BSE sensex, nifty, and the rupee uptrend!

The Friday NSE nifty and BSE sensex performance saw a boost amid much anticipation. Thanks to global influence! Hopes of implementation of economic reforms in Spain for managing of debt imbalances have led to this uptrend. It was the IT market that showed the highest price rise dynamics, given the fact about Spain outsourcing IT services from India. While the BSE sensex rose 183.24 points to close at 18,762.74, the nifty added 53.80 points climbing to the 5,700 level.

Markets also showed a positive upbeat with the rupee rising to a near five-month high on Friday (28 September). Thanks to improvement of global risks sentiment. Further signs of economic discipline are being shown as a result of the same with the government sticking to its original borrowing plan. An amount of 2 trillion rupees is estimated to be borrowed for October-March. Fast tracking of fiscal and economic reforms by the government has indeed increased the value of the rupee.

Investment by Oil Companies in Canada

It is not only FDI inflows in India but also in other countries that is noticed at large. And Indian companies are well taking advantage of the opportunities. Three state controlled oil companies are all geared up to invest in Canadian energy resources.

 A bid amounting to $5 billion has been made by Oil Natural Gas Corp, Oil India Ltd, and Indian Oil Corp for stakes in Canadian oil sands assets owned by ConocoPhillips. These Indian companies would be the first to invest in Canada’s energy resources. ConocoPhillips happens to produce 12,000 barrels of oil a day. And 30 billion barrels (approximate) of bitumen goes into the production of such a huge figure!

To meet 80 percent of its demand for oil, India imports oil from abroad. And the demand is only rising. Such investment ventures in oil assets abroad will at least help the country to meet this growing demand.

Power Bailout, A Temporary Relief!

Power black out incidences are often reported in most regions of the country with the worst being noticed in July when 670 million people were affected for two consecutive days. Most of the state-owned Power Distribution Units are incurring big losses and reforms from the government can bring rays of relief. ‘Something is better than nothing’ goes the saying. At least the government’s measures to offer a bailout to the cash-strapped power distributors would provide temporary relief.

This is no reform but mere restructure. According to analysts, long term energy problems will not be resolved and problems will only add up. $35 plus billion in debt will get restructured with this measure. This has triggered the boost in price of power shares by 2-3 percent in the Indian bourses (24th September).

Under this bailout plan, provincial governments can look forward towards taking on half of their short-term debt and translate them into long-term bonds.

Biggest stock market rise since July 2011

It is a big surprise for investors of the Indian stock market with both the indices of the Indian bourses exhibiting the highest figures since July 2011 besides gaining for the eighth consecutive session. While nifty advanced 142 points to 5,578, sensex rose 443 points to close at 18,464.27 (September 14).

Several factors triggered the rise, the immediate effect being generated by the diesel price hike by the UPA government. Another major contributor was the monetary stimulus (new asset purchase program) of the Federal Reserve; its decision to launch a third round of quantitative easing (Q3) not only boosted Indian market sentiments but also worldwide.

Besides, to curb inflation, the Reserve Bank is expected to leave interest rates on hold. Due to deficient monsoon, food prices rose high this year, which further added to the inflation of 7.55 percent in August 2012.    

Amongst the biggest gainers in blue chip stocks were Reliance Industries and ICICI Bank. 

Federal QE3 Announcement Expected Tonight!

The indices of the Indian bourses are trending up consecutively, though moderately. This upbeat sentiment has been witnessed ever since the announcement by European Central Bank on the unlimited sovereign bond buying decision, and the German Constitutional Court's nod y for the same. Another trigger is underway. Market experts feel that during the two-day meeting of the U.S. Federal Open Market Committee (FOMC), a third round of quantitative easing (QE3) may be announced.

Such a measure would indeed boost market sentiments and the figures of the Indian indices may go up further. It is but a fact that these are temporary triggers which do not last long. Scams, lack of policy-making and implementation, inflation, price hikes, etc. are the key depressants of the volatile Indian market. At least announcement of QE3 may shoot nifty up closer to 5550-5600 levels. ‘Short term gain for a long term pain’ – the statement well describes the QE3 state of affairs!

Downtrend of Siemens India NSE Stocks

The July IIP data did not meet market expectations, but surprisingly it did not affect trading sentiments. At 11.51 a.m. (12 September), sensex was perched at 17,941.31, up 88.36 points and nifty at 5,411.35 up 21.35 points. But positive market sentiments have not favored Siemens India NSE stocks. For every downtrend, there is a reason behind in addition to market volatility. Against the backdrop of the uptrend indices, why Siemens India NSE stocks fell was because of the German conglomerate selling a 1.2 percent stake in a deal that could raise for it an amount of up to $ 50 million.

At 12.35 pm, the stock price fell by 2.79 percent or down Rs. 19.50, i.e. it was perched at Rs. 678.50. Whether the price of Siemens India NSE stocks will further fall or rise all depends on the investors buying and selling them during the trading hours throughout the day

Steel companies Gain as SC orders lifting ban on 18 Iron Ore mines!

