Tag: inflation

Inflation Above 6% Again; Will Nifty Still Test 17,000? Share Market Today

Post author By marketfeed Team
Post date March 15, 2022

News Shots

Reliance New Energy acquired assets of Lithium Werks for $61 million. Assets include entire patent portfolio of Lithium Werks, manufacturing facility in China, key business contracts and hiring of existing employees.

Embassy Office Parks REIT will consider raising funds on March 17.

Jai Corp approved redemption of 84,000, 1% non-cumulative, non-participating redeemable preference shares on March 15.

Wipro partnered with Speira to strengthen the technology infrastructure and cybersecurity requirements of Speira.

RITES declared third interim dividend of Rs 7.5 per share (75% of paid up share capital).

Black Box approved a share split that breaks up shares of face value Rs 10 each into shares of face value Rs 2 each.

What to expect?

NIFTY opened flat at 16,651 and moved higher. Though there was intermittent profit booking, the rally was steady and the hard task of crossing 16,840 also was done yesterday. NIFTY finally closed the day at 16,871, up 241 points or 1.45%.

BANK NIFTY opened with a small gap-up at 34,734. Though there was a downmove, it rallied heavily throughout the day. The 5 minute chart may look volatile but there was a steady up-move in the 15 minute charts. BANK NIFTY closed the day at 35,312, up 766 points or 2.22%.

IT moved up by 2%.

The US markets closed in the red. The European markets closed well in the green.

The Asian markets are mostly down except for Nikkei. The U.S. Futures and the European futures are trading in the green.

SGX NIFTY is trading at 16,850 indicating a flat opening.

NIFTY has supports at 16,840, 16,750 and 16,650. We can expect resistances at 16,900, 17,000 and 17,100.

BANK NIFTY has supports at 34,800, 34,400 and 34,000. Resistances are at 35,000, 35,200 and 35,500.

NIFTY has the highest call OI build-up at 17,500 and the largest put build-up at 16,000.

BANK NIFTY has the largest call OI build-up at 36,000 and the largest put OI build-up at 34,000.

INDIA VIX is at 25.7.

Foreign Institutional Investors net sold shares worth Rs 180 crores. Domestic Institutional Investors net bought shares worth Rs 1,100 crores.

Though Sgx Nifty was indicating a gap-down, a flat opening was expected as US futures were trading higher on positive remarks by the representatives of both Russia and Ukraine ahead of the talks. It is expected that there will be a consensus in the coming days.

Bloomberg reported that Paytm banks barred from adding customers as there are reports that they gave data access to Chinese entities that did not own direct stake in Paytm CEO said that it is a baseless allegation.

The Consumer Price Inflation for February came out at 6.07% against an expected 5.9%. WPI stood at 13.11%. We will get to know the impact on the market along with the Fed interest rate decision on Wednesday.

BANK NIFTY had a strange candle at 11:05 where a wide red candle was under formation soon after a full green candle. AU Bank had fallen by 10% in the same candle. There were rumours spreading in social media about an RBI probe on the bank. The bank has come up saying these are just rumours.

The LIC IPO has been postponed and it was expected. The market is rather volatile now and is never a good time for the largest IPO.

I will be watching 17,000 on the upside and 16,750 on the downside.

Tags inflation, Market News, pre market report, Russia, Ukraine

Editorial

Financial Crisis 2022: Supercycle, High Inflation Rates, and Scarcity.

Post author By marketfeed Team
Post date March 7, 2022

The world has been hit with scarcity of all sorts. Oil prices are hitting new highs. Gold and Silver prices are soaring. Global inflation is hitting records. Commodities are getting expensive. Every country is facing a financial crisis of its own. Some say that the crisis is a part of the continued ‘supercycle’ that took place after the pandemic year 2020. The Ukraine-Russia crisis is simply adding fuel to the fire. There is a plausible reason for a global economic crisis that could get more rancid with time.

The Scenario

Ukraine-Russia Crisis

Russia is a major supplier of oil. It contributes to nearly ~11% of global oil production. Countries across the world have imposed hefty sanctions on Russia, even taking Russian banks off the global banking system SWIFT. The SWIFT ban applies to about 70% of Russia’s banking activities. The European Union has even banned RT and vaccine maker Sputnik. While Russia has assured that there shall be no hindrance in supply to its customers despite the war that it has waged against Ukraine.

