Skip to main content

Fundamentals January 22, 2013

Nik's Diary

The Indian market opened flat to negative mirroring similar opening in SGX Nifty and most other Asian markets as investors await the outcome of the Bank of Japan’s policy meeting scheduled today. The  US  markets  were  closed  on  Monday  due  to  the  Martin  Luther  King  Day. Meanwhile, European stocks ended on a positive note taking cue from the strong closing to US indices last week and encouraging comments from the German Bundesbank. The bank said in its monthly review that the prospects for the German economy have improved, as companies’ expectations have brightened. Nonetheless, the central bank slashed its forecast for German economy in 2013 to 0.4% from 1.6% earlier and warned that the economy could sink into recession in the winter months. The Indian markets ended higher for a third consecutive session with yesterday’s close. Sentiments remained mildly positive after global ratings agency Moody's reaffirmed India's sovereign rating at 'Baa3' and the outlook as 'stable' for the time being, citing potential for growth, robust domestic savings and a dynamic private sector. Going ahead investors would be watchful of the earnings data coupled with reports on weekly jobless claims, leading economic indicators, and new and existing home sales.

Import duty on gold hiked to 6% 
The government on Monday announced a slew of measures including a hike in import duty on gold and platinum to discourage their consumption. The finance ministry directed gold exchange-traded funds to park a part of their gold holdings with banks so that some demand for these metals is met from domestic sources. It also eased the terms of gold deposit schemes of banks to encourage individuals to deposit their idle gold, which will help increase domestic supply. India's current account deficit widened to a record 5.4% of gross domestic product in the first half of the current fiscal as gold and crude oil imports remained high, increasing the country's dependence on foreign capital inflows. Announcing the measures, economic affairs secretary Arvind Mayaram said import duty on gold and platinum will now be 6% against 4% earlier. He said the steps taken by the government will help moderate the quantity of gold that is imported. Following the announcement, gold rose Rs 315 to Rs 31,250 per 10 gram in the Delhi bullion market. Gold futures went up by almost 1% as February contract touched Rs 30,847 per 10 gm at the MCX. Bullion traders and jewellers said gold and platinum will become costlier and the demand for the yellow metal in particular will come down.The measures follow finance minister P Chidambaram's statement on January 2 that the government would be forced to make gold expensive if demand for it continued unabated. The statement came after data showed a jump in the current account deficit to 5.4 % in the quarter to September. India imported $56.5 billion worth of gold in 2011-12, and by the end of December 2012, the country had already made purchases worth $38 billion. The current account deficit is the difference between exports of goods and services and inward remittances, and import of goods and services and transfers to outsiders. A country running high current account deficit will need steady capital flows to bridge the gap or else it will run down its reserves that will depreciate currency and cause serious economic trouble. Mayaram said the government will effect consequential changes in the additional customs duty and excise duty on gold ore bars, gold ores and refined gold. "The duties will be reviewed after sometime if there is a moderation in the quantity of gold that is imported into the country," he said. Bullion traders, however, were clearly unhappy with the announcement. Mukesh Kothari, director of Riddisiddi Bullion, said the move might turn the clock back to the days when gold smuggling was rampant. Rajiv Popley, director of Mumbai-based Popley group, said import duty on gold will now stand at Rs 180 per gm. "It has come as a blow to the organised jewellers at a time when they are going in for more efficient management to bring down costs," he said. Mayaram said the move to link gold ETF with deposit schemes will help increase physical availability of gold in the market, as a part of the gold with ETFs will be brought into circulation meeting the demand of gems and jewellery trade. "Consequently, there will be a moderation in the quantity of gold that is imported into the country," he said. Under the modified Gold Deposit Scheme, the minimum quantity of gold that may be deposited into the scheme would be reduced and the minimum tenure would be brought down to six months from three years to draw investors to the scheme. Market regulator Sebi and RBI will come out with notifications on gold ETFs and gold deposit schemes in two to three weeks. MF industry cheered the move saying it would bring down cost of operations for gold ETFs as they would not have to park gold in vaults on payment of charges. "It is a positive move if gold ETFs are allowed to lend a portion of their gold deposits subject to regulatory framework. Investors sentiment will increase in gold-linked financial products," said Lakshmi Iyer, head of products at Kotak Mutual Fund. Source: Economic Times

