Inflation in India at 9 months low
Inflation dropped to 6.84% for the week ending on 6th December. This is mainly because of the fall of crude oil which was reflected in other commodities. This downturn of inflation would continue as the base effect (comparing to last year) would help it to be low. Other reason for the reduction in inflation is the excise rate cut and good crop this season.
Reducing inflation figures caused the bond yield down in hopes of interest rate cuts. (Bond's yield is inversely proportion to interest rates)
Quick Update
Sensex crossed 10,000 mark.
Rupee getting stronger. INR was at 50.35 on 1Dec, 49.57 on 8Dec, 48.05 on 15Dec and 46.89 on 18Dec.
Crude goes further down to $36.22 a barrel falling 9.59% yesterday and 8.12% day before.
Friday, December 19, 2008
Thursday, December 18, 2008
18December2008
Fed cuts rates again
The US Federal Reserve cut its target for overnight interest rates to a range of 0-0.25%. This now closes option for any further rate cut. The Fed also said it would expand its policy of buying mortgage-backed securities to support the housing market and that it was now considering the benefits of purchasing long-term treasury bills – a move first used by President Franklin Roosevelt in the Great Depression to push down long-term interest rates.
A treasury bill is taditionally a short term zero coupon bond i.e. they do not pay interest. They are instead issued at a discount to their face value. Like any Government bonds there is very little risk attached to investing in treasury bills. Default risk on a government's borrowings in its own currency is low enough to be regarded as zero.
Gloom at Wall Street
Morgan Stanley posted a $US2.2 billion fourth-quarter loss, wider than the most pessimistic analyst's estimate, as it unexpectedly wrote down the value of fixed-income businesses and lost money in all three of its main divisions.
Goldman Sachs, the 139-year-old investment bank reported its first quarterly loss since becoming a public company 10 years ago. For the period endedNovember , Goldman reported a fourth-quarter net loss of $2.12 billion , or $4.97 a share, compared with net income of $3.22 billion , or $7.01 a share, a year earlier.
OPEC cuts oil production
Organisation of the Petroleum Exporting Countries (OPEC) yesterday decided to pull an extra 2.2 million barrels per day (bpd) out of production from 1 January. This aimed to put a floor on crude price at $43 a barrel. It seems the news is not taken positively as crude is now trading at $39.8 a barrel.
TATA on Ferrari
Tata will be riding on Ferrari in coming season of Formula -1. Soon we"ll see Tata logo on F-1 cars of Felipe Massa and Kimi Raikkonen. This comes as a 'historic' news as claimed by Ferrari management. Tata on the other hand believes it as one of the cheapest way to get promotion globally.
Satyam (contd. from yesterday)
Satyam share in India fell by 30% yesterday at close. ADRs soar up 50% after Satyam called off the deal. Maytas Infrastructure fell by 20% yesterday and its further down 20% today. One costly mistake has caused Satyam promoters 600 crores.
The US Federal Reserve cut its target for overnight interest rates to a range of 0-0.25%. This now closes option for any further rate cut. The Fed also said it would expand its policy of buying mortgage-backed securities to support the housing market and that it was now considering the benefits of purchasing long-term treasury bills – a move first used by President Franklin Roosevelt in the Great Depression to push down long-term interest rates.
A treasury bill is taditionally a short term zero coupon bond i.e. they do not pay interest. They are instead issued at a discount to their face value. Like any Government bonds there is very little risk attached to investing in treasury bills. Default risk on a government's borrowings in its own currency is low enough to be regarded as zero.
Gloom at Wall Street
Morgan Stanley posted a $US2.2 billion fourth-quarter loss, wider than the most pessimistic analyst's estimate, as it unexpectedly wrote down the value of fixed-income businesses and lost money in all three of its main divisions.
Goldman Sachs, the 139-year-old investment bank reported its first quarterly loss since becoming a public company 10 years ago. For the period ended
OPEC cuts oil production
Organisation of the Petroleum Exporting Countries (OPEC) yesterday decided to pull an extra 2.2 million barrels per day (bpd) out of production from 1 January. This aimed to put a floor on crude price at $43 a barrel. It seems the news is not taken positively as crude is now trading at $39.8 a barrel.
TATA on Ferrari
Tata will be riding on Ferrari in coming season of Formula -1. Soon we"ll see Tata logo on F-1 cars of Felipe Massa and Kimi Raikkonen. This comes as a 'historic' news as claimed by Ferrari management. Tata on the other hand believes it as one of the cheapest way to get promotion globally.