Boeing and Airbus have decided to stop supplying parts to Russia. Many western countries have decided to not let Russian aircraft or ships dock on their ports. Such sanctions can clearly hinder trade between countries that have had a cordial diplomatic relationship with Russia, India being one of them.

Oil prices Break the Roof

Oil prices have touched the roof. While Brent Oil is trading at $124 per barrel, WTI Crude has touched $122 per barrel. The pressure continues to mount as OPEC+ has refused to increase oil output even as oil prices touched the roof after the Ukraine-Russia escalation. Oil prices touched such peaks last in 2008 and 2010 around the time of the subprime mortgage crisis. The primary reason behind such price shocks is a sudden spurt in demand with a broken supply chain. In the current scenario, oil-producing nations that are part of the OPEC+ simply refuse to increase oil output despite a mounting global supply crunch. A further increase in oil prices can push prices of commodities and attached costs to higher levels.

Russia is also a major supplier of natural gas to Europe. While many European countries have decided to cut imports from Russia in the form of sanctions, it will eventually impact the already inflated natural gas prices, especially in Western Europe.

Metals and Minerals in a Stir.

Aluminum prices have topped 26.99% followed by Nickel at 24.33% and Zinc at 17.78% in just about a month. In the same period, Gold and Silver prices are up by nearly ~8 and ~12% respectively.

Russia produces around 6% of the world’s aluminum and 7% of mined nickel. Ukraine exports nearly 80% of the steel it produces. Prices of other rare metals like neon, palladium, and platinum that are critical for the production of microchips, are also on the rise. With the already existing semiconductor crisis, a shortage of these metals could rupture the tech as well as the automotive industry. Even the aviation industry depends on Russian titanium. Boeing and Airbus get more than a third of their titanium requirements from VSMPO-AVISMA, a Russian company manufacturing Titanium. There have been no sanctions on VSMPO-AVISMA so far.

Metal	Monthly Price Change %
Aluminum	26.99%
Nickel	24.33%
Zinc	17.78%
Lead	11.60%
Tin	10.70%

Source: Trading Economics

Are we in a Supercycle? Or is it the Ukraine-Russia stir that is Causing a Global Crisis?

According to Fool.com, “A supercycle is defined as a sustained period of expansion, usually driven by robust growth in demand for products and services”. In a supercycle, the sustained period of economic growth is so prompt, that supply isn’t able to meet the high demand. This leads to an increase in the prices of commodities and high inflation levels. The boom in commodities demand arises when there is excess liquidity in the market

After the COVID-19 pandemic, governments poured money into the system to boost infrastructure, employment, and stimulate demand in the economy. After a period of economic doldrum, demand suddenly gets boosted in a way where the supply couldn’t keep up.

Even if we are in a supercycle, the COVID-19 pandemic combined with the Ukraine-Russia crisis has multiplied its effect. Companies struggling with an already existing financial crisis are finding themselves in the middle of a stupor. If that was not enough, central banks across the globe have started tapering the liquidity in the system. Lesser money in the hands of the public could mean lesser buying power. As an individual investor, now is the time to diversify, derisk, and stay disciplined.

Tags financial crisis, inflation, Scarcity, Supercycle

Daily Market Feed Pre Market Report

Confusing News but the Markets Steady; 17,250 or 17,500? Share Market Today

Post author By marketfeed Team
Post date February 17, 2022

News Shots

Tata Consultancy Services announced a partnership with MATRIXX Software to offer a comprehensive next-gen subscription management platform for communication service providers.

Best Agrolife subsidiary Best Crop Science (previously known as Best Crop Science LLP) has received a licence for indigenous manufacturing of spiromesifen technical, from Central Insecticides Board and Registration Committee.

Southern Petrochemicals reported that their consolidated profit of the company in Q3FY22 grew significantly by 832 percent year-on-year to Rs 59.6 crore compared to Rs 6.4 crore in Q3FY21. Consolidated revenue grew by 15 percent to Rs 492 crore from Rs 427 crore during the same period.

