Wednesday 30 December 2015

Interest-Free Banking: Reaching out to a wider base

RBI Committee report of Mr Deepak Mohanty - RBI Committee on Medium term Path for Financial Inclusion headed by Shr. Deepak Mohanty has released its report and recommendations on 28-12-2015 to increase financial inclusion in India.

Chapter 5 of the report titledInterest-Free Banking: Reaching out to a wider base’ focuses on the importance of Interest free banking system in depth and recommends Interest Free Windows in existing conventional banks. The report highlights the central concept in interest-free banking and finance is justice.

Recommendation 5.1
The Committee recommends that commercial banks in India may be enabled to open specialised interest-free windows with simple products like demand deposits, agency and participation securities on their liability side and to offer products based on cost-plus financing and deferred payment, deferred delivery contracts on the asset side.


RBI now seeks public comments and opinions in this regard. Kindly see the following note from the Press Release of RBI regarding submitting comments on the report:

"The Reserve Bank of India has today placed on its website, the Report of the Committee on Medium-term Path on Financial Inclusion (Chairman: Shri Deepak Mohanty). Comments may please be emailed or sent by post to the Principal Chief General Manager, Reserve Bank of India, Financial Inclusion and Development Department, 10th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001 by January 29, 2016."



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Tuesday 29 December 2015

Market Brief (28th Dec 2015)


Absence of any major triggers held the markets in a range with substantially low volumes, to end the day on flat note, though the week finished on positive up by two percent.  Although the markets expressed in terms on Nifty gave a flat close, but lot of buying was witnessed in selected mid and small cap companies and it appears it will continue for some more time.  The market for the Next week is crucial, from the point of view that it is headed towards a important event like the derivative settlement, Year end 2015 close, crude struggling to get bottomed out and jittery global equity markets. It further needs to be seen how the corporate results are unfolded next month, with the current valuation and lower expectation any positive surprise for the markets will see a sharp upward spike, and on the other hand since the undertone is bearish, further bad news would create a panic situation in the markets. Investors need to watch this development closely before taking a call on the markets.

Technically too markets are crucially poised, A trade and a close below 7600 this time see a sharp downside and a capitulation period for the markets, however if the nifty manages to keep its head up above 8000 would than test 8200, its only if the nifty closes and stays above 8200 will bottom out this markets or its vulnerable for a deep fall. The first range to watch on the nifty is 7600 and 8000 and further 7800 to 8200.

The year 2016 will be stock pickers markets and if one spots the right stock, money is still there in abundance and bad selection would jeopardize ones portfolio.



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Market Brief (21st Dec 2015)


Increase in the US interest rates buy FED, announcement of Finance mister of lower GDP expectation, non clearance of GST in the parliament and some profit taking by short term investor on the weekend were some of the reasons for Nifty closing over a percent lower on Friday, however, the week ended on positive note giving some glimpse of hope for the markets. With few days remaining for the winter session of parliament and some political upheaval, it needs to see how it plans out.  Clearance of some reform bills and stability in global markets and Crude prices will play a key role going forward. 

Technically too, market is critically poised, 7700 on the nifty on close basis is very significant. If nifty closes below these levels and than a breach of 7540 will certainly see 7000 to 7200 coming swiftly. However if 777 is held than Nifty may stage pull back rally to 7900 to 8000 and a close above 8000 on the nifty, the short term trend will look up. From an intermediate term (medium term) 8200 on the nifty is crucial and unless nifty closes above 8200 and stays there the medium term would continue to remain down. Short term range for the Nifty is between 7700 and 8000.

As suggested earlier through our newsletters, investors should have lot of restrain and patience. Be very selective in your approach and avoid stocks of the company that are delivering poor corporate results. Rather buy stocks of well managed, low leveraged and growth company stocks, despite if one has to pay higher prices.



