US mkt down by more than 6.7%
Crude fall below $50
Rupee Fall further to 50.175 per $
Friday, November 21, 2008
Thursday, November 20, 2008
20November2008
Rupee closed below 50 per Dollar first time
For the first time in history, Rupee broke the psychological barrier of 50 per Dollar. It has breached this barrier on 27th October intraday but closed at 49.945. There are couple of reason for this fall of Re. against $. Firstly, FII (Foreign Institutional Investors) are buying $ heavily. This must be because the FII are exiting indian stock market and investments from oil companies. The high demand for $ makes Re. weak against $. Another reason for this downfall is arbitrage opportunity developed in $-Re in offshore and domestic market (arbitrage is the state when there is different in pricing of an instrument in different market. In this situation one can make risk free profit. Arbitrage is rarely observed in evolved markets). There are Non-deliverable Forward (NDF) trading on INR in Dubai and Singapore (NDF can be explained as a forward contract where you agree to buy or sell INR on future date at current price. But at the end of the period you don't need to physically deliver INR, just need to pay the difference). $-Re. rate in this market is around 50.85-50.90, this prompted buying of Dollars from domestic market and selling in these market providing a clear arbitrage.
As was always known exporters and IT companies gain the most when Re weakens as their is in $. But this is not the case now. Major or all IT companies are hedged to their Fx exposure now a days. So they wont be able to make a gain out of this.
It is important to note that Re fell by 26.9% since beginning of 2008 and down by 27.36% from its year high of 39.265 on 15-Jan-08. RBI is trying its best by selling $ and lowering demand, as is clear in steep fall of $ reserve RBI. But it seems that this is not enough as Re is inching 51 per $ today!
For the first time in history, Rupee broke the psychological barrier of 50 per Dollar. It has breached this barrier on 27th October intraday but closed at 49.945. There are couple of reason for this fall of Re. against $. Firstly, FII (Foreign Institutional Investors) are buying $ heavily. This must be because the FII are exiting indian stock market and investments from oil companies. The high demand for $ makes Re. weak against $. Another reason for this downfall is arbitrage opportunity developed in $-Re in offshore and domestic market (arbitrage is the state when there is different in pricing of an instrument in different market. In this situation one can make risk free profit. Arbitrage is rarely observed in evolved markets). There are Non-deliverable Forward (NDF) trading on INR in Dubai and Singapore (NDF can be explained as a forward contract where you agree to buy or sell INR on future date at current price. But at the end of the period you don't need to physically deliver INR, just need to pay the difference). $-Re. rate in this market is around 50.85-50.90, this prompted buying of Dollars from domestic market and selling in these market providing a clear arbitrage.
As was always known exporters and IT companies gain the most when Re weakens as their is in $. But this is not the case now. Major or all IT companies are hedged to their Fx exposure now a days. So they wont be able to make a gain out of this.
It is important to note that Re fell by 26.9% since beginning of 2008 and down by 27.36% from its year high of 39.265 on 15-Jan-08. RBI is trying its best by selling $ and lowering demand, as is clear in steep fall of $ reserve RBI. But it seems that this is not enough as Re is inching 51 per $ today!
Wednesday, November 19, 2008
19November2008
FM asks India Inc to lower prices
Finance minister of India, Mr. P. Chidambaram has urged urged India Inc. CEO to lower prices. This is in view to increase the sale and hence safeguard the jobs which is quite possible in large scale. CEOs of automobile industry, builders etc. expressed inability to lower price. Auto sector companies already are running on very low margin of 4-5%, so lowering prices wont be possible to meet the requirement. Builders are already finding it difficult to raise capital are struggling to complete the projects. DLF, Unitech have expressed inability to lower rates. Unitech has put its construction of chain of luxury hotels on hold to fund its other projects.
Yahoo! CEO Jerry Yang resigns
Severely criticized for his handling of deal with Microsoft, advertisement deal with Google, Yahoo Inc. co-founder and CEO could not handle the pressure from shareholders and stepped down. Note: In May Microsoft bid for Yahoo! giving $33 for each share when Yahoo! was trading at $25-27. Jerry, rejected the offer and Microsoft in its try to get Yahoo! and fight against ever growing Google, walked away. Google also did not proceed with commercial search advertising arrangements with Yahoo! as regulators dint allowed because of the affect on competition in the market.
By November beginning Yahoo! share was pricing at $10-10.5. A steep fall after the deals canceled. On 18th November 2008, shares rose by more than 8.5% in hopes of new CEO restarting talks with Microsoft.
This is another case of a Chief Executive being complacent for his company. Similar was the case with Dick Fuld, CEO of Lehman Brothers who was too bold to claim Lehman being under priced before Lehman filed for bankruptcy on 15September2008.
