So the normal monsoon is a major positive right across the board.
Just shifting focus since you did talk about US, what are your views in growth investment economies, particularly the US right now? Now looking at the recent jobs data and housing prices, do you see FED going for another asset buying spree to support growth if required because El-Erian of PIMCO recently said that US recovery is indeed losing momentum and the situation is getting alarming?
We sent a message to our clients a couple of months ago in June with a report that was just called double dip. So our view of the prospects for the US, and I am afraid for Europe as well, is that it will probably go back into recession over the course of the next 2 to 3 quarters. That is really a consequence of the policies of being forwarded by the FED, done by other central buyings as well as governments around the world. There has not been new revival in the private sector across Europe and the US basically because there is too much debt in the first place and that debt is now being paid down with no revival in the private sector and cutbacks in the public sector.
There is a real buzz in Asia right now as economies in the region here power head. How are you viewing the investing environment in Asian economies, particularly when it comes to India?
It is quite interesting to look at how people are viewing the region. You quite rightly said people are seeing it powering ahead, but this is very much on a year on year basis. Last year in the first half of the year, economic activity was weak. This year because of something about rebound looks as if the region is powering ahead, but some of the momentum is probably slipping though especially as we start to see problems arising in the US and in Europe going into the second half of this year.
India, in particular, the valuations are pretty stretched. The economy seems to be doing quite well. At the same time, interest rates are definitely going to go up further from and the export sector will be struggling. So if anything at the moment, we would actually be taking some trading profits in India.
Monsoon though in India has been normal this time around and Indian companies are reviving their capex plans as well. How do you see these two factors playing on rural and corporate incomes in the coming months?
Certainly the improvement in the monsoon this year is a huge benefit for India. It takes a lot of the pressure of consumer prices because the expectation will be a much better harvest, much better vegetable supply, some of the facts is behind the high CPI and the high PPI over the course of the last year.
So inflation will come off relatively sharply in India and that really improves disposable income rather than incomes per se. It means that Indians will have much more available money to spend on other things other than essentials, food in particular. So that is positive going forward for broadening of the demand base in India and of course an improvement in real incomes as food prices come down. So the normal monsoon is a major positive right across the board.
Just shifting focus since you did talk about US, what are your views in growth investment economies, particularly the US right now? Now looking at the recent jobs data and housing prices, do you see FED going for another asset buying spree to support growth if required because El-Erian of PIMCO recently said that US recovery is indeed losing momentum and the situation is getting alarming?
We sent a message to our clients a couple of months ago in June with a report that was just called double dip. So our view of the prospects for the US, and I am afraid for Europe as well, is that it will probably go back into recession over the course of the next 2 to 3 quarters. That is really a consequence of the policies of being forwarded by the FED, done by other central buyings as well as governments around the world. There has not been new revival in the private sector across Europe and the US basically because there is too much debt in the first place and that debt is now being paid down with no revival in the private sector and cutbacks in the public sector.
Tuesday, August 31, 2010
India can grow between 8.5% and 9%: Infosys
Are you happy with the kind of numbers we have clocked in in terms of GDP, 8.8%, in line with street estimates?
Yes, these are great numbers as expected because if you look at globally, there are very few pockets of growth and India is one economy growing at 8% to 9% and 8.8 is what people are expecting. Some of them are expecting close to 9. So these are great numbers.
Most people say that services are bit of a black box for the next couple of quarters as well. It came in at 9.7% in Q4 of course. How do you expect services to pan out because most people are bullish about agriculture, not too bullish about industry. What about services?
Growth is possible, but you have to look at the global indicators also because if you look at globally, all the leading data from the US are too negative, so also Europe. So to that extent if something drastic happens in the global economy, it could impact growth in India also, but looking at what it is today, India has got a better chance of achieving that growth because monsoon has been good till now. So agricultural growth will be there. India has got a better chance of achieving something between 8.5% and 9%.
At the end of Q1, you guys were cautiously optimistic, if I can put it that way, with regards to the European and US situation, at this point of time when you are talking to your clients, are you sensing nervousness of any sort which could have a bit of an impact on services growth overall?
Till now, things are good. We are seeing growth coming in but if you look at all the leading indicators from all the large markets, they are too negative. So we have to keep a close eye on that because if the sentiments are bad, it could affect the budgets for IT next year. So we have to balance between the short term optimism and the long term concern that is what we are doing. We are still hiring people, we are still focussing on growth, we are seeing a lot of volume growth coming in, but if the environment continues to deteriorate like this, probably it could impact the budgets for next year & the growth.