Compuage Infocom received approval from the board of directors for fundraising up to Rs 50 crore through a rights issue.

Wipro received a five-year contract to drive transformation for ABB’s information systems digital workplace services. The agreement, worth over $150 million, will help ABB’s information systems deliver enhanced, consumer-grade digital experiences for its 1,05,000 employees in over 100 countries.

Infosys has been named a foundational partner for the launch of the Google Cloud Cortex Framework. Infosys will help clients accelerate digital transformation and power new business capabilities with its market-leading data, analytics and AI expertise. The company will take advantage of Google Cloud Cortex Framework, along with its strong experience in SAP and Google Cloud ecosystems, to deliver better business outcomes.

What to expect?

NIFTY opened the day with a gap-up at 17,415 and moved down. The index bounced back from 17,280 and moved up to face resistance at 17,500. NIFTY was affected by the last hour negativity and closed the day at 17,322, down 30 points or 0.17%.

BANK NIFTY opened with a gap-up at 38,311. There was bearishness in the beginning but the index moved higher. BANK NIFTY started moving down after filling the gap and closed the day at 37,954, down 216 points or 0.57%.

NIFTY PHARMA moved up by 0.5%.

The US markets were bearish in the first half but accelerated towards the end closing the day flat. The European markets consolidated, closing slightly in the red.

The Asian markets are trading in the green except NIKKEI. The U.S. Futures and the European futures are flat.

SGX NIFTY is trading at 17,374 indicating a gap-up opening.

NIFTY has supports at 17,280, 17,210, 17,150 and 17,100. We can expect resistances at 17,380, 17,435, 17,500, 17,540 and 17,610.

BANK NIFTY has supports at 37,800, 37,550, 37,300. Resistances are at 38,400, 38,600 and 38,800.

NIFTY has the highest call OI build-up at 17,700. The highest put OI build-up is at 17,000.

BANK NIFTY has the highest call OI build-up at 38,500 and the highest put OI build-up at 37,000.

INDIA VIX stays at 20.6.

Foreign Institutional Investors net sold shares worth Rs 1,900 crores. Domestic Institutional Investors net bought shares worth Rs 1,200 crores.

BANK NIFTY followed the same Tuesday price action by moving below the previous day close and rallied up. But the global negativity killed the rally towards the close. NIFTY had moved better than the banks in the first half.

Russia said that they withdrew troops from the border. But NATO said that they see an increase in the strength of the Russian troops in the region for which Russia reacted by saying that NATO has got no evidence. The market participants were confused by the chain of events and there was a sell-off. The latest update is that the US officials also are of the view that Russia has increased troops which Russia has dismissed as ‘hysteria’.

UK CPI inflation came out at 5.5%, nearing a thirty-year high. The UK was the first nation to hike the interest rates to control inflation.

Fed Minutes were released yesterday and it said that the Fed will go for a rate hike in March and though this is expected, it can be a concern as to how much the rate hike will be.

News continuously makes impact on markets in a situation like this when the world is worried about a war. So, make sure that you trade with extra caution. If 17,280 is broken, we may see a fall. Let us watch 17,500 on the upside.

Tags inflation, Market News, pre market report, Russia, TCS, Ukraine, War

Editorial

The Impact of High Inflation and Interest Rates Hikes

Post author By marketfeed Team
Post date January 21, 2022

The reports of interest rate hikes by the Federal Reserve of the United States have spooked stock market investors across the globe. Many have speculated that such an action by the US Fed will encourage other nations to hold a hawkish stance to keep inflation in check. However, such a move might eventually result in a global stock market crash!

In this article, we shall go through the factors behind interest rate hikes and find out whether we really need to fear this decision.

The Story

Firstly, let us understand the basic macroeconomic concept of a business cycle. Businesses and the economy as a whole don’t move in a straight line. There are expansions and contractions in the economy (like ups and downs in a wave). As the economy expands, the long-term trend of these waves is always in a positive bias.

As a result of the economic contraction due to the COVID-19 pandemic, it was essential for governments and central banks of each country to expand their economy. So, they boosted their economy with incredible stimulus packages and low repo rates. Repo rate is the interest rate at which central banks (like the Reserve Bank of India and the Federal Reserve of the US) lend to commercial banks.