Satyam (contd. from yesterday)
Satyam share in India fell by 30% yesterday at close. ADRs soar up 50% after Satyam called off the deal. Maytas Infrastructure fell by 20% yesterday and its further down 20% today. One costly mistake has caused Satyam promoters 600 crores.
Wednesday, December 17, 2008
17December2008
Bernard Lawrence Madoff FraudulenT
In what could be the biggest Ponzi scam of all time, Bernard L. Madoff got arrested on 11thDecember2008. He was amongst the most active in NASDAQ and served as its chairman of the board of directors, and on its board of governors. A Ponzi scheme is a fraudulent investment that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business.
Madoff's fraud may involve up to $50 billion in cash and affect many financial institutions, charities, funds, funds of funds of the world.
Madoff had a remarkable track record of success year after year. A hedge fund run by Madoff described its strategy as focused on shares in the S&P index, averaged a 10.5 percent annual return over the past 17 years. In November 2008, amid a general market collapse, the fund reported that it was up 5.6 percent that month, while the S&P 500-stock index fell 38 percent.
Hedge funds typically hold their portfolio at a securities firm (typically a major bank or brokerage) whereas Madoff's firm was its own broker-dealer and supposedly processed all its trades. Although Madoff was a pioneer of electronic trading, he refused to provide his clients online access to their accounts. He sent out accounting statements by mail, whereas most hedge funds statements and allowed them to be downloaded via computer for easier analysis by investors.
Satyam Maytas
Satyam board pushed a deal to buy Maytas Infrastructure and Maytas Properties, spending $1.6 bn from cash rich Satyam systems. Satyam founder and Chairman B Ramalinga Raju and other insiders hold 36 percent in Maytas Infra and 35 percent in Maytas Properties. Analysts questioned the motives of Satyam's top executives, saying there was a potential conflict of interest because they hold stakes in both companies. This was severely criticised causing Satyam ADR to fell by 55% (ADR: Stock of Indian Company listed in American Exchange). Finally the board bowed to investor pressure and canceled plans to spend $1.6 billion to buy two builders.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to help weather the global economic slowdown. Considering there are no synergies that could boost buying of realty sector industries by IT company. It would be interesting to see if at all Satyam may win back the confidence of investors.
In what could be the biggest Ponzi scam of all time, Bernard L. Madoff got arrested on 11thDecember2008. He was amongst the most active in NASDAQ and served as its chairman of the board of directors, and on its board of governors. A Ponzi scheme is a fraudulent investment that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business.
Madoff's fraud may involve up to $50 billion in cash and affect many financial institutions, charities, funds, funds of funds of the world.
Madoff had a remarkable track record of success year after year. A hedge fund run by Madoff described its strategy as focused on shares in the S&P index, averaged a 10.5 percent annual return over the past 17 years. In November 2008, amid a general market collapse, the fund reported that it was up 5.6 percent that month, while the S&P 500-stock index fell 38 percent.
Hedge funds typically hold their portfolio at a securities firm (typically a major bank or brokerage) whereas Madoff's firm was its own broker-dealer and supposedly processed all its trades. Although Madoff was a pioneer of electronic trading, he refused to provide his clients online access to their accounts. He sent out accounting statements by mail, whereas most hedge funds statements and allowed them to be downloaded via computer for easier analysis by investors.
Satyam Maytas
Satyam board pushed a deal to buy Maytas Infrastructure and Maytas Properties, spending $1.6 bn from cash rich Satyam systems. Satyam founder and Chairman B Ramalinga Raju and other insiders hold 36 percent in Maytas Infra and 35 percent in Maytas Properties. Analysts questioned the motives of Satyam's top executives, saying there was a potential conflict of interest because they hold stakes in both companies. This was severely criticised causing Satyam ADR to fell by 55% (ADR: Stock of Indian Company listed in American Exchange). Finally the board bowed to investor pressure and canceled plans to spend $1.6 billion to buy two builders.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to help weather the global economic slowdown. Considering there are no synergies that could boost buying of realty sector industries by IT company. It would be interesting to see if at all Satyam may win back the confidence of investors.
Tuesday, December 16, 2008
16December2008
Cheaper Home Loan
Buying a Home has become cheaper for Low/Middle income group and in smaller towns. All of 28 Public sector Banks in India have decided to lower the interest rates on home loans and loans for small and medium enterprise, however with some conditions.