Just wanted to know from you what is your ballpark growth numbers for the service sector within the entire fiscal and any particular dampener or any particular situation can actually hamper this growth projection that you have for yourself?
Service sector will do well, probably manufacturing sector is something we have to watch out what is happening globally. So the trend we saw in the services sector in the last few quarters could continue.
Yes, these are great numbers as expected because if you look at globally, there are very few pockets of growth and India is one economy growing at 8% to 9% and 8.8 is what people are expecting. Some of them are expecting close to 9. So these are great numbers.
Most people say that services are bit of a black box for the next couple of quarters as well. It came in at 9.7% in Q4 of course. How do you expect services to pan out because most people are bullish about agriculture, not too bullish about industry. What about services?
Growth is possible, but you have to look at the global indicators also because if you look at globally, all the leading data from the US are too negative, so also Europe. So to that extent if something drastic happens in the global economy, it could impact growth in India also, but looking at what it is today, India has got a better chance of achieving that growth because monsoon has been good till now. So agricultural growth will be there. India has got a better chance of achieving something between 8.5% and 9%.
At the end of Q1, you guys were cautiously optimistic, if I can put it that way, with regards to the European and US situation, at this point of time when you are talking to your clients, are you sensing nervousness of any sort which could have a bit of an impact on services growth overall?
Till now, things are good. We are seeing growth coming in but if you look at all the leading indicators from all the large markets, they are too negative. So we have to keep a close eye on that because if the sentiments are bad, it could affect the budgets for IT next year. So we have to balance between the short term optimism and the long term concern that is what we are doing. We are still hiring people, we are still focussing on growth, we are seeing a lot of volume growth coming in, but if the environment continues to deteriorate like this, probably it could impact the budgets for next year & the growth.
Just wanted to know from you what is your ballpark growth numbers for the service sector within the entire fiscal and any particular dampener or any particular situation can actually hamper this growth projection that you have for yourself?
Service sector will do well, probably manufacturing sector is something we have to watch out what is happening globally. So the trend we saw in the services sector in the last few quarters could continue.
Sunday, August 29, 2010
Major market correction unlikely, good time to buy quality stocks
The domestic stock markets seem to be oblivious to the dire predictions surrounding them about double-dip recession, Hindenburg Omen, and other major predictions of doom. The decibel levels of these predictions increased last week, particularly after an unrelenting parade of bad news on the economy - notably on jobs and housing emanating from the US.
Globally, expectations of a sustained economic recovery are giving way to talk of a double-dip recession. This negative view is compounded due to the fact that the European Central Bank has proposed to postpone the exit from emergency lending measures to 2011, indicating that problems still persist in Europe. The emotional quotient of the market is one of disappointment, and that does lead to sensational headlines on the bearish side.
RBI's view
However, the Reserve Bank of India (RBI) seems to be undeterred by such negative news. Like the stock markets, the view of the central bank was benign as expressed in the annual report released last week The RBI is very optimistic about India's GDP growth being very resilient as has been demonstrated on various occasions like the global downturn of 2008-209 or the domestic agricultural shortfall of late 2009. They go on to say that even now the prospects for the financial year 2011 are extremely bright based on the corporate and consumer durables' sales numbers, and that private consumption demand has grown so much that it almost makes growth self-sustaining. The RBI just wants a good monsoon and better fiscal control for its prediction to come true.
Risks
What the RBI is really bothered about is inflation. Inflation here is a long-term problem. There are many challenges it faces in meeting the inflation targets, as the inflation problem is in the supply side. Hence, the monetary policy has a smaller role to play, while the bigger role falls on the government to mitigate supply constraints.
For supply side constraints to be solved, structural issues need to be addressed. For instance, food production has to be bolstered. Investments in food supply chains have to be made. More importantly, food wastage has to be significantly reduced.
It is reported that India loses $21 billion worth of farm produce after harvest every year because of wastage. Moreover, it has a storage capacity shortfall of 35 million tonnes. Addressing these issues could go a long way in bringing down inflation to lower and stable levels. Apart from inflation, the RBI perceives volatile capital flows as a meaningful risk to the economy.
Investment strategy
Given the two diametrically opposite views - one global and another local -investors are now faced with a dilemma. Should you stay invested in stocks or move your investments to safer avenues such as fixed deposits? There does not seem to be any reason to panic yet. A single Hindenburg Omen signal may be a warning that something is not quite right, but the signal has to be supported by other factors before one can act.