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Market Brief (14th Dec 2015)


Falling crude prices, stalemate in the parliament on crucial reform bills, weak international markets, geo-political fears, stagnant economic growth, weakening rupee and FII selling were some the reasons for market collapse for day and week basis.  Markets in an intermediate term are in firm hands of bears and until things are resolved it will continue to declines. There is no respite whatsoever at the moment. As mentioned earlier unless some of these issues are not resolved it will be difficult for the markets to progress and best it may remain in a range.

Technically the lows registered in September at 7540 on the nifty is vital support and if breached on close basis than certainly markets will see correction continuing till at least 7250 the Fifty per cent retracement from the low 6000 registered last year  and if this level of 7250 odd is held than a sharp bounce is not ruled out. On the higher side multiple resistance right from 8000 to 8300 will cap the markets going higher and unless the markets fundamentals and internals improves a range bound trade at best can be expected from the markets.

Although markets are in a correction mode offers a great buying opportunities, one can selectively buy in smaller quantity and gradually increase on further declines and more once the market have bottomed. At present none of the sector looks good, however selected stocks from Sectors like oil & gas, auto, consumer staple and discretionary, selected stocks from engineering and industrials one can look to buy on declines from a long term view.

‘Buy when others are pessimistic, however requires greatest fortitude and wisdom, but pays highest reward’.



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Sunday 6 December 2015

Market Brief (7th Dec 2015)


Stalement on GST and other reform bills, a very much expected hike in US interest rates, depreciating rupee, improved economy of US and geo-political fears were instrumental in FIIs pulling money from Indian markets. Hence, Indian market, being bearish in the intermediate trend, continued its down trend and gave negative close for the day and the week. Going forward, a lot depends on whether GST and other critical bills get cleared in this winter session of Parliament and until that happens, market will remain under pressure. Although, sharp fall in the oil prices is positive for the Indian economy, but at the same time the depreciation of Indian rupee negates the benefit of falling oil prices. A caveat here is that if oil price starts rising, it could be a big negative for the Indian markets.

In conclusion, with mixed news flows and non-clarity on many issues, the upside for the market will remain capped for some times until Union Budget. It further needs to be seen how corporate will do this quarter, though expectations are low. Positive surprises can lift the markets on higher levels. Where technical of the market go, 7700 on the Nifty is very important, and this is the last hope for the market, if 7700 is held than at best in the near term, market could remain in range between 7700 and 8000. A close below 7700 on nifty would witness a swift sell-off in the market and the Nifty would test its 2015 of 7540. On the higher side, multiple resistance area between 8000 and 8350 would keep the markets under check.

The broader markets though look vulnerable, but the selected midcaps and the small cap stocks are still doing well. Investors should weigh higher on mid and small cap companies. And in event of sharper declines, one can utilise for buying stocks since the long term view of the market is bullish.



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Tuesday 15 September 2015

August trade deficit flat at $12.48 billion, exports fall to lowest in about 5 years.


The trade deficit for the month of August has come in almost flat at USD 12.48 billion against USD 12.81 billion month-on-month (MoM), even as imports dipped 9.95 percent to USD 33.74 billion versus USD 35.95 billion MoM. Merchandise 
exports plunged 20.7 per cent to $21.3 billion in August from $26.8 billion in the year-ago period, the ninth consecutive monthly decline and the steepest in the first five months of this financial year. In terms of a monthly year tally, exports are at multi-year lows. The fall resulted from a massive demand slowdown in global markets and an uncertain global economic environment, owing to a crisis in China.



The value of exports in August was the lowest in about five years. For April-August, exports from India stood at $111.1 billion, down 16.2 per cent compared with $132.5 billion in the year-ago period, according to data released by the commerce and industry ministry on Tuesday. Meanwhile, oil imports for the month declined significantly to come in at USD 7.36 billion against USD 9.49 billion MoM. Gold imports on the other hand surged to USD 4.96 billion against USD 2.97 billion in July. Non-oil imports remained largely unchanged at USD 26.39 billion against USD 26.46 billion MoM. Silver imports for the month stood at USD 363.41 million versus USD 277.77 million MoM. For the period between April and August, trade data came in at USD 57.52 billion versus USD 58.22 billion year-on-year, with imports coming in at USD 168.61 billion against USD 190.75 billion YoY and exports at USD 111.09 billion versus USD 132.53 billion during the same period last year. India wasn’t the only Asian country to see a steep fall in exports. A YES Bank note said exports from Korea declined 14.7 per cent in August, the most in six years, while those from China contracted 5.5 per cent.