Under the scheme launched, interest rate on home loans up to Rs 5 lakh, for a maximum period of 20 years, will not exceed 8.5 per cent for the first five years. However, if interest rates changes further then lower of two will be applicable. The margin for this been reduced to 10 per cent, from the current 20-25 per cent. This means that now a buyer can get 90% of home amount as loan.
Similarly interest rate on loans up to Rs 20 lakh for a maximum period of 20 years has been fixed at 9.25 per cent and the margin has been reduced to 15 per cent. Also there will be a free insurance cover for this loan. Pvt. Banks viz. ICICI and HDFC haven't responded to this yet.
More so, this can't be a big relief to realty sector. Hardly anyone takes 5-20 Lakh loans in metros, or even tier B cities. This makes sense for Public Sector Banks whose majority of customers are those asking for 15-20 Lakh Loans, with average of 7-8 Lakh.
Existing customers are not entitled for this scheme. This is because this measures are taken to boost demand for home and help struggling realty sector.
Banks also said they are reducing the interest rate on loans to micro enterprises by 0.5% and small and medium enterprises by 1%. Both existing and new customers will benefit from the move, which comes into immediate effect.
Buying a Home has become cheaper for Low/Middle income group and in smaller towns. All of 28 Public sector Banks in India have decided to lower the interest rates on home loans and loans for small and medium enterprise, however with some conditions.
Under the scheme launched, interest rate on home loans up to Rs 5 lakh, for a maximum period of 20 years, will not exceed 8.5 per cent for the first five years. However, if interest rates changes further then lower of two will be applicable. The margin for this been reduced to 10 per cent, from the current 20-25 per cent. This means that now a buyer can get 90% of home amount as loan.
Similarly interest rate on loans up to Rs 20 lakh for a maximum period of 20 years has been fixed at 9.25 per cent and the margin has been reduced to 15 per cent. Also there will be a free insurance cover for this loan. Pvt. Banks viz. ICICI and HDFC haven't responded to this yet.
More so, this can't be a big relief to realty sector. Hardly anyone takes 5-20 Lakh loans in metros, or even tier B cities. This makes sense for Public Sector Banks whose majority of customers are those asking for 15-20 Lakh Loans, with average of 7-8 Lakh.
Existing customers are not entitled for this scheme. This is because this measures are taken to boost demand for home and help struggling realty sector.
Banks also said they are reducing the interest rate on loans to micro enterprises by 0.5% and small and medium enterprises by 1%. Both existing and new customers will benefit from the move, which comes into immediate effect.
Saturday, December 6, 2008
Inflation
Everyday we talk about inflation, few months back this was the biggest hurdle for Finance minister. Inflation was rocketing high. Now we read that as inflation is easing Government can take measures to improve growth etc. But how exactly does it all work?
Let us start with defining inflation. Inflation is an increase in the prices of goods and services in an economy over a period of time. As everyone understands inflation increases means increase in the price and vice versa. Actually the concept is little deeper. We’ll understand this well when we’ll see how it is calculated.
There are two ways to calculate Price Indices:
1) Wholesale Price Index, WPI: WPI is the index that is used to measure the change in the average price level of ‘goods traded in wholesale market’. India has taken WPI as an indicator of the rate of inflation in the economy.
2) Consumer Price Index, CPI: CPI is a weighted average of prices of a specified set of goods and services ‘purchased by consumers’. It is a price index that tracks the prices of a specified set of consumer goods and services, providing a measure of inflation. CPI is the official measure of inflation in many countries such as the United States, the United Kingdom, Japan, France, Canada, Singapore and China.
India is the only major country that uses a wholesale index to measure inflation. The WPI has an All Commodities Index, which consists of three major groups –
1) Primary Articles; 2) Fuel, Power, Light & Lubricants; and 3) Manufactured Products.
These are again broken up into smaller sub-groups. For instance, the primary articles group would have food articles, non-food articles and minerals. Each of these sub-groups would have several individual commodities in them.
This WPI tracks prices of 435 commodities, of which 98 are primary articles, 19 in the fuel, power, light & lubricants group and 318 are in the manufactured products group.
The current index, which uses 1993-94 as its base year, has weights of 22.025 for primary articles, 14.226 for fuel etc and 63.749 for manufactured products.
