..... . VALI disclosures . .....: 13-07-22, FinancialMarket REPORT

Wednesday, July 13, 2022

13-07-22, FinancialMarket REPORT

NIDTY50 index:cmp16058.30

volatility Supports:vS1=15992, vS2=15380

Closing Resistance cR1=16259

- prefer exit from long on future, Call and Nifty bees below vS1 of index -

NIFTY BANK index

cmp 35132.25

Volatility Supports: vS1=34630, vS2=33472

Closing Support cS1=35017

remains bullish above 34630

NIFTY MIDCAP index cmp27782.05

Volatility Supports: vS1=27266, vS2=27266

Closing Support cS1=27544

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TATA MOTORS cmp430.55

Trailing Stoploss 422

INDIAN ENERGY EXCHANGE cmp163; Trailing Stop-loss @159...however we are not going to put stop-loss order but we prefer hold the stock with medium to long term perspective

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The market is expected to open on a cautious note as trends in the SGX Nifty indicate a flat opening for the broader index in India with a gain of 15 points.

The BSE Sensex fell more than 500 points to 53,887, while the Nifty50 tanked 158 points to 16,058 on Tuesday and formed a bearish candle on the daily charts.

As per the pivot charts, the key support level for the Nifty is placed at 16,007, followed by 15,955. If the index moves up, the key resistance levels to watch out for are 16,134 and 16,210.

Asian Markets

Shares in the Asia-Pacific were mixed on Wednesday ahead of China trade data and central bank decisions in the region. Investors will also be looking ahead to the US inflation report for June.

Japan's Nikkei 225 rose 0.48 percent, and the Topix index gained 0.43 percent In South Korea, the Kospi advanced 0.39 percent. The S&P/ASX 200 in Australia was 0.2 percent lower.

MSCI's broadest index of Asia-Pacific shares outside Japan was just above the flatline.

SGX Nifty

Trends in SGX Nifty indicate a flat opening for the broader index in India on Wednesday with a gain of 15 points. The Nifty futures were trading around 16,075 levels on the Singaporean exchange.

US Markets

Wall Street ended in the negative territory on Tuesday as growing signs of recession kept buyers out of the equity market ahead of inflation data.

The Dow Jones Industrial Average fell 192.51 points, or 0.62 percent, to 30,981.33, the S&P 500 lost 35.63 points, or 0.92 percent, to 3,818.8 and the Nasdaq Composite dropped 107.87 points, or 0.95 percent, to 11,264.73

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Favourable base propels IIP growth to 19.6% in May

India's industrial growth, as per the Index of Industrial Production (IIP), surged to 19.6 percent in May from 7.1 percent in April, data released on July 12 by the Ministry of Statistics and Programme Implementation showed.

At 19.6 percent, the May industrial growth rate is the highest in one year, although it has been aided by a favourable base effect. IIP growth in May 2021 was 27.6 percent.

Economists expected industrial growth to pick up sharply from April's 7.1 percent because of a low base. In the year-ago period, the IIP was posting sharp sequential falls – from 145.6 in March 2021 to 115.1 in May 2021 – as the country was engulfed by the second wave of the coronavirus pandemic, leading to the re-imposition of restrictions on movement and activity in several regions.

June CPI inflation comes in at 7.01%, RBI one quarter away from failure

India's headline retail inflation rate, as measured by the Consumer Price Index (CPI), was largely unchanged at 7.01 percent in June from 7.04 percent in May, data released on July 12 by the Ministry of Statistics and Programme Implementation showed.

The latest inflation print is along consensus estimates. As per a Moneycontrol poll, CPI inflation was seen at 7 percent in June.

At 7.01 percent, the June CPI inflation print takes average inflation for April-June to 7.3 percent, 20 basis points lower than the Reserve Bank of India's (RBI) forecast of 7.5 percent. However, undershooting the forecast is of little significance at this stage, with the central bank on track to miss its mandate.

Oil prices slip on anticipated U.S. inventory build amid demand worries

Oil prices fell in early Asian trading on Wednesday as U.S. inventory data showed buildups in crude oil and refined products amid rising fears of a global economic slowdown.

Brent crude futures dropped 68 cents, or 0.7%, to $98.81 a barrel at 0002 GMT. U.S. West Texas Intermediate crude declined 72 cents, or 0.8%, at $95.12, also the lowest in three months.

OPEC forecasts slower oil demand growth in 2023

OPEC forecast that world oil demand will rise further next year, but at a slightly slower rate than in 2022, with consumption supported by better containment of the COVID-19 pandemic and still-robust global economic growth.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) said it expects world oil demand to rise by 2.7 million barrels per day (bpd) in 2023. This year's growth forecast was left unchanged at 3.36 million bpd.

source:News18

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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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Wednesday, July 13, 2022

13-07-22, FinancialMarket REPORT

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