Govt provides Rs 25K cr to financial institutions

Close on the heels of major liquidity infusions by central banks around the world, the Reserve Bank of India, on Wednesday, has decided to provide Rs 25,000 crores for lending to financial institutions. Out of this Rs 7,500 crores will be provided to commercial banks and Rs 17,500 crores to Nabard.

Announcing the move, Finance Minister P Chidambaram said the governmnet will provide farm loan waiver of Rs 250 billion to banks immediately.

The amount was being issued against the waiver of farm loans worth an estimated Rs 71,000 crore to bailout nearly four million small and marginal farmers across the country, he said.

He said the earlier limit on external commercial borrowings (ECB), which helps the corporate sector to access the financial markets overseas, was also being doubled to $6 billion.

Source: - Economic Times.

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World is likely headed for a deep recession. - Krugman.

US Economist Paul Krugman , the Nobal prize winner for economics this year said on Monday, that the World is likely headed for a deep recession despite the European plan to bailout banks.
He warned that the crisis have already inflicted serious damage on the World economy.

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Petrol prices to be cut if crude fall to $61

India’s crude oil import price has dropped to the year’s lowest but a cut in petrol and diesel price may happen only if crude falls to USD 61 per barrel as rupee depreciation has partly offset the gains. Oil firms were supposed to break-even on sale of petrol.., diesel, LPG and kerosene if the price of the basket of crude India buys were to come down to USD 67 per barrel. However, with 20 per cent depreciation in value of rupee against the US dollar, the break-even point is now at USD 61 a barrel.

“The benefit of softening of the international oil prices has been partly offset by the recent depreciation of the rupee,” a Petroleum Ministry official said.

Indian Oil, Hindustan Petroleum and Bharat Petroleum are losing about Rs 350 crore per day on fuel sales.

“The domestic retail prices at the time of revision in prices in June were equivalent to Indian basket of crude oil of USD 66 per barrel. With the recent depreciation of rupee against US dollar, the current retail prices now correspond to USD 61 per barrel of Indian basket of crude oil,” he said.

The Indian basket of crude oil on Monday fell to USD 72.20 per barrel, the lowest level this year. It has averaged USD 79.70 a barrel in October.

The three firms are losing Rs 4.68 per litre on sales of petrol, Rs 11.48 on diesel, Rs 28.07 on kerosene and Rs 322.14 per LPG cylinder and are projected to lose Rs 1,62,158 crore on fuel sales this fiscal.

“International prices of crude oil and petroleum products are still higher than the prices at which current retail prices are fixed and so there is no valid reason for downward revision in retail prices,” he said.

The official said the three fuel retailers were borrowing heavily for financing their working capital and capital expenditure requirements.

“The combined borrowings of the three, which stood at Rs 48,400 crore in March 2007 and Rs 66,900 crore in March 2008, has increased to Rs 93,500 crore as of August, 2008,” he said.

The oil firms’ credit limits have recently been enhanced by Rs 14,000 crore to enable them to meet their fund requirements till the end of October.

“The interest burden of the three companies during 2008-09 is expected to go up by Rs 4,200 crore compared to previous year due to increase in borrowings and higher rate of interest,” he said.

Source: Financialexpress

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Market outlook and trading ideas for 15 Oct.

US markets ended mixed.
Asian markets have opened marginally lower.
We may have a flat to gap down opening.
Yesterday we opened excellent as I predicted but we saw profit booking which was the reason for the markets to give up all its gain.

The support for the Sensex is 11180 and the resistance to the up move is at 11761-12230

Nifty: (3519) the support for the Nifty is at 3468 and the resistance to the up move is at 3620-3702-3751

Stocks to look out for today are.
RNRL
Buy above. 59.45 for targets of 61.90 & 64.20
Sell below 55.55 for targets of 53.20 & 51.45
Punj Llyod.
Buy above 218 for targets of 225 & 232
Sell below 209 for targets of 206 & 203

Happy Investing.
Did u like the new look..
www.indianmoneyplus.com

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Market outlook and day trading ideas for 14th Oct.

US markets roared back.
DOW and NASDAQ both are up 11% odd.
This is the biggest ever single day gains for Nasdaq as well as Dow.
Our markets will surely do the same thing.
Yesterday we saw a big short covering in the way.
We will open with a gap up of at lest 400 points.
The support for the Sensex is 11000 and the resistance to the up move is at 11761-12230

Nifty: (3490) the support for the Nifty is at 3300 and the resistance to the up move is at 3620-3702-3751

Day Trading Ideas.

