Thursday 27 February 2014

The Dragon Falters

The heavy selling pressure in the Chinese Yuan continues unabated.    This may cause unwinding
of the Yuan carry trade at some point of time.    This development coupled with the acceleration,
if undertaken by the US Federal Reserve Bank,  of tapering of the Quantitative Easing program
could trigger a cascading effect in the global markets.

Carry trades involve borrowing funds in a nation with low interest rates to purchase high yielding
assets elsewhere.    The initial cracks in the Chinese shadow banking system appears to be
surfacing.    The dragon is stumbling.

Sunday 23 February 2014

Weekly Outlook

Last week saw some significant selling in the Chinese Yuan.    Now that the G20 choosing to look
away at the concerns of the emerging economies with regard to market volatilities,  the latter shall
continue to remain vulnerable to capital outflows.

Now that the Vote on Account is behind us,  there appears to be no significant domestic trigger
except for the data points like the IIP,  etc.    In the light of the above,  global cues will drive Indian
markets.

Finally,  it appears that Nifty may see significant spike in volatility going forward.

Sunday 16 February 2014

Weekly Outlook

Globally,  the risk-off sentiment is prevailing in the markets.    Add to that,  the soft economic
data that has emanated from the US has kept the dollar index subdued causing the yellow metal
to rally in the short term.    Moreover,  the intent of the US Federal Reserve Bank to stay on its
taper course has further added to the risk aversion sentiment.

Locally,  markets will be closely watching the Vote-on-Account (VoA) session in the Parliament
on Monday.    In anticipation of some kind of positive surprise  on the VoA front,  equities saw
some short covering during the fag end of Friday's trading session.    Will the Finance Minister
reciprocate to the market sentiment ?    One will have to wait and see till Monday.    Foreign
Institutional Investors (FII) have been net sellers in Indian equities for the past several trading
sessions.

Finally,  it appears that equities may remain listless with a downward bias.

Sunday 9 February 2014

Market Outlook

The week goneby witnessed some kind of stability returning in the markets.    Volatility was
seen to be subsiding in global markets.    Having said that, emerging markets are not out of
the woods yet.

For the coming week,  world markets will be keenly watching Janet Yellen's comments,
as she will be making a debut appearance before the House Financial Services Committee
on Tuesday and the Senate Banking Committee on Thursday,  as chairperson of Federal
Reserve Bank.

Finally,  it appears that global equities may see a fresh bout of selling at some point of time.

Sunday 2 February 2014

Weekly Outlook

The week goneby, witnessed selling pressure in the emerging market currencies and stocks.
Volatility has spiked up significantly in these markets.    Even rate hikes from the central
banks of some economies have failed to lure investors.    There is no sign of abatement of
this nervousness.

Back in India,  now GDP is estimated at 4.5% much below the previous estimate of 5% as
per a government agency.    Further,  according to a latest data,  consumer vehicles sales
have dropped for the month of January 2014 YoY.

Given all these factors,  markets may continue to remain under pressure for the coming week.