Grant Road to be made junction
Grant Road will be made junction to increase number of locals of western line from South Bombay to Virar. Churchgate station is already functioning at its max. There is a local leaving Churchgate station every 2 minutes in peak hours. Making Grant Road a junction would come as a relief to millions of commuters on western line of Mumbai.
Finance minister of India, Mr. P. Chidambaram has urged urged India Inc. CEO to lower prices. This is in view to increase the sale and hence safeguard the jobs which is quite possible in large scale. CEOs of automobile industry, builders etc. expressed inability to lower price. Auto sector companies already are running on very low margin of 4-5%, so lowering prices wont be possible to meet the requirement. Builders are already finding it difficult to raise capital are struggling to complete the projects. DLF, Unitech have expressed inability to lower rates. Unitech has put its construction of chain of luxury hotels on hold to fund its other projects.
Yahoo! CEO Jerry Yang resigns
Severely criticized for his handling of deal with Microsoft, advertisement deal with Google, Yahoo Inc. co-founder and CEO could not handle the pressure from shareholders and stepped down. Note: In May Microsoft bid for Yahoo! giving $33 for each share when Yahoo! was trading at $25-27. Jerry, rejected the offer and Microsoft in its try to get Yahoo! and fight against ever growing Google, walked away. Google also did not proceed with commercial search advertising arrangements with Yahoo! as regulators dint allowed because of the affect on competition in the market.
By November beginning Yahoo! share was pricing at $10-10.5. A steep fall after the deals canceled. On 18th November 2008, shares rose by more than 8.5% in hopes of new CEO restarting talks with Microsoft.
This is another case of a Chief Executive being complacent for his company. Similar was the case with Dick Fuld, CEO of Lehman Brothers who was too bold to claim Lehman being under priced before Lehman filed for bankruptcy on 15September2008.
Grant Road to be made junction
Grant Road will be made junction to increase number of locals of western line from South Bombay to Virar. Churchgate station is already functioning at its max. There is a local leaving Churchgate station every 2 minutes in peak hours. Making Grant Road a junction would come as a relief to millions of commuters on western line of Mumbai.
Tuesday, November 18, 2008
18November2008
Citi to reduce headcount by 50000
Citi that never sleeps, has announced to cut jobs by 50,000 by January of 2009. This will be over job cut of 23,000 from January to September 2008. This will make it largest job cut by Financial company in the current crisis. These job cuts will be across all region and mainly in Investment Banking division. Citi faced losses of $20bn in last quarter. And this move tends to reduce the losses in next quarter, though not enough to get Citi profit!
Job cut in Diamond industry
Latest industry to hit by global recession is Diamond industry. And India is badly hit by it. Indian Diamond industry purchases raw diamonds from African countries and process it to beautiful jeweleries and export it. With exports coming down Indian companies are asking for less raw diamond. This reduces the demand for our skilled workers. Though, these companies have already given leaves to contract workers earlier. Considering the huge size of Indian Diamond industry mainly concentrated in Surat, this will definitely affect Indian Economy which is still much safe than other major economies of the world.
Japan in recession
World's second largest economy (source: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)) Japan is the latest country to enter recession. The economy has contracted by 0.4%. Note here that a country is said to be in recession if its growth is negative for two consecutive quarters. A technical recession is if a country suffers negative growth including inflation for two consecutive quarters. Japan is suffering because the use of the Japanese products reduced immensely across the globe. France is next to follow Japan with UK on the brink. Economy of China is also slowing down. Is the world heading for a bigger crisis than 1929-1930?
Citi that never sleeps, has announced to cut jobs by 50,000 by January of 2009. This will be over job cut of 23,000 from January to September 2008. This will make it largest job cut by Financial company in the current crisis. These job cuts will be across all region and mainly in Investment Banking division. Citi faced losses of $20bn in last quarter. And this move tends to reduce the losses in next quarter, though not enough to get Citi profit!
Job cut in Diamond industry
Latest industry to hit by global recession is Diamond industry. And India is badly hit by it. Indian Diamond industry purchases raw diamonds from African countries and process it to beautiful jeweleries and export it. With exports coming down Indian companies are asking for less raw diamond. This reduces the demand for our skilled workers. Though, these companies have already given leaves to contract workers earlier. Considering the huge size of Indian Diamond industry mainly concentrated in Surat, this will definitely affect Indian Economy which is still much safe than other major economies of the world.
Japan in recession
World's second largest economy (source: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)) Japan is the latest country to enter recession. The economy has contracted by 0.4%. Note here that a country is said to be in recession if its growth is negative for two consecutive quarters. A technical recession is if a country suffers negative growth including inflation for two consecutive quarters. Japan is suffering because the use of the Japanese products reduced immensely across the globe. France is next to follow Japan with UK on the brink. Economy of China is also slowing down. Is the world heading for a bigger crisis than 1929-1930?
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