Monetary Policy Review

Monetary Policy August 2nd 2017

Big day today in the history of Indian Economy because the Monetary policy created a record today. Heartfelt congratulations to the Indians because the central bank of India that is RBI has cut interest rates by 25 percent to bring it to 6.00% which is the lowest in 6 ½ years. A Big achievement and economy well in course of growing big. Celebrations can begin, people can enjoy. Maybe after reading this post completely….

Let me take a minute and explain a little about Monetary policy. Monetary policy is a process by the which central bank of the country controls the supply of money by doing various activities which are related to demand and supply creation. Most important factors taken into consideration are Inflation and Production. In India RBI is the authority which holds responsibility of Monetary policy, this monetary policy can change the game of growth to huge extent for any country. India has system of Bi-monthly monetary policy which means six policies in a year.

Now about the D-Day Monetary Policy that happened today on 2nd August 2017!

The base interest rate of India now stands at 6.00% which as I said earlier is 6 ½ years low figure. Such big thing that India has achieved and we all should be proud of that fact. Now you can have lower Home Loan interest rates, Lower EMI’s and so on … What if I say this is all something that had to happen almost 10 months ago which means 5 policies ago in October 2016.

Yes, you heard it right. The rate cut that was to come way back in October 2016 has come today and clearly Markets were in no mood to accept this fact and saw a fall end at of the day. That also means the growth of India for 10 months is now gone for toss. We start all over again.

Mr. Governor – Urjit Patel

Mr. Governor you have given lame reasons for not giving rate cut all this while and today when you give rate cut to make up for the messed-up situation. Are you given that role to ponder over past events or to predict future and act accordingly!  You spoke about increasing inflation and you see that inflation never hit 4% and today it is 1.5% and that is when you wake up or is this realization after Government hammering you for your dumb decisions taken in last policy. Other reason you talk about is the crude oil hitting 60$ which looks like a far stretched dream of yours.

Now after giving a small rate cut of 25bps which is of no use you talk about 18-24 months inflation and vegetable prices. When the policy decisions are taken looking at 2 months past data how are you balancing it with next 2 years?

People may enjoy this cut and celebrate it but I am bitterly disappointed and feel sad for Government and people of India for having a person like you as Governor.

Weather Update 2nd August 2017

Monsoon continues to be weak over India with every part except North west India getting less than normal rain. India got 6.5mm rain last night vs the normal of 9.7mm which is a deficit of -33%. That takes the total seasonal rainfall to 472mm vs normal of 472mm which is 100% of LPA. South India touched a new low of 82% of LPA, central India at 105%, North west India at 116% and Eastern India at 92% of LPA.
Hyderabad was totally dry in the last 24 hours till today morning and none of the 6 observatories recorded any rainfall. Rainfall occurred at few places in Telangana with Warangal receiving more than the normal. Telangana on an average got 4.1mm rain vs normal of 8.4mm taking the total seasonal rainfall to 351mm vs normal of 390mm. That is a deficit of exactly -10%. Now telangana is in double digit deficit. Only one district of Khammam has more than normal rain.

Here is the break up of the percentage deviations in different districts.

Khammam +11%
Warangal 0%
Hyderabad -1%
Rangareddy -7%
Mahaboobnagar -7%
Nalgonda -7%
Medak -10%
Karimnagar -17%
Nizamabad -23%
Adilabad -29%
Rainfall in important places of India in last 24 hours ending today morning
Srinagar 0.5mm
Shimla 27.6mm
Chandigarh 8.2mm
Delhi 1.0mm
Jaipur 2.0mm
Bhopal 0.7mm
Ahmedabad 2.0mm
Mumbai 3.4mm
Pune 0.4mm
Kochi 62.6mm
Bangalore 1.8mm
Chennai 10.2mm
Vijayawada 28.0mm
Bhubneshwar 0mm
Kolkata 17.3mm
Guwahati 1.5mm
Patna 17.6mm
Lucknow 13.2mm

Market Update 2nd August 2017

Market update 2nd August

Monetary policy day today. Everyone has factored in 25 bps cut. That means there is a good probability that RBI will do something different. Either no cut or a 50bps or a remote chance of 75 bps cut and wishful thinkers like me can dream of a 100 bps cut. If any of these happens there will be wild swings in the market. NIFTY will not move much if there is a 25 bps cut but any other scenario can set it on fire. No rate cut of 25 bps cut with hawkish commentary will taken NIFTY down by more than 50 points. Any 50 bps or above cut might see NIFTY crossing 10,200 today itself. There is a problem of liquidity and the system has to absorb that. That simply means people converting their cash into bonds and that happens only when rates go up but rate cut would be further liquidity coming into the system. The only other alternative left is converting that liquidity into products and services which again depends on many macro factors. so, RBI will be in a fix to give a big cut now!