Calculation of Inflation
Inflation is calculated point to point compared to last year. WPI figure is released every week. Base year us taken as 1993-94 where WPI is taken as 100. Current WPI is compared with WPI exactly 52 weeks back. These are the values of WPI of last year and this year:
| Week No. | Date | WPI | Date | WPI | |
| 1 | 5/1/2008 | 217.6 | 6/1/2007 | 208.7 | |
| 2 | 12/1/2008 | 217.8 | 13/01/2007 | 208.7 | |
| 3 | 19/01/2008 | 218.2 | 20/01/2007 | 208.9 | |
| 4 | 26/01/2008 | 219 | 27/01/2007 | 209 | |
| 5 | 2/2/2008 | 218.8 | 3/2/2007 | 208.9 | |
| 6 | 9/2/2008 | 219.4 | 10/2/2007 | 209 | |
| 7 | 16/02/2008 | 220.4 | 17/02/2007 | 208.6 | |
| 8 | 23/02/2008 | 220.9 | 24/02/2007 | 209 | |
| 9 | 1/3/2008 | 222.3 | 3/3/2007 | 209.3 | |
| 10 | 8/3/2008 | 225.7 | 10/3/2007 | 209.4 | |
| 11 | 15/03/2008 | 226.4 | 17/03/2007 | 209.6 | |
| 12 | 22/03/2008 | 226.6 | 24/03/2007 | 210.1 | |
| 13 | 29/03/2008 | 226.7 | 31/03/2007 | 210.4 | |
| 14 | 5/4/2008 | 227.8 | 7/4/2007 | 211.5 | |
| 15 | 12/4/2008 | 228.2 | 14/04/2007 | 211.4 | |
| 16 | 19/04/2008 | 228.9 | 21/04/2007 | 211.5 | |
| 17 | 26/04/2008 | 229.1 | 28/04/2007 | 211.6 | |
| 18 | 3/5/2008 | 230.5 | 5/5/2007 | 212 | |
| 19 | 10/5/2008 | 230.6 | 12/5/2007 | 212.4 | |
| 20 | 17/05/2008 | 230.8 | 19/05/2007 | 212.4 | |
| 21 | 24/05/2008 | 231.2 | 26/05/2007 | 212.3 | |
| 22 | 31/05/2008 | 232.3 | 39119 | 212.5 | |
| 23 | 7/6/2008 | 236.5 | 9/6/2007 | 211.8 | |
| 24 | 14/06/2008 | 236.9 | 16/06/2007 | 211.9 | |
| 25 | 21/06/2008 | 237.7 | 23/06/2007 | 212.4 | |
| 26 | 28/06/2008 | 238.4 | 30/06/2007 | 212.8 | |
| 27 | 5/7/2008 | 239.3 | 7/7/2007 | 213.3 | |
| 28 | 12/7/2008 | 239.5 | 14/07/2007 | 213.6 | |
| 29 | 19/07/2008 | 240.5 | 21/07/2007 | 213.7 | |
| 30 | 26/07/2008 | 240.7 | 28/07/2007 | 213.9 | |
| 31 | 2/8/2008 | 241.4 | 4/8/2007 | 213.8 | |
| 32 | 9/8/2008 | 241.1 | 11/8/2007 | 213.7 | |
| 33 | 16/08/2008 | 241.1 | 18/08/2007 | 213.7 | |
| 34 | 23/08/2008 | 241.2 | 25/08/2007 | 213.9 | |
| 35 | 30/08/2008 | 241.4 | 39091 | 214.8 | |
| 36 | 6/9/2008 | 241.7 | 8/9/2007 | 215 | |
| 37 | 13/09/2008 | 241.7 | 15/09/2007 | 215 | |
| 38 | 20/09/2008 | 241.3 | 22/09/2007 | 215.2 | |
| 39 | 27/09/2008 | 241.3 | 29/09/2007 | 215.3 | |
| 40 | 4/10/2008 | 239.6 | 6/10/2007 | 215 | |
| 41 | 11/10/2008 | 238.8 | 13/10/2007 | 215 | |
| 42 | 18/10/2008 | 238.3 | 20/10/2007 | 215.3 | |
| 43 | 25/10/2008 | 238.5 | 27/10/2007 | 215.4 | |
| 44 | 1/11/2008 | 235.5 | 3/11/2007 | 216.1 | |
| 45 | 8/11/2008 | 235 | 10/11/2007 | 215.8 | |
| 46 | 15/11/2008 | 235.1 | 17/11/2007 | 216 | |
| 47 | 22/11/2008 | 233.7 | 24/11/2007 | 215.6 | |
| 48 | 29/11/2008 | 39094 | 216.3 | ||
| 49 | 6/12/2008 | 8/12/2007 | 216.3 | ||
| 50 | 13/12/2008 | 15/12/2007 | 216.4 | ||
| 51 | 20/12/2008 | 22/12/2007 | 216.4 | ||
| 52 | 27/12/2008 | 29/12/2007 | 216.7 |
How inflation is calculated? For example we will get inflation for this week i.e. week number 47. Inflation_47 = (WPI_47_2008-WPI_47_2007)/WPI_47_2007 = (233.7-215.6)/215.6~8.4%. Important thing to note is inflation is always calculated compared so same week exactly a year back.
