Monthly Archives: May 2014

Gold: – Can Fall Up to 25K-18K

Gold may not be able to enter an uptrend as long as it remains below 28800. It has breached the first support of speed resistance lines and within 4-8 months it may reach 25000 (its Jun 2013 low) which is an important 38.2% Fibonacci level as well as the second support by speed resistance lines. If support of 25000 is broken, gold may fall to 18000 by 2015 to 2016. We expect it to fall below 25k and it may reach 18000.

Gold Commodity

Improving global economies and falling risks is taking away the investors from investing in safe assets. Avoid investing in gold or gold ETF now. Rather invest in stocks or equity funds, check our earlier recommendations for selecting the right sectors and stocks.

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Filed under Commodity News, Currency Update, Debt News, Equity Market, Finance, Q4 Results, World News

India has ordered oil companies to provide $11.4 billion subsidy!

India has ordered oil companies to provide $11.4 billion subsidy for 2013/14 to help cover losses of state retailers that sell fuels at cheaper rates – a jump of 12 percent from the previous year, a source with knowledge of the matter said on Thursday.

U.S. Treasuries prices edged lower on Thursday after stronger economic data on U.S. existing home sales and factory activity lifted sentiment, while larger-than-expected weekly jobless claims failed to spur safe-haven bids.

Deb market 23 may 2014
Commodity Key Headlines

1) Three to Six Hurricanes Forecast for Atlantic Season.
2) Copper Set for 3rd Weekly Gain on Factory Data, Stockpiles.
3) Pengana Joins BT to Flag Roll Back of Mining’s Age of Austerity.
4) Empty Buses Show Defiance Trumps Hunger in Worst Platinum Strike.
5) Zimbabwe to Use Diamonds to Secure Loan: Letter to Miners.
6) Australia’s Pollution U-turn Threatening UN Climate Talks.
7) JBS $17 Billion Spree Set to Continue as CEO Seeks Growth.
8) WTI Oil Falls from One-Month High on U.S. Data.

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NIIT spurts after strong Q4 earnings!

Volatility continued in late trade as the key benchmark indices hovered in negative zone. The barometer index, the S&P BSE Sensex, close down 78.86 points or 0.32%, up 110 points from the day’s low and off 140.37 points from the day’s high. The market breadth, indicating the overall health of the market was strong. The BSE Small-Cap index was up close to 2%. The BSE Mid-Cap index was up close to 1.5%.

NIIT Technologies

NIIT Technologies

Who Moved and Why

1) NIIT spurts after strong Q4 earnings.
2) Readymade Steel gains after winning orders.
3) M&M declines on plan to stop production for 3 days.
4) Sun Pharma slips after Karkhadi unit gets warning letter from USFDA.
5) MRPL surges after turnaround Q4 results.
6) Essar Oil spurts after robust Q4 results.
7) VIP Industries jumps after strong Q4 results.
8) Gati gains on foreign fund buying.

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Filed under Commodity News, Currency Update, Debt News, Equity Market, Finance, Q4 Results

Wholesale price index (WPI) eased to 5.2 in April from 5.7% March 2014!

Key benchmark indices edged higher amid high intraday volatility after the latest data showed that inflation based on monthly wholesale price index (WPI) eased to 5.2 in April 2014 from 5.7% in March 2014. The barometer index, the S&P BSE Sensex, close up by 90.48 points or 0.38%, up close to 170 points from the day’s low and off about 60 points from the day’s high. The market sentiment was boosted by data showing that foreign funds made substantial purchases of Indian stocks on Wednesday, 14 May 2014.

WPI Index

WPI Index

Who Moved and Why

1) Adani Ports & SEZ gains after Q4 results.
2) LG Balakrishnan gallops to record high on strong results, liberal bonus issue.
3) Tata Motors slips in volatile trade as global wholesales decline in April.
4) Bajaj Auto slides after weak quarterly earnings.
5) Bank of India slips after weak Q4 earnings.
6) Shakti Pumps spurts to 52-week high after stellar Q4 outcome.
7) Sun Pharma gains after settling Novartis lawsuit.
8) Aurobindo Pharma gains after MSCI inclusion.

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Filed under Commodity News, Currency Update, Debt News, Equity Market, Finance

Ukraine Conflict-Impact on India

The ongoing Ukrainian conflict has created nervousness amongst investors. But as far as India is concerned, it is not expected to face any major impact of this conflict. India’s trade with erstwhile USSR, which used to account for 26% of the country’s total trade, has now been reduced to less than 1%. The main effects of this conflict are to be seen in Europe and Russia. It has alerted EU countries to Russian threat and it has helped in uniting them, whereas Russia is increasingly getting isolated in international community.

Ukrainian problem started simmering in the region when pro-Russia leader Viktor Yanukovych was ousted on February 21. Putin feared European Union dominance in Ukraine and started supporting pro Russian groups in Ukraine leading to annexation of Crimea to Russia. The situation in Ukraine is deteriorating with pro Russian groups increasingly taking control. The Ukrainian government and its military are not strong enough to take on Russia supported groups and in most probabilities Putin will be able to directly or indirectly take control of substantial parts of Ukraine.