NIFTY will open flat above 10,100 levels and might remain flat in a range till the monetary policy is announced at 2.30PM. 10,350 and 10,400 call is seeing some writing and that indicates that people are betting on a rally due to rate cut and that might push the premiums up and they are seeing an opportunity to eat those premiums early in the series. Bank NIFTY is also seeing a lot of action around 25800 and 25900 levels. NIFTY put call ratio has jumped to 1.11 from 1.06 the day before indicating lot of people buying puts at the 10,100 and above levels. So expect a volatile day around the monetary policy time and lets see where it closes.

Q1 results scheduled for today

1. Bata India
2. Edelweiss
3. Emami
4. Godrej Properties
5. Greenply
6. Lupin
7. Punjab National Bank
8. Reliance infra
9. TBZ
10. Uco bank
11. Voltas
12. Wockhardt
Am expecting Voltas and PNB to come good and Lupin and Uco bank to disappoint.

Astrology – Moon Signs and Sun signs!

Astrology is one of the most important occult science which is widely followed in many countries. From Western countries like America, Europe, Russia to Asian countries like India, China, Japan Thailand etc astrology is a very popular occult science. Every country has its own style of calculations and predictions but broadly solar and lunar form of astrology is widely practised. Solar calculations take sun as the base whereas lunar calculations takes moon as the base. Western astrology followed across different parts of the world take sun as the base or follow the solar signs also called “sun signs”. Indian astrology however follows lunar system where “moon sign” or “Rashi” is taken as the base for astrological predictions.

What is the difference between sun sign and moon sign?

It is well known that astrology basically has 12 signs and each sign has its own characteristics. Sun stays in one sign for period of 30 days and that’s how 30 days multiplied by 12 signs gives 360 days covering almost one year. Starting with Aries from March 21st to April 19th and ending with Pisces from February 19th to March 20th.

Here is the list of sun signs along with dates followed as per western astrology.

1. Aries 21st March to 19th April
2. Taurus April 20th to May 20th
3. Gemini 21st May to 20th June
4. Cancer 21st June to 22nd July
5. Leo 23rd July to 22nd August
6. Virgo 23rd August to 22nd September
7. Libra 23rd September to 22nd October
8. Scorpio 23rd October to 21st November
9. Sagittarius 22nd November to 21st December
10. Capricorn 22nd December to 19th January
11. Aquarius 20th January to 18th February
12. Pisces 19th February to 20th March

In India we follow lunar system or moon sign. Sun stays approx 30 days in a sign where as moon stays 2.5 days in a sign. So moon covers 12 signs in 2.5×12=30 days. That means by the time sun travels through one sign, moon would have completed travelling through all 12 signs. This makes people born on closer dates different moon signs. For example, two people are born on 24th July and 1st August. According to western astrology both have the same sun sign that is Leo. But if we take moon signs, moon was located in Cancer on 24th July and today on 1st August it is located in Libra. So one person is a cancerian and the other will be Libran. So they have different qualities and that makes Indian astrology unique.

Now we have 12 signs or 12 houses and each house represent a particular characteristic of the person. However the Indian and western astrology have the same characteristic for the house. Like the 1st house represents the person’s personality in both Indian and western astrology. Same is the case with 7th house which is the house of love and marriage in both Indian and western astrology.

Here is the list of what each of the 12 houses represent.

1st house represents Personality
2nd house represents money and monetary status
3rd house brothers and sisters
4th house Education and mother
5th house Emotional balance and children
6th house health and accidents
7th house marriage and married life
8th house Life span and death
9th house Foreign travel and father
10th house career
11th house business and friends and friendships
12th house old age and karma

Let us now look at the person who was born today, 1st August gets his houses according to his sun and moon sign. Suppose a baby is born right now at 10-30PM and his Astro sun sign as per Western astrology is Leo. So, his First house of personality is controlled by Leo, 2nd house of money is ruled by Virgo, 3rd house of relationship between siblings is ruled by Libra, 4th house of education and mother are ruled by Scorpio, 5th house of mental balance and children is ruled by Sagittarius, 6th house of Health and accidents is ruled by Capricorn, 7th house of love and married life is ruled by Aquarius, 8th house of Life span and death is ruled by Pisces, 9th house of foreign travel, communication and father is ruled by Aries, 10th house of career is ruled by Taurus, 11th house of Business and friends is ruled by Gemini and 12th the last house of karma and old age are ruled by Cancer.