This is how inflation for the year looks:
Note that in May it showed a steep rise. This is mainly attributed to increasing crude price in that period. Fuel price were increased in period of June-July. This led to increase in transport cost leading to increasing in vegetable prices and other commodities.
Normally, high inflation is linked to higher money supply in the market. Think it this way, when there is high money supply this means purchasing power of people increases which leads to increase in prices. As we see, inflation is easing since September 2008. This gives Finance Ministry + RBI an opportunity to take steps for growth. Hence, they are more comfortable in decreasing interest and rates cut recently hence increasing the money supply in the system.
Wednesday, December 3, 2008
3December2008
RBI to ease Rates, Interest
In order to infuse liquidity in the system Govt. has set up a committee to discuss on reducing Repo Rates, Reverse Repo and Interest Rates. (Its important to note that RBI controls money supply in the system with these rates. Like, in order to increase the liquidity in the system RBI can cut Rates (Repo, Reverse Repo) and/or Interest Rates. In layman's terms, if interest rates come down more people will take loans at cheaper available rates. Hence, there is more money in the market. This means, higher purchasing ability and in turn might lead to higher inflation. With inflation easing for a month now, Govt. might not care about it and like to safeguard Financial system)
Repo rate is rate at which RBI lends money to Bank. Reverse Repo, on the other hand is the rate at which RBI takes deposits from Bank. Currently, Repo rate is at 7.5% and Reverse Repo is at 6%. Committee targets cut Repo rate by 1.5% and Reverse Repo by 2%.
Cash Reserve Ratio (CRR) is proportion of cash banks have to keep with central banks. Cut in CRR means Banks can lend more. In a way, Banks can cut rates to provide loans at cheaper rate. This would also mean that Banks will cut deposit rates as well to safeguard the Bank's margin. Most of the Banks have already cut the deposit rates by 50 basis points (1 basis point = 0.01%)
Closed End Mutual Fund to be listed on Exchanges
Closed End Mutual Fund may have to be listed on the Exchange. This is to safeguard fund houses from the institutional investors, FIIs who take out investments abruptly and premature. Now when these are listed, fund houses don't bear the impact. This is in view of current situation when RBI had to open for banks to let Mutual Funds access to banks funds. Now investor who wish to premature exit have to find the buyer at exchange.
NSE vs MCX
For the first time there is an open fight of country's leading exchanges. NSE has put FT (Financial Technologies) on watchlist. NSE's decision has blocked sale of softwares of FT to brokers, vendors. FT is promoter of MCX. MCX is leading commodity Exchange of the country, with Mr. Jignesh Shah as the Chairman. Recently these two bourses came face to face for currency future trading in which people believe 'trader driven' MCX is performing better than NSE.
In order to infuse liquidity in the system Govt. has set up a committee to discuss on reducing Repo Rates, Reverse Repo and Interest Rates. (Its important to note that RBI controls money supply in the system with these rates. Like, in order to increase the liquidity in the system RBI can cut Rates (Repo, Reverse Repo) and/or Interest Rates. In layman's terms, if interest rates come down more people will take loans at cheaper available rates. Hence, there is more money in the market. This means, higher purchasing ability and in turn might lead to higher inflation. With inflation easing for a month now, Govt. might not care about it and like to safeguard Financial system)
Repo rate is rate at which RBI lends money to Bank. Reverse Repo, on the other hand is the rate at which RBI takes deposits from Bank. Currently, Repo rate is at 7.5% and Reverse Repo is at 6%. Committee targets cut Repo rate by 1.5% and Reverse Repo by 2%.