Adlabs

Buy above 242 for targets of 248 & 253.

Sell below 232 for targets of 227 & 222.

Happy Investing.

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Market outlook and day trading ideas for 13th oct.

US markets ended flat after a chopsy section.
Europe was down almost 5% +.
Asia faced a bad time ever.
RBI has cut CRR by 150 Bps which will bring 60,000 crores in the markets from 11 Oct.
Which means we would have a green start and forget about the end.

Day trading ideas.
RNRL
Buy above 53.40 for targets of 55.80 & 57.30
Sell below 49.40 for targets of 47.90 & 46.25
ICICI Bank.
Buy above 371 for targets of 380 & 389.
Sell below 342 for targets of 336 & 329.

Book profits at every rise.
Happy Investing.

Stock Quotes

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Stock Idea - Indiabulls Security.

Scrip: - IndiaBulls Securities.
BSE Code: - 532960
CMP: - 19.65
Market cap: - 497.93 Cr.
52 Week H/L : - 300.00 - 19.65
Target: - 48 (1 year)

I am advising this scrip because looking at its financial this scrip is available a dirt cheap rate.
More over the company has given a dividend of 375% on Rs 2 Face value which come to around 7 Rs odd.
Look at the 52 week high and low difference.
My advice is that only the conservative and long term investors should go for this scrip.
Accumulate in each dip.
Think ?
Happy Investing.

Stock Quotes

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Weekly Review for the Week October 13th - 17th October 2008.

We said ‘Technically the market still looks weak and is likely to continue its move down and is likely to move down to its target of 11900 and if it manages to close below 11900 then the next technical targets on the way down are 11150. The market has strong resistance at 13200 on the way up.’

The market unfolded as expected and also did better than expected and saw a low very close to the 10000 mark.

Technically the market still looks weak and there is no sign of strength so far, but the market has a very strong support near at 9700, the market has seen a low at 10240, which is just 540 points away. The market is poised to bounce back anytime, the more it goes down fast the more it sets up to bounce back.

The supports on the way down are at 9700 and resistances on the way up are at 11267-11760

The supports on the way down are at 2908 and resistances on the way up are at 3700

From a trading point of view I would be cautious on the short side would look to go long at the first sign of strength

Happy Trading

Source : Prakash Gaba

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Investment strategy in troubled times.

Ajay Bagga, CEO of Lotus India Asset Management & chairman of Financial Planning Standards Board (India), shares his investment strategy for the current market scenario.

The global economic and markets landscape has gone bleak over the last 15 months.
As global stock market indices fell, there has been a procession of hedge fund failures, formidable names have gone out of existence and all investors, including the ones in the so called safe US Money market funds, have stared at dwindling portfolios and mounting losses.

Investors have responded with a massive "flight to safety."

As the third quarter of 2008 approached, the crisis exacerbated with major institutions declaring bankruptcy, merging under liquidity pressures or going under government control.

Each such announcement has caused minor market bounces, as venerable market mavens repeatedly, erroneously announced that the worst was factored into the markets already.

Given this background of the last five quarters markets, how should investors best approach a difficult environment?

The first essential is to shut out the market noise. In the short term, as Benjamin Graham taught us nearly 75 years ago, the markets are driven by sentiment. And, sentiment causes markets to over shoot both, on the way up and the way down as well.

As media and analysts shout about the end of the world from the roof tops, the smart money was making money.

Most famously, a major fixed income fund manager, who had huge positions in bonds of Fannie and Freddie, warned of a "financial tsunami" if the US Treasury failed to act decisively on these two entities, virtually pushing these two GSE’s into government controllership and pocketing $1.3 billion of gains in a single weekend.

Similarly, many long short hedge funds made gains shorting financials, till the regulators changed the rules of the game by banning shorting itself.

The second critical action item for investors is to focus on their own asset allocation plan. If an investor is saving for a retirement that is 20 years away, the present market turmoil is only a distraction.

However, someone who is already retired and living off a diminishing portfolio, needs to switch into a preservation mode.

An analysis of their own investment horizon, financial goals and risks appetite, in the present volatile and depressed price environment is an invaluable step in setting investors finances on a firmer footing.

The third action step follows from shutting out the noise and re-evaluating the asset allocation.