But if it is seen in the Indian astrological calculation his 1st house will be Libra, his money house is Scorpio, 3rd house will be Sagittarius, 4th house Capricorn etc. Like that the predictions differ totally if we take Indian astrology compared to the western astrology.

Which one is more accurate? Indian or Western??

Western astrology is very general and takes Sun as reference point for the prediction. Whereas In Indian astrology we take Moon sign for predicting, Which is more detailed. You can imagine yourself when I say, in western astrology people born in 30 days have same 1st house so same personality whereas in Indian astrology those born in 30 days will have 12 different 1st houses, thus 12 different personalities. But this is just one broad way of predicting. Many more dimensions are there which I will discuss in my future posts.

#Astrology #Indian #Western #Sunsign #MoonSign

Weather update 1st August

Monsoon is weak in many parts of the country today also. In more than 80% areas the rain was less than normal. India as a whole got 6.2mm rain last night vs normal of 9.3mm taking the total to 466mm vs normal of 462mm which is 101% of LPA. Situation further worsened in south India as it got a deficit of -19% rain taking the LPA from 83% to 82%. 82% LPA is the worse in this season. Central India is at 107%, North west India at 117% and Eastern India is at 92% of LPA.
Hyderabad remained totally dry yesterday night. No part of Hyderabad reported any rain. Telangana reported excess rainfall in Nalgonda district while other districts got deficit rain. Medak, Rangareddy and Hyderabad districts were totally dry. Telangana on an average reported 3.2mm rain vs normal of 7.5mm taking the total seasonal rainfall from 1st June to 1st August to 347mm vs normal of 381mm which is a deficit of -9%.

Here is the break up of deviations in different districts

Khammam +11%
Hyderabad +2%
Warangal -0.5%
Rangareddy -5%
Mahaboobnagar -5%
Nalgonda -7%
Medak -8%
Karimnagar -16%
Nizamabad -22%
Adilabad -28%
8 out of 10 districts are in negative zone now. Only Khammam and Hyderabad districts have positive reasonal rainfall.

Market Setup 1st August

RBI monetary policy is the buzz word when NIFTY opens today. It is going to open positive today around 10,100 and we will cross 10,100 which will be another landmark. Auto sales numbers for July will start pouring in from noon and Maruti and Eicher along with Hero will be in the focus. Indigo came up with a Stellar result yesterday and the stock has not reacted so far. Profit came above 800 Cr and that’s highest ever for any airline company at any time. EBIT was close to 1200 Cr. Bank NIFTY is showing double the strength of NIFTY and that is primarily on the monetary policy tomorrow. Rate cut is on its way and most probably it will be a 25 bps cut. Added to this is the news of SBI cutting deposit rates and maybe few more banks might cut their deposit rates today. Will it be ICICI? Lets see!!

Q1 results expected today

1. JSW steel
2. Marico Industries
3. PC jewellers
4. Power grid corp
5. Torrent power
Not many interesting companies are declaring the results, so the focus will be more on macros than micros.

Fuel prices in important cities on 1st August

City                   Petrol    Diesel   16th July           Rise in price
Delhi                 65.40    55.58    64.21                +1.19
Mumbai             74.56    59.04    73.54                +1.02
Kolkata             68.56    58.23    67.62                +0.96
Chennai             67.71    58.49    66.67                +1.04
Bangalore         66.39    55.62    65.38                +1.01
Hyderabad        69.24    60.38    68.20                +1.04
Except Delhi, petrol prices in last 15 days went up by slightly more than 1 rupee!!

Weather Update 31st July

Weather update 31st July

Deficit rain continues in India and last 24 hours India got 5.0mm rain vs normal of 8.9mm which is a deficit of -44%. South India got a deficit of -29%, Central India -69%, North west India is at -7% deficit and Eastern India at -53% deficit in the last 24 hours till today morning. With this the total rainfall this season from 1st June to 31st July stands at 460mm vs normal of 453mm which is 102% of LPA. South India continues to be at 83%, central India at 109%, North west India at 118% and Eastern India at 92% of LPA. At the end of June India was at 104% LPA vs 102% now.

Let’s look at the states and their deviations at the end of June and July.