Businesses and individuals were able to avail packages and obtain loans easily. As the global economy started to revive with higher vaccination rates, the gross domestic product (GDP) of countries rebounded, and unemployment reduced drastically. Citizens started to spend more on products and services, as they were now fueled with more cash in their pockets. However, the suppliers could not keep up with the high demand! As the demand side skyrocketed, the supply side was broken. Supply chains were unable to satisfy the existing demand, which led to inflation. (Click here to read more about inflation).

In the graph shown above, you can see the impact of inflation in the US. It has hit a 40-year high. The inflation rate in December 2021 was 7% compared to the previous year. Let us look at the inflation rates of other countries.

We are now at the end of the expansion stage, and the economy is growing too fast. On the other hand, stock markets have rallied multifold and are at high valuations as inflation started to spread. If inflation is not controlled, the economy will quite literally collapse.

How do governments solve this issue? Here is where the monetary power of the central banks comes into the picture. The Federal Reserve can now increase the interest rates that were once decreased in the contraction period. Moving forward, it will be difficult for industries and individuals to avail loans. This move will lead to a decline in money flowing into the economy. Eventually, inflation will drop.

Effects on Stock Markets

Investors value stocks by the earnings they are likely to obtain in the future. For example, many have invested in highly valued startup companies like Nykaa, Paytm, and Zomato with the intention that they are disruptors in their respective fields. Moreover, these firms will be coming up with better sales and earnings in the future.

An increase in interest rates will lead to less liquidity among people. They will start to spend less and cut short their expenses, which ultimately affects the sales of companies. So the valuation of the companies will come under question, and investors will have a bearish sentiment on these stocks. Thus, any sectors that were valued with future earnings have a high risk when interest rates are hiked.

Conclusion

If not controlled, inflation can erode the wealth of a nation. Indeed, the action by the US Federal Reserve will create short-term money constraints in the economy. However, it will fuel greater expansion in the long term.

After the release of the minutes of the US Federal Reserve’s December policy meeting (click here to read about Fed minutes), the NASDAQ index of the US, in which tech stocks have high weightage, fell more than 7% to date. However, the Indian markets did not move down as much.

Moving forward, we will be able to see similar actions from the Reserve Bank of India (RBI) that may shake the Indian markets. Stocks of highly consumer-centric companies and tech firms could fall into a short-term bearish phase as their sales/earnings projections (to which their current valuation is tied up) would fall.

What are your views on the hike in interest rates? Do you think it will affect our markets severely? Let us know in the comments section of the marketfeed app.

Tags economic cycle, Editorial, Fed reserve, hawkish stance, high inflation, hike, inflation, interest rates, NIFTY, RBI, S&P500, tech stocks, UK Fed Reserve, United States

Editorial

The Fed Minutes: Explained

Post author By marketfeed Team
Post date January 10, 2022

Minutes of the US Federal Reserve’s December policy meeting were released last week. It outlines the central bank’s plans to speed up measures to keep inflation in check. The US markets fell heavily following the developments as investors are concerned about the aggressive stance of the Fed. The Indian markets declined by up to ~1.5% on Thursday. In this article, find out what the Fed Minutes imply.

The Fed Minutes

The Federal Open Market Committee (FOMC) Meeting Minutes are a detailed record of the committee’s policy-setting meeting held nearly two weeks earlier. It offers detailed insights regarding the FOMC’s stance on monetary policy. The US Fed uses tools to control the overall supply of money in the economy and promote sustainable growth. One can examine the Fed minutes for clues regarding the outcome of future interest rate decisions.

In a document released last Wednesday (Jan 5), the minutes from the policy meeting held on December 14-15 showed that Fed officials are concerned about the pace of increase in prices of goods and services (inflation) and global supply disruptions right from the beginning of the Covid-19 pandemic into the year 2022. These concerns seemed to outweigh the risks posed by the highly transmissible Omicron variant of Covid-19.

The Fed Reserve had so far maintained a consistent stance on its monetary policy. It did not make any major changes in the repo rate or taper bond buying from the open market. The minutes offered details on the Federal Reserve’s abrupt policy shift in December, taken to counter inflation running at more than twice the central bank’s target of 2%. Any central bank would lower interest rates or sell bonds/taper bond buying in the open market whenever the actual inflation rate is higher than the targeted or projected inflation rate. Inflation is currently at a four-decade high in the US, and unemployment has declined to nearly pre-pandemic levels.