Investors need to widely diversify their investments. In a falling market, with the kind of unprecedented events we have been seeing, a lot of thought to be uncorrelated assets start moving in sync.

Or, there could be counter-intuitive moves in a particular category which defies logic. For example, the strengthening of the US dollar against all major currencies since July 16, despite the huge deficit creating programs of the US monetary authorities.

And one final point. Understand the fundamentals. One famous market analyst sensationalised the crisis' impact on India by calling the Indian market over-valued and stated that he would be a buyer at 6000 levels of the benchmark BSE Sensex.

Well, guess what? The expected EPS of the BSE Sensex for FY09 is between Rs 950 to Rs 1020 odd. That puts a 6000 market at 6 times 1 year forward and around 5 times 2 year forward.

And this for a $1 trillion plus output economy growing at 7% in real terms at worst, with corporate earnings growth expected at 13% to 19% for the next two years?

Well you know what, I would borrow all I can and buy all the Indian stocks I can at 6000 levels. And probably at much higher than that levels as well.

So my simple suggestion to investors would be, diversify well, study your investments well, and understand the fundamentals better.

Analysts and commentators make a living by a catchy turn of phrase. That is impressive, but watch them as just one more set of players in the game of life.

Your money and its growth are far too important to trust it to the talking heads and fortune tellers.

Yes things look extremely bleak, yes we could see a multi-year economic slowdown, yes asset values will go down, most probably in sharp bursts.

Yet, all these should not radically impact your asset allocation plan. There is money to be made when there is blood on the streets.

And, to follow the Sage of Omaha Warren Buffet, investors need to be "greedy when others are fearful".

This buying low to one day sell high will work well if investors buy a diversified portfolio, in a systematic and disciplined manner over time. That is one of the best known ways to make market volatility work in your favour.

The focus on fundamentals will make the long term nature of the markets work in investors’ favour.

As Benjamin Graham completed the quote, 75 years ago, markets may behave like voting machines in the short term , but they behave like weighing machines in the long term.

Make those fundamentals count over the long term to create portfolio wealth.
Soutce: - UTVi

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Gold options point to $1,200 in rocky ride

Options traders are betting that gold will run toward $1,200 an ounce by year end, but it looks like they will have to sweat out some extremely choppy markets before seeing if the prediction pays off. Buying of cheap calls has been one of the strategies for gaining exposure to gold, which has been one of the few commodities to prosper as a safe haven during the scariest stock market rout in memory.

Call options confer the right but not an obligation to buy something, in this case the December gold futures contract, at a predetermined strike price and date. COMEX December $1,200 call options currently have 24,000 contracts of open interest, by far the most popular among all the different strike prices. The second highest were the $900 calls with 18,000 lots, followed by the $1,000 calls with 17,000 lots.
A put confers the right to sell something at a particular price and time. When heavy interest lines up at a particular strike price, it can indicate where the underlying market is headed, or at least where options traders think it is. The hedging by options desks to make sure they can sell or buy an instrument if the option is exercised can force the underlying market in the direction of the strike, especially as it nears expiration.

A relentless sell-off that pulled the US stock market down about 20 percent this week bolstered gold's status as a safe store in times of financial chaos, driving bullion $200 higher in just a month's time. "Gold is seen as something real to hold onto during times of panic," said Rob Kurzatkowski, futures analyst of optionsXpress in Chicago. Out-of-the-money call options, where the underlying price is well below the strike, are priced much cheaper than near the money calls. This signaled the price volatility of gold will likely stay at an elevated level in the near term, option traders said.

OUT-OF-THE-MONEY BARGAIN

Kurzatkowski said that the prices of near-the-money calls have been bid up due to increased volatility, prompting many investors to buy the cheaper December $1,200 calls as a way to profit from gold's upside potential. A single lot of December $1,200 call option costs $9.00, compared with $60 of the on-the-money December $900 call. The difference is due to gold's high implied volatility, a statistical measure of the expected magnitude of gold futures price movement given an option price.

"The volatility would suggest that the option premiums are pretty high," said David Rinehimer, director of Citi Futures Perspective in New York. The market's actual volatility was illustrated by gold's massive $108 swing on Friday that included a $65 loss. Kurzatkowski said he expected gold to rise to $1,000 soon should mounting fears on banks and a global recession continue to pummel the stock markets, but a sudden resurgence of the dollar could limit bullion's rally.
Source: - ET

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