iCharts Discussions

[rk_a2003]

Markets are moving up and also INR is strengthening. There is one main hope for the recent moves in them. The recent weaker-than-estimated U.S employment data released last Friday acted as a catalyst for such a move in Indian markets. Market players are expecting that a slowdown in tapering will be an obvious outcome of this weak employment data. This sort of positive sentiment emanated out of the hope may prevail for some more days till the next FED meet.

But I don’t think that this hope will be realized. The Export-Import Bank of China (Chexim)announced its plans to issue up to 4 billion yuan ($660.99 million) of dim sum bonds in Hong Kong to institutional investors. Analysts forecast gross dim sum bond issuance volume to reach around 550 billion yuan in 2014, representing a more than 50 percent increase from last year's 360 billion yuan. We can see a continuous and sustained effort of Chinese for acquiring an international acceptance for its currency through various measures.

Out of the U.S. debt – $17.3 trillion as of January 2014 China owns an estimated $1.3 trillion in U.S. Treasuries ,it is the number-one investor among foreign governments, according to the July 2013 figures released by the U.S. Treasury. This amounts to over 23.1% of the U.S. debt held overseas and about 7.5% of the United States’ total debt load.

Most of the economists feel that because of this huge holdings of US treasuries, China cannot dare to dethrone the hegemony of US $ as an international currency. This will cause evaporation of its own wealth but China is known for it’s unorthodox adventures in 20th century through which it emerged as a super power. Keep in mind that at the beginning of the century it is not more than a rotten country and Chinese were called as opium people. It was far behind many of the countries including India.

It’s capable of throwing surprises and may use it’s huge $ reserves in the form of US treasuries to dethrone US $.US think tank is well aware of this potential threat and they can not afford to weaken US $ further by continuing the QE for longer and longer periods.

I suspect that they refrain from slowing down the tapering. But, who knows they may Jump from the frying pan into the fire.

.............Continued

[rk_a2003]

Vinay,

Last time when you posted BDI charts in September it was at year highs. BDI reached new highs in the 2nd week of November. Nifty was around 5700 in September and touched 6300 in November 1st week .It again went to new highs of 6400 on 9th December.

We know that BDI is a leading indicator. Nifty followed it roughly in relative terms. I know it's not a very smart way to compare just BDI and Nifty when there are multiple factors that influence index movement. I think to have an idea of BIG PICTURE still we may use this guide.

Now BDI is off new highs and entered in to short term down trend around 1st week of Jan and Nifty is going down now indicating a short term down trend. Whether this down turn in BDI is due to lull period after X mas ? We are not sure but future will definitely answer this question.

[vinay28]

true rk, bdi can't have any direct impact on nifty since bdi hardly has any component from India but it does show strength developing in global trade, which in turn will help India, albeit after about 6 month delay.

[URRATHI]

[amitagg]

strictly disgaree based on some wave structures....5200 is all time low for years to come...mentioned in some post earlier......

[vinay28]

[apka]

[vinay28]

[pkholla]

[rk_a2003]

Last time when inflation was at its peak every analyst expected a rate hike from RBI. Surprisingly (for many)Mr. Raghuram Rajan maintained status quo. High inflation at that time was mainly due to high vegetable prices .The governor thought that tightening of money flow is no way going to ease the supply of vegetables and refrained from raising the rates. He made a point by doing so that economic expertise is not contradictory to common sense.

Well, this time inflation has softened and we may expect that it will move in the same direction in future also aided by softening global crude prices; whereas the industrial growth took a beating due to high interest rates .

Mr.R.R is known for his out of box thinking and for taking dynamic decisions that too without giving any hints to markets. I will not be surprised if some sort of monetary easing is announced tomorrow again surprising the markets.

[rk_a2003]

SEBI organized an International conference on ALGO & HIGH FREEQUENCY TRADING in Mumbai. Does any one have access to the papers presented there? I would like to read at least the gist of what is presented there.

Vinay! any possibility?

[vinay28]

[rk_a2003]

Mr.Governor lived up to the expectation.The surprise element remained but in an opposite way.

[amitagg]

[vinay28]

I don't know where to post this. So I have chosen this thread.

Almost everyone is very bullish about markets in short to medium term, based on a belief that BJP/NDA will get majority in the Loksabha elections and things will be rosy all around forever thereafter. I am, however, not so sure about it and hence I am putting forth some possibilities, as promised last week, as a matter of abundant caution. The intention is not to have a contra view just for the sake of it but because of my real feelings about such possibilities. Also, I have no intention to create panic. After all I could be completely wrong and I am actually hoping that I will be wrong. Please note that this is not based on technical analysis.

BJP may do well in elections but events that may occur in April may force it to rethink and change its strategy decided earlier. The party may suffer due to differences over their leader. So, even if it comes to power, serious differences may develop over its leadership and national & external policies around/after mid June. Opposition may cause a lot of trouble for them. This may result in BJP not being able to hold on to power.

Meanwhile, winds may start blowing for a no confidence motion in August but the ruling party may barely manage to stay in power. However, matters will come to a head after Oct-Nov, possibly resulting in re-elections, probably by April ’15.

Congress may find it very difficult to get enough seats and may have to indulge in excessive horse trading and also loose a lot of ground in forming a coalition. Mistakes made by congressmen during April-June will give headache to Sonia. However, it may slowly become powerful after June, particularly after Oct-Nov.

The third front may get more seats than before. Congress may beat BJP in forming a coalition with it if BJP fails to hold on to power.

New policy of giving chance to youngsters in all parties may appear good initially but their unilateral decisions may cause havoc.

Other events such as natural calamities and external policies can create serious issues. Pakistan and China will keep us on our toes.

To sum it up, it may be very difficult for any ruling party to take any decision. Many more scams will get exposed. Eco-political chaos may result in economic crisis, perhaps as bad as the one in 1992, forcing the Govt. to take drastic measures. We may also see dry and wet drought. INR may crash and gold may zoom.

Incidentally, I also feel that sell off may begin in the markets by end April/early May.

If re-elections do take place, the govt that will be formed then may finally bring more stability.