The US stock markets are in a correction mode already and have pretty much been in a correction mode throughout this year. It does not immediately indicate that emerging markets like India have to follow suit. This can be validated from the IMF roadmap alone, which says developing Asia will grow at 8.7 per cent next year as against 3.4 per cent for the advanced world. There is a good intrinsic growth in the Asian region, which will be reflected in the indices sooner or later.
Globally, expectations of a sustained economic recovery are giving way to talk of a double-dip recession. This negative view is compounded due to the fact that the European Central Bank has proposed to postpone the exit from emergency lending measures to 2011, indicating that problems still persist in Europe. The emotional quotient of the market is one of disappointment, and that does lead to sensational headlines on the bearish side.
RBI's view
However, the Reserve Bank of India (RBI) seems to be undeterred by such negative news. Like the stock markets, the view of the central bank was benign as expressed in the annual report released last week The RBI is very optimistic about India's GDP growth being very resilient as has been demonstrated on various occasions like the global downturn of 2008-209 or the domestic agricultural shortfall of late 2009. They go on to say that even now the prospects for the financial year 2011 are extremely bright based on the corporate and consumer durables' sales numbers, and that private consumption demand has grown so much that it almost makes growth self-sustaining. The RBI just wants a good monsoon and better fiscal control for its prediction to come true.
Risks
What the RBI is really bothered about is inflation. Inflation here is a long-term problem. There are many challenges it faces in meeting the inflation targets, as the inflation problem is in the supply side. Hence, the monetary policy has a smaller role to play, while the bigger role falls on the government to mitigate supply constraints.
For supply side constraints to be solved, structural issues need to be addressed. For instance, food production has to be bolstered. Investments in food supply chains have to be made. More importantly, food wastage has to be significantly reduced.
It is reported that India loses $21 billion worth of farm produce after harvest every year because of wastage. Moreover, it has a storage capacity shortfall of 35 million tonnes. Addressing these issues could go a long way in bringing down inflation to lower and stable levels. Apart from inflation, the RBI perceives volatile capital flows as a meaningful risk to the economy.
Investment strategy
Given the two diametrically opposite views - one global and another local -investors are now faced with a dilemma. Should you stay invested in stocks or move your investments to safer avenues such as fixed deposits? There does not seem to be any reason to panic yet. A single Hindenburg Omen signal may be a warning that something is not quite right, but the signal has to be supported by other factors before one can act.
The US stock markets are in a correction mode already and have pretty much been in a correction mode throughout this year. It does not immediately indicate that emerging markets like India have to follow suit. This can be validated from the IMF roadmap alone, which says developing Asia will grow at 8.7 per cent next year as against 3.4 per cent for the advanced world. There is a good intrinsic growth in the Asian region, which will be reflected in the indices sooner or later.
Reff: Economic Times.
Wednesday, August 18, 2010
U.S. Treasury, Morgage-Lenders Seek to Keep Government Role in Housing Fix
The Obama administration, looking to overhaul the U.S. mortgage-finance system, gathered support from lenders and the real estate industry for reducing, without ending, the government’s role in insuring loans.
A limited government backstop “has a lot of traction,” saidMichael Berman, chairman-elect of the Mortgage Bankers Association, in a Bloomberg Television interview after a Treasury Department conference in Washington to discuss proposals. “At either of the extremes -- either a full nationalization or a full privatization -- we’re not in the mainstream.”
The Obama administration is seeking advice on how to rebuild a system at the center of the 2008 credit crisis. Some Republicans have sought to abolish Fannie Mae and Freddie Mac, the main sources of U.S. mortgage financing. Yesterday, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the system.
“To suggest that there’s a large place for private financing in the future of housing finance is unrealistic,” Gross said at the meeting. “Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won’t work.”
Fannie Mae, based in Washington, and Freddie Mac of McLean, Virginia, have drawn almost $150 billion in Treasury aid since September 2008, when they were seized by the government amid soaring losses on mortgage investments. The U.S. has promised unlimited support for the two companies. Including Ginnie Mae, the government insured almost 97 percent of U.S. mortgages in 2009, according to Inside Mortgage Finance.
‘Carefully Designed Guarantee’
“There is a strong case to be made for a carefully designed guarantee in a reformed system,” aimed at providing access to mortgages, even during economic slumps, Treasury SecretaryTimothy Geithner said. “The challenge is to make sure that any government guarantee is priced to cover the risk of losses and structured to minimize taxpayer exposure.”
Some government involvement is needed to ensure that markets traditionally underserved by lenders have access to credit, mortgage lenders and housing advocates said. The Federal Housing Administration, created in 1934, insures loans to borrowers with little cash.