Federal Reserve officials said a strengthening economy and higher inflation could lead to earlier and faster interest-rate hikes than previously anticipated. This move essentially takes out money from the economy, restricting consumers from spending.

The FOMC announced it would wind down the Fed’s bond-buying program at a faster pace than first outlined at a previous meeting in early November to counter risks from inflation. This process is known as tapering. Thus, the Fed is on course to eliminate its emergency quantitative easing program (which essentially pumps money into the economy) a few months earlier than expected.

The FOMC has voted for certain measures to curb inflation rates. Unlike the last meeting, the FOMC has taken steeper measures. It has announced a series of measures that hint towards interest rate hikes starting mid-March. This means that the Fed might take a decision that might hit the markets harder than usual.

What Next?

US Fed Chair Jerome Powell will appear before the Senate Banking Committee next week for a hearing on his nomination for a second four-year term. He is likely to update his views about the US economy at that time. As per industry experts, the achievement of the Fed’s goals in 2022 would ultimately depend on how the nation reacts to the surge in Covid-19 cases and how quickly life goes back to normal. Investment banking firm Goldman Sachs expects up to four Fed interest rate hikes this year.

We will have to wait and watch how the situation unfolds in the weeks to come.

Tags fed minutes, FOMC, inflation, interest rates, us federal reserve

Editorial

Inflation in India – What You Need to Know

Post author By marketfeed Team
Post date December 27, 2021

Inflation is the general increase in prices of goods and services that tends to reduce the purchasing power of money. Thanks to inflation, a litre of petrol that cost Rs 25 in the year 2000 now costs more than Rs 100. Inflation has a noticeable impact on our lives. One can notice the effects of inflation especially after the consequent waves of the COVID-19 pandemic. Central Banks and Governments across the globe are trying to fight inflation without impacting the stock markets, currency, and the general population.

In this piece, we explore the inflation indicators, rising food prices, and how governments are trying to tame them.

Inflation Indicators: WPI, CPI, and More…

There are two primary indicators for inflation in a country. One is the Wholesale Price Index (WPI) and the other is Consumer Price Index (CPI). Each indicator is calculated by considering a specific basket of goods and services. Wholesale Price Index (WPI), as the name suggests, measures the change in the wholesale price of goods and services. These goods and services are traded in bulk. Then there is the Consumer Price Index (CPI), which measures retail price change for goods and services at the consumer level. WPI inflation impacts businesses and industries, whereas CPI inflation affects consumers.

Both CPI and WPI consist of a basket of goods and services with a certain weightage given to all. The weightage for both CPI and WPI is given below:

For WPI, ‘manufactured products’ are assigned the highest weightage, whereas for CPI, ‘food and beverages are assigned the highest weightage. A quick glance through the pie chart will tell that ‘manufactured products’ drive the WPI inflation, whereas ‘food and beverages’ drive the CPI inflation.

WPI-CPI Divergence

The WPI-CPI Divergence is a noticeable phenomenon that has occurred many times in the past. Generally, WPI and CPI inflation move together. It is evident from the figure given below that WPI and CPI inflation growth are diverging instead of moving together. While CPI inflation growth is moderate, WPI inflation is growing at a much higher rate.

The question is, why is WPI inflation growing at a fast pace but CPI inflation isn’t?

The WPI inflation spike is clearly because of an increase in the wholesale price of manufactured goods. As stated before, WPI is driven by businesses/industries and vice versa. After the Covid-19 pandemic imposed restrictions, businesses decided to recover and expand. As governments pumped money into the system to push businesses and industries towards recovery, the demand for raw materials started increasing. The increase in demand for wholesale raw materials pushed the WPI inflation upwards. The disruption in supply chains has further contributed to WPI inflation. If the WPI inflation isn’t curbed, the cost of procuring raw materials will increase for businesses. Eventually, these costs will be passed on to consumers, driving up CPI inflation.