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Monday 14 September 2015

Wholesale prices fall 4.95% in August 2015

India’s wholesale inflation remained in the negative terrain for the tenth straight month in August 2015 at (-) 4.95% in spite of a sharp spine in onion and pulse’s prices resulting in practical measures by the government to seize price rise.

The deepening of deflation in August could be explained by restrained global commodity and crude prices besides deflation in the core sector, a sign of weak demand in the economy. The descending prices of potato and other vegetables also contributed to the decline.

The wholesale price index fell 4.95% in August compared to a 4.05% decline in July, marking the tenth month of deflation, data released by the ministry of commerce and industry showed on Monday.

Food inflation, with over 14% weight in the index, remained in the deflationary zone for the second straight month at (-) 1.13% in August versus (-) 1.16% in the preceding month. Vegetables prices fell 21.21% in August versus 24.52% in July, marking the fifth straight month of deflation.

The price rise of onions zoomed up 65.29% in August from a year ago, compared to a negative 0.49% in July. Inflation in 
pulses rose to 36.4% during the month versus 35.75% in July. As pulse’s price shot up to Rs 155 per kg, the government has decided to import additional 5,000 tonnes of tur dal to make certain domestic supply. The government has also imported large amount of onions from Egypt and Afghanistan to enhance domestic availability.

The deflation in the core sector deepened during the month, suggestive of weak domestic demand. This may urge the RBI to cut rate for the fourth time in 2015 during the policy meet on September 29, 2015.
RBI has cut rates thrice by 25 basis points each this calendar year thus taking the repo rate to 7.25%, from 8%.

Manufactured products’ inflation essentially considered by RBI for policy decisions fell further to 1.92% versus 1.47% in July 2015. The average wholesale inflation in 2014-15 was 2.1% against 6.0% in 2013-14. The deflation in fuel intensified further in August to 16.5% from 12.81% in the previous month. Oil prices have fallen by over 50% in the last one year. Brent crude prices stood as $48.59 per barrel on Friday, 1.5% lower than the previous day.


Falling Oil Prices




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Thursday 3 September 2015

IMPORTANT DETERMINANTS OF THE INDIAN ECONOMY


 Some of the important factors and determinants of the economy, and the changes that have occurred during the last 2 years.


INFLATION – The WPI (Wholesale Price Index) Inflation has come down from 7.05 percent to a negative 4.05 percent. After changing the main gauge of inflation from WPI to CPI (Consumer Price Index), because CPI hurts the common man more, the CPI has come down from 9.80 percent to 3.78 percent in July 2015.



FOREX – The Foreign Exchange has increased from the past 2 years,  from $ 274 billion in Sept 2013 to $ 355 billion in August 2015, partly due to global energy prices falling.



INR – The Indian rupee is depreciating vis-a-vis the dollar, due to market forces of demand and supply, but the RBI Governor, Dr. Raghuram Rajan is not concerned. Instead he says this is health for the Indian Rupees.



CRUDE OIL – The Brent Crude Oil is currently trading at $46.09/bbl. 



CURRENT A/C – The Current Account deficit gap has decreased and the economy is moving towards the goal of a developed nation.  



NPA – The NPAs in the banks was and still remain a cause of concern for the RBI, the finance minister and the banks. The NPA has increased from `228321 crore in Sept 2013 to `320554 crore in June 2015.





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Caution: Islamic Investments strictly prohibits intraday trading and Derivative trading. Stocks should only be sold upon procuring the delivery.