It is a big sigh of relief for miners in Karnataka. Thanks to the Supreme Court lifting ban on 18 iron ore mines. After a year of interruption on environment concerns, miners in Karnataka can now resume mining. Annual addition to the production capacity would now be a mind boggling 5 million tonnes. But then arises a concern of the increased capacity of affecting dwindling global iron ore prices!

Unless the raw materials are shipped overseas by exporters, the price factor would be affected. Why shipments are not feasible are because of excessive freight rates and 30 percent export tax. Nevertheless, India happens to be the world’s third largest exporter of iron ore output, exporting around100 million tonnes a year. Clamping of illegal mining has led to slumping of overseas sales.

The lifting of this ban from 18 iron ore mines is the gateway to the lifting of more bans giving scope for the gradual opening of other category mines. 

Spot iron ore prices are already down about 40% this year due to China's cut in demand. However, this cut in demand of iron ore is blessing for Steel companies as the extra output from iron ore mines can be used by Steel mills. As soon as the news was out, Sesa Goa Ltd NSE showed an uptrend cheering traders!

Languishing GDP growth!

It is no surprise to learn that in the quarter ending June, the GDP growth of India got weaker, exhibiting its lowest in three years, at 5.5 percent. With this exposure, there seems to be no respite for Prime Minister Manmohan Singh. The economic agenda that he created is no wonder paralyzed owing to a series of political scandals. And the coal scandal exposed by CAG has added fuel to the fire. As he is trying to escape those scandals, the GDP report for June Qtr acted as an eye-opener, hitting him worse!

Exports have been hit due to weak demand in the West. But such fluctuations do occur. It is lack of government reforms and overspending that has affected greatly the GDP growth. Investors hoped that the weak GDP growth would influence the RBI to lower interest rates at its next policy meeting to be held on September 17. But again the stubbornly high inflation has come on the way!

After the GDP data report, sensex recovered to about 80 points from it's lowest point of the day and Nifty too improved by 25 points from it's lowest point. However, due to fall in ICICI bank shares, sensex fell by 0.92% and nifty fell by 1.1%.

Jindal Steel and Power Ltd hits its 3 years low!

The after effects of CAG report are putting many stocks on rout. Jindal Steel and Power is one of them and its shares have hit a 3 years low today. The NSE shares touched a low of Rs.358.85/- and closed at Rs.359.15/-

Jindal Steel and Power Ltd NSE shares had fall 6.5% today hitting it's earlier lowest, of previous two sessions, since May 2009. It’s 3^rd day in a row that Jindal shares have slumped. It seems investors are holding to invest in companies who have been named in the Comptroller and Audit General report which was published earlier this month on August 17.

Not only Jindal, but the entire metal index got slashed today. Another reason for the dip accounts to the slowing demand due to low growth rate.

Price rally affecting Indian gold imports!

Revelation by delegates at a major conference on August 24 about Indian gold imports to fall further this year holds much ground. According to reports by the World Gold Council, it fell to 131 tonnes or 56 percent in the second quarter. The fall is all because of global gold prices being driven higher by the weaker dollar and surplus cash in the market. Prices of gold have more than doubled since 2008, restraining purchases from price-sensitive Indian buyers.

As of August 24 statistics, gold prices, exhibited its biggest weekly rise, an uptrend by 3 percent since early June. No wonder demand in China for gold is increasing; this may trigger gold market to peak at $1,800-$1,850 an ounce by the end of this year. Gold is seen by the government as a dead asset, hence encouragement to the masses to spend on other Indian goods and consume things in India.

Market trends and Bharti Airtel’s lowest close

Talks by the government of disinvestment and fuel subsidies may to some extent lead to improvement of the Indian economy. Decisions are delaying but a ray of hope persists amongst market investors.

On the 22nd of August, the share market fell, snapping the previous two-day rise. Whatever uptrend was witnessed in the India stock market since July was majorly contributed by foreign liquidity flows amounting to around $3 billion. And this has happened even without the government announcing any fiscal reforms.

You can well imagine the positive consequences when fiscal measures get announced by the government! Amid the market players that were a puppet of volatility, one of the biggest losses was faced by Bharti Airtel Ltd. NSE shares, the shares of which fell 3.8 percent to their lowest close (22nd August) since Oct. 2006. News about the potential entry into voice and data segments by Reliance Infotel, a unit of Reliance Industries, has led to Airtel shares downtrend.

After-effects of CAG reports!

CAG reports are creating headlines and it would no wonder affect India’s already volatile stock market. The reports reveal losses amounting to billions of dollars being incurred. The government was accused for the losses.

These reports were on three sectors, viz. coal, power, and aviation. Coal blocks, Delhi's flagship airport, and power projects were allocated at a fraction of market prices, which cost the exchequer tens of billions of dollars in lost proceeds. Developers got the airport land at a tenth of its market value, thus gaining an undue profit of $4.3 billion. Had the allocation happened wisely, results would have been otherwise in the CAG report.

It is now the PM’s turn to receive a blow of negative criticism and the opposition is already seeking answer from the PM, even demanding his resignation, as he was linked to the coal allocation in favor of private companies. It is to wait and watch the effect of the CAG reports! But the effect on the India stock market was evident with the falling share price of those named by the CAG!