India-China trade declines by over 10 per cent to $66.47 billion in 2012
After posting impressive growth in the past few years, India-China bilateral trade declined by 10.1 per cent to $66.47 billion last year. According to the figures released by the Chinese Commerce Ministry, India's trade deficit mounted to $28.87 billion due to steady decline of export of iron ore. The deficit grew by $1.79 billion compared to 2011, it showed. The bilateral trade touched $61.74 billion in 2010 posting a high growth at 42.66 per cent followed by 19.71 per cent in 2011 with $73.9 billion. This is the first time in recent years the bilateral trade registered negative growth, which according to officials was in consistent with the decline in global trade. Indian exports to China declined by 19.6 per cent to $18.8 billion last year compared $23.41 billion in 2011 and $20.86 billion in 2010. Significantly China's exports to India, which in the past had a high volume of growth, declined by 5.7 per cent to $47.67, the data showed. China's exports touched $50.49 billion in 2011 from 40.88 billion in 2010. While the two countries were confident that the trade volumes would pick up, there is a great deal of scepticism about Indian exports making much headway as China has not opened up much on IT, and Pharmaceuticals fronts despite high voltage campaigns by India. Top Chinese leaders also have been openly acknowledging that the high trade Indian deficit is a matter of concern for bilateral trade, that is aimed at reaching the $100 billion target in 2015. "China pays close attention to the trade imbalance. We have already encouraged Chinese companies to import more from India and will continue to do so," China's top negotiator with India Dai Bingguo, had said in a recent interview to PTI. He was confident that $100 billion set by both the countries for 2015 would be achieved. "As neighbours and large emerging countries, China and India enjoy huge potential and broad prospects for economic cooperation. We are confident that, by working together, we will reach the goal of $100 billion of two-way trade by 2015," he said. The two countries held high level strategic dialogue in December last year raising the prospects of increase in trade and investment between both the countries this year. Source:Economic Times

FIPB clears IKEA's Rs 10,000 crore investment proposal
The Foreign Investment Promotion Board(FIPB) has given its nod to Swedish home furnishings retailer IKEA's revised 10,500-crore investment proposal that will allow the company to set up retail stores along with its popular cafes in India and also sell more categories of products. FIPB had cleared IKEA's proposal on November 21 last year but disallowed it from selling many items such as home and office-use products, textiles, apparel and fabric, and also said the company could not set up cafes in the stores. The company, which is keen to replicate its global format stores in India, approached the Department of Industrial Policy and Promotion (DIPP) requesting a review of the FIPB decision. "The company's proposal has been cleared," said a government official adding that company can sell 18 product categories compared to 15 categories approved earlier. The company wanted to retail 29 product categories but those contained many duplications that FIPB has removed. The proposal will now go to Cabinet Committee on Economic Affairs for final endorsement as the board can clear investments of up to 1,200 crore only. The FIPB was to take up IKEA's proposal on Thursday but the meeting was advanced to Monday, just before some of India's ministers headed out for important foreign engagements. Finance minister P Chidambaram left for Hong Kong and Singapore on Monday for investor road shows. On Tuesday his other Cabinet colleagues, including commerce and industry minister Anand Sharma, will go to Davos to attend the World Economic Forum meeting. DIPP, which formulates the FDI policy, had forwarded IKEA's review request to the FIPB to consider its case favourably. The revised proposal was to be taken up on December 31 originally but it was taken off the meeting's agenda. Sharma, who has been batting for IKEA, termed the approval as a positive development. "The government is committed to play a constructive role in encouraging FDI, especially in areas that create jobs and provide technological advancement. Globally, IKEA has a business model which integrates in its embrace SMEs and domestic industry, making them part of global value chain," Sharma said. The company representative said the move will encourage investments into the country. "We are thankful to commerce and industry minister Anand Sharma who worked hard on our proposal. This will ensure more investments into the country," said Diljeet Titus, partner at law firm Titus and Co that represents IKEA in India. India had diluted the mandatory 30% local sourcing norm to allow foreign retailers to fulfill it over a period of five years. The rules also stipulate a single entity for the sourcing and retailing, but the DIPP and the FIPB have allowed IKEA to have a separate sourcing arm. Source:Economic Times

Comments

Popular posts from this blog

NDPMS Stock Advisory

It is entirely possible that NDPMS could have, from time to time, some trading or investment positions in the stocks being discussed on the blog. This blog is not intended for distribution to, or use by, any person or entity, any jurisdiction or country, where such distribution or use would be contrary to local law or regulation. Reproduction in whole or in part without written permission is prohibited.

12.1% Equity Return in 10 days !! Review it to believe it !!

This is a pseudo folio. The base folio amount was kept at Rs 1 lakh and was created on September 26, 2015. Most of the positions are still open hence please consider this post as an update on the folio.The folio heat was kept at 10% which in simpler words mean that of all position gets their stop losses hit, the folio will drop maximum by 10%. Risk reward ratio is kept at 3:1 which implies that target points are set at 3 times the risks per position taken. This post is subjected to promotion of NDPMS Stock Markets Training Program. Please read the disclaimer before forming any opinions about the post, stock markets or NDPMS Wealth Management. Disclaimer: The intention of this post is not at all to entice the blog viewers to take up NDPMS Advisory Service. The post is solely used to promote NDPMS Training Program. It is entirely possible that NDPMS could have, from time to time, some trading or investment positions in the stocks being discussed on the blog. This blog is not int...

Professional Trading !!

Professional Trading is a profession where an individual makes his living from trading in stock and commodity markets. A professional that involves prolonged training and experience. It provides you with other various opportunities. It gives you freedom of time and money. It has no competition threat. There are no deadlines, no geographical deadlines, no dependency on staff. You are your own boss.  When people come to the world of trading many think that they only need to learn a strategy and follow the rules of that strategy and they do this for a while. The problem with those who do not first get a good foundation of the markets is that when the markets change or when they have a draw down they start making mistakes. Those mistakes lead to self sabotage even in the healthiest of minds. The process of trading is only enjoyable when your sub conscious mind figure out the right ways for trade. In other words those who start with passion very often find that those feelings are...