Private lenders provide “virtually no mortgage finance in lower income and communities of color,” said Ellen Seidman, an executive vice president at Chicago-based ShoreBank Corp. “We’ve got to pay better attention to access to credit.”
Congressional Overhaul
Representative Barney Frank, the Massachusetts Democrat who leads the House Financial Services Committee, has begun work on overhaul legislation and will hold hearings in September. Geithner has promised to deliver a “comprehensive” plan for the housing-finance system by January. Yesterday’s meeting was also hosted by the Department of Housing and Urban Development.
During debate over the financial-regulation overhaul signed by President Barack Obama last month, Republicans were rebuffed in efforts to abolish Fannie Mae and Freddie Mac. Led by Senator John McCain of Arizona and Representative Jeb Hensarling of Texas, Republicans say the firms were driven to ruin by their competing missions -- serving shareholders as publicly traded companies and promoting homeownership among lower-income borrowers as government-sponsored entities.
The question remains how a new guarantee would work. Ideas at the meeting included a government backstop of last resort for some mortgage-backed securities.
The challenge is to encourage private investment and contain taxpayer exposure, said Ingrid Gould Ellen, director of the Furman Center for Real Estate & Urban Policy at New York University, during a panel discussion.
“A government guarantee is critical,” she said. Still, “you want to limit the scope of the guarantee.”
Monday, June 21, 2010
manage and track investments
High Networth Individuals-: Making the financial decisions is harder than ever right now. Finding the time to manage and track investments and trading positions on adaily basis effectively and keep up with everything that is going on in the markets can be difficult in today’s fast moving markets.
This service is desgined to leave you free to concentrate on your normal and business and family life In a nutshell
* We offer you professional trading and investment advice.
* We give you the advantage of ———-proven investment processes.
* We deal with utmost transparency.We will send you regular performance statements and research updates which will keep you abreast of the markets.
* You will also have access to our website which is designed to give all the research information at the click of a mouse.
* We focus on providing clients with dedicated servicing.
* suggested trades are communicated through the use of personal calls,SMS and online chat platforms.
* A tradition of trust and confidentiality lies at the heart of our service .So,too, does skill in designing innovative and up-to - date financial solutions.
* And all of these at a very affaordable priceline…
So, just leave your wealth creation needs to us and rest assured in the freedom to pursue your own passions and commitments to the fullest.
12000 per month/ 30000 per quater.
This service is desgined to leave you free to concentrate on your normal and business and family life In a nutshell
* We offer you professional trading and investment advice.
* We give you the advantage of ———-proven investment processes.
* We deal with utmost transparency.We will send you regular performance statements and research updates which will keep you abreast of the markets.
* You will also have access to our website which is designed to give all the research information at the click of a mouse.
* We focus on providing clients with dedicated servicing.
* suggested trades are communicated through the use of personal calls,SMS and online chat platforms.
* A tradition of trust and confidentiality lies at the heart of our service .So,too, does skill in designing innovative and up-to - date financial solutions.
* And all of these at a very affaordable priceline…
So, just leave your wealth creation needs to us and rest assured in the freedom to pursue your own passions and commitments to the fullest.
12000 per month/ 30000 per quater.
Thursday, June 3, 2010
Volatile stock markets hold potential for investors
Stock markets around the world have been quite volatile since the last few weeks. The main reason behind this market volatility is negative sentiments in the global markets on the one hand, and positive sentiments in the domestic markets triggered by strong results and fundamentals of domestic companies , on the other.
In a positive sense, the phases of market corrections give opportunities to investors who might have missed the market rallies. The markets remained quite volatile during the last few weeks due to investor reactions to the news and developments at the local and global levels. Analysts believe the markets will scale new highs in the coming months driven by strong performances of domestic business houses and strong foreign institutional investor (FII) inflows.
These are some of the major factors contributing to volatility in the stock markets :
Global factors
The current crisis in the European region is one of the main reasons behind the uncertainty and negative sentiments in the global markets. The uncertainty is on how the governments will handle the debt in some European nations. It is looming large since the last few weeks and the inability to find a proper solution has posed a threat to the existence of the Euro as a single currency for many nations.
The crisis that started with Greece seems to be spreading to some more countries in the Euro region. Analysts feel a second recession triggered by any of these factors could be much more damaging and long-lasting . Therefore, these panic waves in the markets every now and then.
Domestic factors
On the domestic front, the high inflation rate in food articles is one of the main factors that are triggering negative sentiments. However, on the positive side, the domestic economy is doing pretty well and corporates have posted strong fourth quarter results in the results season that concluded last month.