Let us take a look at two new terms: Core CPI and Core WPI. Core CPI and Core WPI exclude food, fuel, and light. A closer look at the Core CPI and Core WPI shows that the two aren’t as divergent as shown earlier. This clearly proves that the WPI inflation is mainly driven by inflation in food, vegetables, and fuel prices. Production has resumed to pre-pandemic levels, but consumption is still below those levels.

While manufacturers continue to produce goods, there isn’t sufficient demand YET among consumers. Businesses have not yet started passing on the burden of inflation to consumers. However, one can still feel the tremors of it in retail prices. Telecom operators have hiked tariffs by 20-25%. Recreation and Amusement inflation has been the highest since 2012. Food inflation has been on the rise steadily since September 2021.

Central banks across the globe have started hiking interest rates. Most are following a contractionary monetary policy, meaning they have started taking money out of the economy. The central banks are doing so at a slow pace for a reason. If the tapering of liquidity impacts personal income, it could restrict consumers from spending, eventually stalling economic growth and also causing a considerable output gap. While businesses would have spent a lot on capacity building and increasing production, the demand for the same from the consumer side might not exist.

However, a question remains. Will the CPI converge to WPI or vice versa? It could happen, provided there is a surge in demand from the consumer side and planned expenditure from businesses. This would eventually normalise inflation levels and stimulate economic growth.

Tags Consumer Price Index, CPI, inflation, Wholsaler Price Index, WPI, WPI-CPI Divergence

Editorial

The Impact of Rising US Treasury Bond Yields: Explained

Post author By marketfeed Team
Post date March 8, 2021

The United States Treasury Bond Yield has been showing a significant rise over the past week or so. On Thursday (March 4), the bond yield (or returns) rose to its highest level since 2015— 1.57%. The Dow Jones Industrial Average fell by more than 1% on the same day, while the S&P 500 nearly erased all of its gains made in 2021. As soon as the yield rates increase, we see markets crashing globally. You may recall that our Nifty fell by over 500 points last Friday (Feb 26) due to the same reason. Let us have a detailed understanding of this phenomenon.

A Breakdown of Events

Bonds are debt instruments that are issued by governments and corporations when they require funds. Bond yield is the fixed return that an investor gets on a bond or any particular government security. Amidst the Covid-19 pandemic, the US Federal Reserve had cut interest rates (on loans) to near-zero levels in March 2020. This meant that people could borrow more money from banks at cheaper rates. They could use this money for basic consumption and other requirements, and thus, kick the economy out of recession.

Once the US Fed cut interest rates, bonds became more attractive as they gave fixed returns. There was more demand for bonds, which led to an increase in bond prices. The higher a bond’s price, the lower will be its yield. This is because an investor who is buying a bond will now have to pay more for the same returns. As we know, people had also turned away from the stock market as panic had led to a collective sell-off during March-April.

The Current Scenario

In recent months, the situation has more or less turned for the better. The rate of infections has fallen and people are receiving Covid-19 vaccines. The $1.9 trillion stimulus package in the United States will also provide a well-needed boost for all economic activities. Due to these positive sentiments, investors had moved away from treasury bonds to riskier assets such as stocks (as it provided higher returns). This ultimately led to a fall in treasury bond prices and an exponential rise in bond yields to their recent highs.

Since the beginning of 2021, bond yields have surged from 0.9% levels to 1.57%. Higher yields in the US signal that the Federal Reserve might start to increase the interest rates to contain inflation. When economic growth starts to take off in the US, inflation will surely rise. The rise in interest rates will discourage people from taking loans, and there will be less market liquidity. If this happens, investing in stock markets can become riskier. Due to this fear, global investors started to panic and pulled out money from emerging economies such as India— where the economy is recovering at a relatively slower pace.

1-Day Chart of US Government Bond 10-Year Yield and Nifty 50. Source: TradingView

Large institutions felt it was time to invest more money into low-risk securities and balance their portfolios. They started to sell off their stocks and infuse more money into US Treasury bonds, which are now providing them with high/safe returns. This is why we have been seeing a huge sell-off in our Indian stock markets when there is a spike in bond yields.