Cash Reserve Ratio (CRR) is proportion of cash banks have to keep with central banks. Cut in CRR means Banks can lend more. In a way, Banks can cut rates to provide loans at cheaper rate. This would also mean that Banks will cut deposit rates as well to safeguard the Bank's margin. Most of the Banks have already cut the deposit rates by 50 basis points (1 basis point = 0.01%)
Closed End Mutual Fund to be listed on Exchanges
Closed End Mutual Fund may have to be listed on the Exchange. This is to safeguard fund houses from the institutional investors, FIIs who take out investments abruptly and premature. Now when these are listed, fund houses don't bear the impact. This is in view of current situation when RBI had to open for banks to let Mutual Funds access to banks funds. Now investor who wish to premature exit have to find the buyer at exchange.
NSE vs MCX
For the first time there is an open fight of country's leading exchanges. NSE has put FT (Financial Technologies) on watchlist. NSE's decision has blocked sale of softwares of FT to brokers, vendors. FT is promoter of MCX. MCX is leading commodity Exchange of the country, with Mr. Jignesh Shah as the Chairman. Recently these two bourses came face to face for currency future trading in which people believe 'trader driven' MCX is performing better than NSE.
Tuesday, December 2, 2008
2December2008
BSE Sectoral Indices
(1Dec08)The day started with a ray of hope clearing the dark clouds of terrorist attack. Sensex opened 70 points up in line with asian markets showing mixed performances, mostly flat. Even when other sectors were in blue, BSEAuto Index was in red throughout the day. This is in view of dropping auto sales in fear of recession and Maruti Suzuki and Hero Honda taking the biggest hit of the day. Auto Index fell by almost 5% intra day and closed 4.64% down finally. In this fear of recession, it is most likely to fall further and gain new lows.
Another sector taking the toll is Realty. BSERealty sector has seen the most wide spread intraday. It gained +4.4% intraday and then reached -6.4% at day's low. DLF weighing 43% in the index caused the major set back when finally it closed 5.34% down.
Overall it was a day when all the sectors suffered. BSEBank went down 3.87%, ICICI bank causing the major damage. IT sector was 1% down. Important to note that Infosys weighs 56% in the index. Mid cap and small cap were better than Sensex. Mid cap down 1.36% and small cap down 0.21% better than sensex which closed at 2.78%.
Sensex opened firmly in blue. But immediately after Europe market opened in red, domestic market taking cue dived sharply.
Markets worldwide
S&P500 closed down 8.9%, Nasdaq down 8%, Dow Jones Industrial Average down 7.7% marked the summary of US markets crashing. Amongst the financial stocks, Citigroup fell 22.2%, Morgan Stanley 23% and Goldman Sachs 17%. This figures sounds very scary as this would affect asian markets. Nikkei (2dec08) already 5% down, Hang Sang 5%, Sensex also opened weak down 2.6%.
(1Dec08)The day started with a ray of hope clearing the dark clouds of terrorist attack. Sensex opened 70 points up in line with asian markets showing mixed performances, mostly flat. Even when other sectors were in blue, BSEAuto Index was in red throughout the day. This is in view of dropping auto sales in fear of recession and Maruti Suzuki and Hero Honda taking the biggest hit of the day. Auto Index fell by almost 5% intra day and closed 4.64% down finally. In this fear of recession, it is most likely to fall further and gain new lows.
Another sector taking the toll is Realty. BSERealty sector has seen the most wide spread intraday. It gained +4.4% intraday and then reached -6.4% at day's low. DLF weighing 43% in the index caused the major set back when finally it closed 5.34% down.
Overall it was a day when all the sectors suffered. BSEBank went down 3.87%, ICICI bank causing the major damage. IT sector was 1% down. Important to note that Infosys weighs 56% in the index. Mid cap and small cap were better than Sensex. Mid cap down 1.36% and small cap down 0.21% better than sensex which closed at 2.78%.
Sensex opened firmly in blue. But immediately after Europe market opened in red, domestic market taking cue dived sharply.
Markets worldwide
S&P500 closed down 8.9%, Nasdaq down 8%, Dow Jones Industrial Average down 7.7% marked the summary of US markets crashing. Amongst the financial stocks, Citigroup fell 22.2%, Morgan Stanley 23% and Goldman Sachs 17%. This figures sounds very scary as this would affect asian markets. Nikkei (2dec08) already 5% down, Hang Sang 5%, Sensex also opened weak down 2.6%.