Disclaimer: The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness. The above recommendations and Newsletters are based on the theory of Technical & Fundamental Analysis Combined. © Pragmatic Wealth Management Pvt. Ltd.












Wednesday 2 September 2015

DAILY REPORT – 2nd SEPTEMBER 2015






Market Brief – Continuing the losing streak, Sensex, today, closed at 25453.56, down by 242.88 points, and -0.95 percent, whereas Nifty closed at 7717, down by 68.85 points, -0.88 percent, despite a promising start in the early trade triggered by Government’s move to do away with MAT on Foreign Portfolio Investors (FPI).

The market sentiments turned negative, despite the positive trigger of MAT, on the back of weak China data and Global market cues. Globally, the Euro markets and the US markets are also trading lower by 469 points and 2 points respectively.
The BSE Smallcap index ended positive for the day, and closed at 10749.63, up by 16.25 points, and 0.15 percent. However, the BSE Midcap index gave a negative close of 10437.07, down by 86.76 points, and -0.82 percent.

The short and the intermediate trend for the markets still remain down, whereas the long term trend is still up. The Sensex has broken the support level of 26000, and is trading between 25500 and 26000. The Sensex will slip down more if it closes below the level of 25300. Nifty has broken the support level of 7880, and is trading between the range of 7700 and 7800. The Nifty may dive down more if it gives a close below 7670.

Investors are advised to remain cautious and stay invested in the market with a long term perspective, in the blue chip, low debt and good governed stocks.



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Caution: Islamic Investments strictly prohibits intraday trading and Derivative trading. Stocks should only be sold upon procuring the delivery.

Disclaimer: The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness. The above recommendations and Newsletters are based on the theory of Technical & Fundamental Analysis Combined. © Pragmatic Wealth Management Pvt. Ltd.


Monday 31 August 2015

Market Brief (31st August 2015)

Markets saw a severe crash last Monday (24th Aug ’15) on the back of Chinese market meltdown, fall in overall Global markets, and drop in commodity prices. Moreover, the short and medium term trend being down, it ended the last day of this trading week (Friday) on a flat note, giving a weekly return of  negative 3.6 percent each (Sensex and Nifty), amid rally in US and Asian markets barring Hong Kong, weak European cues, weak rupee versus dollar, falling crude oil prices. A dash of positive sentiments aroused amid hopes of delay in Fed rate hike, China pumping in money to boost its economy, and mild hopes of rate cut by RBI this September.

Technically, markets have discounted all the factors, its short and intermediate (medium) term trend still being down. Volatility in the markets will continue for some more time to come. Nifty will stoop down more if it closes below the level of 7670, and can jump higher if it closes above the level of 8230. Markets are poised and will be trading between the critical levels of 7800 and 8300, until and unless huge news comes in way, negative or positive.



Export oriented companies are going to do well in the coming week, belonging to sectors like Information Technology, Healthcare, and some Oil Exporting companies.



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Wednesday 26 August 2015

Recipe for Loss Making



Ingredients:

Interest - too much

Debt - very much

Derivatives - trading much

Bad Governance - fully required


Method:

Mix all the ingredients and serve them in a platter to the public.

Ready to bear losses.







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Tuesday 25 August 2015

Why did the Markets dwell in the bloodbath on Monday


 Reasons why Markets dwelled in the bloodbath on Monday:




1. Resignation of Greek PM leaving bailout funds in risk.

2. China's Debt crisis exposure.

3. Collapsing Global markets and falling currencies.

4. Former Fed. Reserve Chairman warning of bond market bubble and expectation of rising interest rates in US.

5. North Korea announcing "wartime state" with South Korea.

6. China's PMI index falls six-year low to 47.1.

7. Indian rupee hits 2-year low at Rs.66 per $.

8. Pending decision on the fate of the FII's.

9. Foreign funds withdrawing investments from markets.

10. Falling Oil prices.






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