..... . VALI disclosures . .....: 05-07-22, FinancialMarket REPORT

Monday, July 4, 2022

05-07-22, FinancialMarket REPORT

SUN TV(cmp442.25) looking positive at current levels

Nifty 50: (cmp15835.35)

No clear sign for fresh buying found

Volatility Resistance @15852

Nifty Bank (cmp33940.90)

Volatility Support : vS1=33080, vS2=32469

Bulls seems to dominate the momentum

Nifty Midcap:cmp26769.55

Volatility Support @26179,

Volatility Resistance @26791

Indian equity market is poised to open on a cautious note as trends on SGX Nifty indicate a flat opening for the broader index in India with a loss of 14 points.

The BSE Sensex climbed 327 points to 53,235 yesterday while the Nifty50 rose 83 points to 15,835 and formed a bullish candle on daily charts.

As per pivot charts, the key support level for the Nifty is placed at 15,714 followed by 15,593. If the index moves up, key resistance levels to watch out for are 15,904 and 15,974.

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Oil prices

Brent crude futures extended gains on Tuesday as a strike in Norway is expected to disrupt oil and gas output, fanning tight supply worries. Brent crude futures rose 82 cents, or 0.7%, to $114.32 a barrel by 0105 GMT after a 2.4% gain on Monday. US West Texas Intermediate crude climbed $2.58, or 2.4%, to $111.01 a barrel, from Friday's close. There was no settlement for WTI on Monday because of the July 4 US public holiday.

Govt to stick to 6.4% fiscal deficit target, taking steps to address high oil prices: Reports

The Centre is committed to stick to the fiscal deficit target of 6.4 percent despite strong global headwinds, reports citing government sources said on July 4. The Ministry of Finance is confident of achieving the target set at the start of this fiscal, as the country's macroeconomic fundamentals are strong, the sources told news agency PTI.

Officials who are privy to the development reiterated government's commitment to the 6.4 percent fiscal deficit target while speaking to wire agency ANI, but added that the soaring crude oil prices will push India's import bills. The current account deficit will be higher if the crude oil prices surge further, they underlined.

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Kotak Mahindra Bank: RBI imposes penalty on Kotak Mahindra Bank. The Reserve Bank of India has imposed a penalty of Rs 1.05 crore on Kotak Mahindra Bank for non-compliance of certain norms.

IndusInd Bank: RBI imposes penalty on IndusInd Bank. The Reserve Bank of India has imposed a penalty of Rs 1 crore on IndusInd Bank for compliance deficiency.

Vedanta: Vedanta's mined metal production increases 14% YoY in Q1FY23. The company in its BSE filing said its alumina production in Q1FY23 at Lanjigarh refinery increased marginally YoY to 4.85 lakh tonnes, up 1% YoY due to scheduled maintenance in April 2022. The cast metal aluminium production at smelters rose by 3% YoY to 5.65 lakh tonnes. Mined metal production grew 14% YoY to 2.52 lakh tonnes on account of higher ore production across all the mines and supported by better mill recovery. Total saleable production was at 268,523 tonnes, lower by 7% YoY due to debottlenecking activities in blast furnace-3 and gunning of blast furnace-2. Overall power sales increased by 32% YoY to 3,577 million units.

NMDC, MMTC, Tata Steel: Tata Steel completes acquisition of Neelachal Ispat Nigam. Tata Steel has completed acquisition of 93.71% stake in Neelachal Ispat Nigam Ltd (NINL) through its step-down subsidiary Tata Steel Long Products. The transaction cost is Rs 12,100 crore. NMDC successfully sold its 10.10% stake and MMTC transferred 49.78% stake in NINL to Tata Steel Long Products.

RCC Cements: RCC Cements managing director resigns. Sunil Kumar has resigned as managing director of the company due to pre-occupation elsewhere.

Kirloskar Ferrous Industries: Kirloskar Ferrous completes upgrade of mini blast furnace at Karnataka plant. The company has completed an upgrade of its mini blast furnace II ('MBF-11') at Koppal plant, Karnataka. And hence the operations of MBF-11 resumed from July 4. After an upgrade, the manufacturing capacity of pig iron in respect of MBF-11 has increased from 1,80,000 tonnes per annum to 2, 17,600 tonnes per annum and consequently total manufacturing capacity of pig iron at the company level has increased to 6.09 lakh tonnes per annum.

ISMT: ICRA assigns long term credit rating for ISMT's proposed bank facilities. ICRA has assigned long term credit rating as A- with stable outlook and short term rating as A2+ for its Rs 600 crore of fund based and non-fund based proposed bank facilities. The outlook is considered to have an adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk.

Marksans Pharma: Marksans Pharma to consider share buyback proposal later this week. The company said a board of directors will hold a meeting on July 8 to consider the proposal for share buyback

source:EconomicTimes, News18, icharts

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Monday, July 4, 2022

05-07-22, FinancialMarket REPORT

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