State                             June                 July                  Improvement
Arunachal Pradesh         -22%                 -22%                0%
Assam                          -15%                 -21%                -6%
Rest of North East          +2%                  +12%               +10%
West Bengal                  -22%                 +18%               +40%
Jharkhand                     -38%                 +15%               +53%
Bihar                             -45%                 -9%                  +34%
Uttar Pradesh                -19%                 -14%                +5%
Uttarakhand                   +1%                  +7%                 +6%
Haryana                        +171%              -11%                -182%
Punjab                          +131%              -11%                -142%
Himachal Pradesh          +25%                -15%                -40%
Jammu Kashmir             +133%              +31%               -102%
Rajasthan                     +113%              +80%               -33%
Orissa                           -1%                   +1%                 +2%
Madhya Pradesh              0%                  +1%                 +1%
Gujarat                          +9.5%               +61.5%             +52%
Maharashtra                  +15%                -5%                  -20%
Goa                              +18%                +7%                 -11%
Chattisgarh                    -1%                   0%                   +1%
Andhra Pradesh              +37%               +1%                 -36%
Telangana                     +46%                -8%                  -54%
Tamil Nadu                    +2%                  -21%                -23%
Karnataka                      -2%                   -23%                -25%
Kerala                           -13%                 -30%                 -17%

Out of 23 states 12 states showed decrease in rainfall compared to June and 10 states showed increase in rainfall. 1 state had the same rain.

Only Golkonda area of Hyderabad got rainfall yesterday while other parts remained dry. Golkonda got 2.0mm rain. Telangana got 1.0mm rain on an average vs normal of 8.9mm. With this the total rainfall in the 2 month monsoon season is at 343mm vs normal of 374mm which is a deficit of -8%. This is compared to excess of +46% recorded till the end of June. That is a drop of -54%. That means July got less than half of the normal rainfall.

Following is the break up of deviations at the end of June and July in the 10 districts of Telangana.

District              June     July      Improvement
Adilabad           +33%    -27%     -60%
Hyderabad        +44%    +5%      -39%
Karimnagar        +29%    -16%     -45%
Khammam         +76%    +12%    -64%
Mahboobnagar +63%     -5%       -68%
Medak              +42%    -6%       -48%
Nalgonda          +37%    -8%       -45%
Rangareddy      +56%    -3%       -59%
Warangal           +51%    +1%      -50%

Mahaboobnagar was the worst performing district with -68% crop in July while Hyderabad has only -39% drop.

Now all eyes are on August to make up for the loss in the rainfall in July. The first half of August month is important and that will decide the fate of monsoon this season.

 

Kid has grown, Can Nifty overtake Dow Jones?

A Small Story

While Markets trade, let me narrate you a Story of Mother and her Kids!
Mother USA (DOWJONES) is very strong and dynamic and is called as power house of the World. She has many kids like Nifty, Hang Seng, Kospi, Shanghai so on… Years have passed and each kid has grown big. Of which some kids are on their own, some are with Mother and some are very smart in their approach. One kid was the apple of the eye of the mother. That was NIFTY.  Very recently Nifty has moved into his teenage. We all know how crucial is teenage. It is that period where you Win or Lose, Grow or Fall.
Nifty now in its teen has to be behave matured and shouldn’t get into negative area. Because as they say next gen has the capacity to create new heights. Same way once Nifty passes this period in right way it is to reach bigger heights much faster than the Mother. He will also overtake the mother to stay on Top of the world. Welcome to 10,000 which is the teenage for NIFTY!!!

Market Setup 31st July

Last day of the calendar month and the 2nd day of the August series is starting on a flat note. NIFTY will open above 10,000 and this is an important week with the monetary policy scheduled on Wednesday. In my view the maximum we can expect is a 25bps cut and that might not be sufficient to pump up NIFTY further but bank nifty might be bit positive. HDFC is the leader in this pack. Global cues are also mixed. US GDP for Q2 comes at 2.6% vs expected 2.7% which is a mild dampener. Added to this is the rising crude prices which is almost touching 53 dollar. Dollar index is getting weaker and breaking 93 mark and that could make the rupee go below 64 after a long long time today. NIFTY in my view might be around 10,000 mark today and close flat or slightly positive.

Q1 results scheduled for today

1. Container corporation
2. Essar Shipping
3. Godrej Consumer
4. Hexaware
5. Indigo Airlines
6. Maharashtra bank
7. Radio city
8. Shree cement
9. Sintex
10. V guard

Fuel prices in important cities on 31st July
City                   Petrol                  Diesel
Delhi                 65.26(64.87)      55.50(55.19)
Mumbai             74.58(74.20)      59.08(58.75)
Kolkata             68.45(68.14)      58.25(55.34)
Chennai             67.78(67.37)      58.53(58.20)
Bangalore         66.45(66.05)      55.66(55.34)
Hyderabad        69.32(68.91)      60.45(59.93)
Diesel crossed 60 rupees in Hyderabad and Petrol prices gone up by 35-40 paise and diesel prices by 45-50 paise. Huge rise because of Crude oil surge!