Monthly Archives: December 2008

Indian markets and you

Market is gaining strength with good buying coming in from the FII and DII.Has the market bottomed out?.Are these the lower levels for the market.Is there any bad news coming in to take the market lower.Not sure about all that but it looks like there is lot of value buying coming in at the lower levels.

The next set of news can be seen in terms of the quarterly results.Which are expected to be worse.It has to be seen if the market has already factored in those results or will the results be much worse pulling the market down.Q4 results are expected to be lower but might be better than Q3 as the huge fall of commodities would reflect more in the Q4 results which would increase the margins of the companies overcoming the sales.So it can be expected that the market has already found its bottom or may find its bottom when the Q3 results come out.

Apart from the market it is very funny to see how the mood of everyone changes with the market.When the market is going down,it all seems as if the we would loose all our money and is better to get out by selling atleast at breakeven.When the market is going up,we feel oh my god why didn’t I buy at lower level,why did I have the fear at that levels.

I guess one has to be very specific in markets by defining themselves what they are.If they want the returns immediately then they are traders and they would be looking for returns within a day to a week.Hence they should be looking for news which might come out in that week and hence decide how the market would react for them.If one is medium term of 2 to 4 months then one has to think in the same terms and should not react for daily news and swings in the market.

How will the week end

Markets on Thursday ended flat coming off the lows of the day.There was a support for the market at the lower levels indicating some strength against the selling pressure seen earlier in the day.

Government has hinted on Thursday that it will declaring a second stimulus package next week targeting mainly at the export market to lift the employment in the textile industry and other export oriented companies.Package may also support Agricultural sector as the inflation of food articles is still on a rise as all other commodities fall and push the overall inflation down.

MTNL has started India’s first 3G service yesterday in Delhi.BSNL will be coming out in mid of January.3G in India is just in a starting phase.Today there will be a guidelines for 3G aution which may happen by end of Jan.Its the next big development in the India Mobile industry.All mobile operators are getting ready for the aution by selling part of there stakes to foreign telcos thereby generating enough funds to finance the aution.With only 2-4 licences available for private operators in each circle it has to be seen till what extent these companies would stretch themselves in the aution.

Telcos have to wait for a long time for the returns to be gererated out of the 3G.With 90% of the indian Mobile operators being the middle and lower middle class it is very unlikely that they would upgrade to 3G.In the intial years 3G would be mainly used only by the corporate sector.The next segment of users might be the younger employed generation.

Was a big day

It was a very good day on Wednesday for the markets posting a very good gains of 5%.It was only on Wednesday that markets have reacted strongly to the news which came out over weekend.

With US markets ending up marginally up by 1% and Asian markets being slightly negative ,Indian markets might find themselves slightly up as the mood might be still bullish on account of market breaking the key technical levels on Wednesday.With Inflation data to be out today,which may only bring good or very good news.

Auto sector is certainly seems to be very bad with Mahindra shutting down the Logan plant for about 3 months atleast .There have been drastic cut in the prices across all segments in the auto sector but the hopes of demand improving is not looking good.

RBI has officialy declared that growth for India is on slowdown and actual growth might come out lower then what they were expecting it to be.This news has been making rounds but its only now that govt has come out officially.This will effect the foreign inflows to the country.Relatively growth in India is higher when compared to growth Globally.But it has to be seen how FII’s would see it.

Public sector banks have started reacting the RBI’s move of moving home loans below 20 lakhs to priority sector loans.Banks have started to reduce home loan rates by 2% for home loans below 20 lakhs and 3% for loans below 5 lakhs.This a good news for propective home loan owners as 80% of home loans fall under this category.But still people may find themselves on waiting side as interest rates may further come down in coming 6 months.But the end of the day it is a good news and may push some people to get ahead and purchase.

Will the rally go on

Markets have ended positive on Monday in reaction to the Govt’s monetary and fiscal action.But markets were off days high indicating some weakness.

There is a impression in the market that the stimulus provided by Govt is not enough to boost the economy.A further cut in CRR and SLR is needed.Which might only be declared once the inflation is seen cooling down.Stimulus declared by India is very nominal considering the $580 billion package by Chinese govt and drastic cuts by European banks.

The excise duty cut is a positive sign for the auto sector,helping the companies to slash prices by 2 to 4%.Cooling down interest rates also adds to the hopes auto sector which is seeing a huge slowdown.

With no major news in line Indian markets can be seen in line with global markets.Going ahead markets would start aligning itself to the results which would start coming out in early Jan.

Will petrol price and CRR cut help

Long awaited petrol price and CRR cut has been declared.But they were expected.Govt has not slashed the rates more than what the market has been expecting.So its almost sure that there may not be a rally on Monday morning reacting to these steps by government.

With inflation already coming down and seen at 8.2% this week,it can cool down to still lower levels once the impact of reduced petrol is felt.That will give flexibility for the government to reduce the interest rates further.With elections in few months ,government would try max to please the public by reducing the petrol prices and interest rates further.

But effects of all these cuts would not be seen immediate.It would take time for CRR cut to be reflected in the banks liquidity and then the business.The exact time frame may not be guessed but it might be around two quarters.Till which we would see all the companies facing tight liquidity problem and hence would end up reporting poor and poorer results for the coming months.