Though this conflict will create economic disturbances at global level, it is not expected to have any major impact on India. The main effects of this conflict are explained below in brief –

Russia’s role to be diminished: Russia’s role in international affairs is diminished. Moscow has been de facto excluded from the Group of Eight industrialized powers. Its bids to join the Organization for Economic Cooperation and Development and the International Energy Agency are frozen. Western summits with Moscow are cancelled until further notice.

Energy diversification by countries to reduce risk: The energy map of Europe is being redrawn with accelerated action to reduce dependence on Russian oil and gas. EU states are set to build more liquefied natural gas terminals, upgrade pipeline networks and grids and expand a southern gas supplies through Georgia and Turkey to southern and central Europe. The EU gets a third of its oil and gas from Russia, and 40 percent of that gas is pumped across Ukraine. Europe may now look to tap its own shale gas reserves and expand nuclear power, despite environmental concerns.

China factor: The diplomatic alliance between Russia and China, which often vote together in the U.N. Security Council, could change in one of two directions – either rapprochement through a stronger energy partnership, with new pipelines being built to pump Russian oil and gas spurned by Europe to Beijing; or a cooling if China distances itself more from Putin’s behavior and sees less benefit in closer ties with an economically weakened and relatively isolated Moscow. For now, President Xi Jinping is refusing to take sides in public.

U.S. leadership: Washington’s global leadership role weakened by the rise of emerging powers and by retrenchment under President Barack Obama, has been partially restored. Despite his disengagement from wars in Iraq and Afghanistan and strategic “pivot” towards Asia, events have pushed Obama back into the old-fashioned role of “Leader of the Free World” in an East-West crisis in Europe. In Brussels last week Europeans appealed to Obama to sell them shale gas, and both sides agreed to speed talks on a transatlantic free trade and investment pact.

EU united: The European Union has been reunited, at least for now, by the return of a common external threat. This may have helped EU leaders overcome some long-running disputes.

Contest for Central Asia: Both Putin and the West are wooing central Asian autocrats in energy-rich Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan, drawing a discreet veil over their human rights records. If Russia weakens economically, they will want at least a foot in the Western camp.

Putin’s future: Russia’s leader is near the peak of his popularity, riding a wave of nationalist pride over Crimea. However, instability may grow if he comes under pressure from Russian business magnates angry at losing value on their businesses, forfeiting foreign investment in Russia and facing travel restrictions and asset freezes in the West. Most are loyal for now, but things may look different in six months’ time.

CONCLUSION: Russia may succeed in expanding its control over former soviet territories but the European countries have started ensuring energy security and the final impact on global economies will not be a catastrophic one. India may feel the pinch but it will not affect it strongly.


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Indian economy has bottomed out-Debt Market

Optimism that elections now under way in India will usher in a government capable of improving the economy would support local energy companies’ efforts to secure foreign-currency funding for acquisitions, according to Mumbai-based brokerage Ambit Investment Advisors Pvt. Ltd.

Bond risk for Indian companies declined this year. The average cost of credit-default swaps protecting the debt of eight Indian issuers has slid to 297 basis points from 337 at the end of 2013, according to data provider CMA. The rupee rose 1.9% in 2014 to 60.6250 per dollar, while 10-year sovereign bond yields climbed six basis points to 8.89%.

The economy has bottomed out and from here GDP growth is likely to go up, increasing investor confidence,” Vaibhav Sanghavi, a Mumbai-based director at Ambit Investment Advisors, said in an interview on 25 April. Add to that the prospects of a stable new government, and the state-run oil companies can dream of becoming truly global.

India’s state oil companies are leading overseas borrowings by the nation’s businesses as they build on last year’s record $5.5 billion of energy acquisitions. Government-run refiners and explorers increased the amount raised from dollar bonds and loans by 80% to $4.18 billion so far in 2014 from a year earlier, 34% of the total by local firms, data compiled by Bloomberg show. Indian Oil Corp. Ltd (IOC), which plans to buy stakes in Petroliam Nasional Bhd’s (Petronas’s) projects in Canada, was the top borrower with $1.4 billion. Oil India Ltd, weighing bids for assets in Malaysia and Nigeria, ranked second with $1 billion, Indian oil companies are increasing global acquisitions to secure energy supplies and meet demand in the world’s second-most populous nation that’s expected to surge almost 40% by 2020 from 2010 levels. Overseas funding has gained appeal after Indian firms’ dollar debt costs relative to US yields slid 54 basis points this year to a 2007 low of 266 on 2 April, JPMorgan Chase and Co. data show. The spread is now 277 basis points, versus 352 for Chinese companies.

India’s success in reining the current-account deficit and inflation and the prospect of a pickup in the nation’s economy are helping revive confidence, supporting local companies’ bids to rein in overseas funding costs. The shortfall in the country’s broadest measure of trade probably narrowed 60% in the year ended 31 March from a record, according to finance minister P. Chidambaram. Consumer inflation has cooled to 8.3% from a peak of 11.2% in November. Economic expansion quickened to 4.9% last fiscal year from a decade-low 4.5% in the preceding period, according to government estimates.

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