Wednesday, November 26, 2008
26November2008
Sensex Performance
Sensex opened firm up at 9160.5 gaining 2.89% over previous close of 8903.12 in reports of federal bailout of citi group. Market were steady intra day reaching high of 9182.8. But as happening for quite some time markets open up, then FIIs who are seeking opportunity to bank on every rally, began selling and the market dips towards the end. Finally Sensex closed at 8695.53, down 2.33% from yesterday's close before reaching intra day low of 8649.4. Biggest index movers were Reliance Industries and State Bank of India which contributed 111.6 points drop of the 207.6 points drop of sensex.
Fuel price cut in India
There is some good news for Indians burdened by the inflation. Government has announced Fuel prices cut, but cant execute it before elections in states get over. Opposition, namely BJP and Left are crying it foul as it can please the voters and breach the election code of conduct. This would come as a big relief as announcement is for Rs. 5 per liter petrol, Rs. 2 per liter diesel and Rs. 50 per cylinder of LPG. This was highly predicted as crude is already at $50 per barrel and government has raised fuel prices on 4th June when it was at $120-$130 per barrel and Indian oil companies were struggling hard for survival. Since then crude raised to its high of $145.29 a barrel on 3rd July but since then declined steadily and broke $100 barrier on 15th September (The date which divided world in two parts, pre 15th Sep and post 15th Sep) Crude broke the barrier of $50 on 20th November and hence it was getting very much hopeful by the government to cut prices.
Citigroup
This has been a very happening week for Citigroup. Citi, which never sleeps (by the virtue of its presence in vast geography) was on the brink of death. Few days after citi announced laying off 50000 odd employees, the boss, CEO Vikram Pandit himself was finding it tough to hold ground.
Citi shares lost ~58% in a week from 17th-21st November and pressure was constantly building on it. On 24 November U.S. government announced a huge bailout of Citigroup to rescue the company from bankruptcy. Treasury will provide $20 billion in troubled asset relief fund in addition to $25 billion given in October. Government also guarenteed $300 billion in assets. In return the bank will give to government $27 billion of preferred shares and warrants to acquire stock. Preferred share will pay 8% annual return. The government will obtain wide powers over banking operations. Executive salaries, dividends will be capped. Citi gained 57.82%, on 24th November as single day movement.
Sensex opened firm up at 9160.5 gaining 2.89% over previous close of 8903.12 in reports of federal bailout of citi group. Market were steady intra day reaching high of 9182.8. But as happening for quite some time markets open up, then FIIs who are seeking opportunity to bank on every rally, began selling and the market dips towards the end. Finally Sensex closed at 8695.53, down 2.33% from yesterday's close before reaching intra day low of 8649.4. Biggest index movers were Reliance Industries and State Bank of India which contributed 111.6 points drop of the 207.6 points drop of sensex.
Fuel price cut in India
There is some good news for Indians burdened by the inflation. Government has announced Fuel prices cut, but cant execute it before elections in states get over. Opposition, namely BJP and Left are crying it foul as it can please the voters and breach the election code of conduct. This would come as a big relief as announcement is for Rs. 5 per liter petrol, Rs. 2 per liter diesel and Rs. 50 per cylinder of LPG. This was highly predicted as crude is already at $50 per barrel and government has raised fuel prices on 4th June when it was at $120-$130 per barrel and Indian oil companies were struggling hard for survival. Since then crude raised to its high of $145.29 a barrel on 3rd July but since then declined steadily and broke $100 barrier on 15th September (The date which divided world in two parts, pre 15th Sep and post 15th Sep) Crude broke the barrier of $50 on 20th November and hence it was getting very much hopeful by the government to cut prices.
Citigroup
This has been a very happening week for Citigroup. Citi, which never sleeps (by the virtue of its presence in vast geography) was on the brink of death. Few days after citi announced laying off 50000 odd employees, the boss, CEO Vikram Pandit himself was finding it tough to hold ground.
Citi shares lost ~58% in a week from 17th-21st November and pressure was constantly building on it. On 24 November U.S. government announced a huge bailout of Citigroup to rescue the company from bankruptcy. Treasury will provide $20 billion in troubled asset relief fund in addition to $25 billion given in October. Government also guarenteed $300 billion in assets. In return the bank will give to government $27 billion of preferred shares and warrants to acquire stock. Preferred share will pay 8% annual return. The government will obtain wide powers over banking operations. Executive salaries, dividends will be capped. Citi gained 57.82%, on 24th November as single day movement.
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