There is significant buying interest in the markets at lower levels - both from domestic and FIIs. This underlying demand is helping the market bounce back sharply and quickly after every correction.nature. In fact, volatility provides opportunities for each category of investors.
Strategies for investors
Volatility in the stock markets comes from their basic nature. This has to be factored in by equity investors. An investment portfolio has to work around the fact that values are bound to vary as the market fluctuates.
Investors therefore need to consider their individual goals and risk appetite while building a portfolio.
Here are some strategies for investors in the current market conditions:
For medium to long-term investors
The economic fundamentals are quite strong and business houses are doing pretty well. That is why every dip in the markets is followed by strong buying interest. Investors with a medium to long-term horizon should not panic during the corrections and use the opportunities to buy and accumulate fundamentallystrong stocks.
The correction phases provide opportunities to buy such stocks at significant discounts to their regular market prices. Also, during volatile market phases, investors should try to trade in small lots and stagger their activity as it is not possible to predict the market's bottom level. Buying at regular intervals in smaller lots ensures a good entry price for investors.
For short-term investors
Volatile market conditions provide many opportunities to short-term investors. Sometimes, shortterm trading looks attractive as investors can ride on volatile market waves to make short-term gains in quick time. However, timing and tracking becomes very important for this category of investors.
It is highly recommended to trade in the markets with a tight stop-loss and bookprofit level for all open positions during volatile conditions . Maintaining a stoploss level for open positions helps in cutting losses and conserving cash in order to be able to invest further and not get stuck in a bad investment . Booking profits or part profits at regular intervals is also recommended in volatile market conditions.
In a positive sense, the phases of market corrections give opportunities to investors who might have missed the market rallies. The markets remained quite volatile during the last few weeks due to investor reactions to the news and developments at the local and global levels. Analysts believe the markets will scale new highs in the coming months driven by strong performances of domestic business houses and strong foreign institutional investor (FII) inflows.
These are some of the major factors contributing to volatility in the stock markets :
Global factors
The current crisis in the European region is one of the main reasons behind the uncertainty and negative sentiments in the global markets. The uncertainty is on how the governments will handle the debt in some European nations. It is looming large since the last few weeks and the inability to find a proper solution has posed a threat to the existence of the Euro as a single currency for many nations.
The crisis that started with Greece seems to be spreading to some more countries in the Euro region. Analysts feel a second recession triggered by any of these factors could be much more damaging and long-lasting . Therefore, these panic waves in the markets every now and then.
Domestic factors
On the domestic front, the high inflation rate in food articles is one of the main factors that are triggering negative sentiments. However, on the positive side, the domestic economy is doing pretty well and corporates have posted strong fourth quarter results in the results season that concluded last month.
There is significant buying interest in the markets at lower levels - both from domestic and FIIs. This underlying demand is helping the market bounce back sharply and quickly after every correction.nature. In fact, volatility provides opportunities for each category of investors.
Strategies for investors
Volatility in the stock markets comes from their basic nature. This has to be factored in by equity investors. An investment portfolio has to work around the fact that values are bound to vary as the market fluctuates.
Investors therefore need to consider their individual goals and risk appetite while building a portfolio.
Here are some strategies for investors in the current market conditions:
For medium to long-term investors
The economic fundamentals are quite strong and business houses are doing pretty well. That is why every dip in the markets is followed by strong buying interest. Investors with a medium to long-term horizon should not panic during the corrections and use the opportunities to buy and accumulate fundamentallystrong stocks.
The correction phases provide opportunities to buy such stocks at significant discounts to their regular market prices. Also, during volatile market phases, investors should try to trade in small lots and stagger their activity as it is not possible to predict the market's bottom level. Buying at regular intervals in smaller lots ensures a good entry price for investors.
For short-term investors
Volatile market conditions provide many opportunities to short-term investors. Sometimes, shortterm trading looks attractive as investors can ride on volatile market waves to make short-term gains in quick time. However, timing and tracking becomes very important for this category of investors.
It is highly recommended to trade in the markets with a tight stop-loss and bookprofit level for all open positions during volatile conditions . Maintaining a stoploss level for open positions helps in cutting losses and conserving cash in order to be able to invest further and not get stuck in a bad investment . Booking profits or part profits at regular intervals is also recommended in volatile market conditions.
Wednesday, May 26, 2010
Todays Views of stock market
Today market opened with a good rise and it even crossed today resistance levels as we mentioned in our daily report for our clients and in the way last week there no big gains in the market and day by day market is becoming more volatile. Today its 4917 and we have this greek crisis so you readers can give your option on the futher market. so that we can have review regularly.
Subscribe to:
Posts (Atom)