Conclusion

The general mood in the Indian stock market was quite positive after the Union Budget 2021 presentation on February 1. We saw benchmark indices (Nifty and Sensex) hit record highs. However, the rising bond yields have now become a major concern for investors. We can also see bond yields rising in the United Kingdom and India as well. Markets have become highly volatile and unpredictable. The increase in bond yields has also impacted the currency market. The rupee closed at 73.47 against the US Dollar on March 1. This was the biggest single-day fall since March 2020. Gold prices have fallen heavily due to the same reason.

In the US, the Federal Reserve has outrightly stated that the recent rise in bond yields would not affect their existing policies. The Fed said that interest rates would be kept near-zero levels until the economy reaches full employment. This is positive news for stock markets, as lower interest rates for borrowings leads to better liquidity.

Many financial analysts have warned that markets could crash further if bond yields continue to rise. However, the recent GDP numbers show that India has made a strong economic recovery. All major sectors such as manufacturing, services, and real estate are showing rapid growth. These are very positive sentiments that would encourage investors to infuse more money into our stock markets (which is already in a bullish phase). Thus, the correction we are witnessing now will most probably be a short-term phenomenon. Do keep a close watch on both domestic and global developments while entering into trades.

Tags Editorial, federal reserve, inflation, NIFTY, stock markets, us bond, us treasury bond yields

Market News Top 10 News

Finance Ministry Announces New Stimulus Package – Top Indian Market News

Post author By marketfeed Team
Post date November 12, 2020

Finance Ministry unveils 12 new stimulus measures through Atmanirbhar Bharat 3.0

The Finance Ministry has announced a series of new measures to provide a further boost to India’s Covid-hit economy. The size of the stimulus package has been estimated at Rs 2.65 lakh crore. The Atmanirbhar Bharat 3.0 has focussed on sectors such as real estate and infrastructure. It has also introduced various steps to increase job opportunities in our country.

Read more here.

Cold storage chain ready for Covid-19 vaccine: Apollo Hospitals CEO

Suneeta Reddy, the CEO of Apollo Hospitals, has stated that the company is ready for the administration of the Covid-19 vaccine in India. She has said that Apollo has the necessary cold storage chain in place for the vaccine. They have also trained about 10,000 people to administer the vaccine.

Read more here.

Retail inflation rises 7.61% in October: Govt data

The growth rate of India’s retail inflation, which is measured by the Consumer Price Index (CPI), had increased to 7.61% in October. The CPI for September was reported at 7.27%. On a separate notice, it was stated that the Index of Industrial Production (IIP) had posted a growth of 0.2% YoY to 123.2 in September. The IIP measures India’s factory output. The two sets of data were released by the Ministry of Statistics & Programme Implementation.

Read more here.

Cochin Shipyard Q2 Results: Net Profit falls 48% YoY to Rs 107 crore

Cochin Shipyard Ltd. reported a 48% year-on-year (YoY) decline in net profit to Rs 107.16 crore, for the quarter ended September (Q2). The company’s revenue declined by 32.43% YoY to Rs 657.40 crore, during the same period. The shipbuilding company has stated that its main sales activities have not recovered to pre-Covid levels.

Read more here.

Eicher Motors Q2 Results: Net Profit declines 40% YoY to Rs 343 crore

Eicher Motors Ltd. reported a 40% YoY decline in consolidated net profit to Rs 343 crore, for the quarter ended September (Q2). The company’s revenue from operations declined by 2.65% YoY to Rs 2,143 crore, during the same period. Eicher Motors has stated that its sales of Royal Enfield motorcycles and commercial vehicles had fallen sharply, as compared to Q2 of the previous financial year.

Read more here.

Grasim sells fertilizer business to Indorama for Rs 2,649 crore

Grasim Industries has sold 100% stake in its fertilizer business- Indo Gulf Fertilizers (IGF), to Singapore-based Indorama Corporation Ltd. IGF is engaged in manufacturing and trading of urea and other agriculture inputs in India. The total value of the sale has been estimated at Rs 2,649 crore. The transaction is subject to necessary regulatory approvals.

Read more here.

Natco Pharma Q2 Results: Net Profit rises 73% YoY to Rs 204 crore

Natco Pharma Ltd. reported a 72.23% year-on-year (YoY) increase in consolidated net profit to Rs 203.9 crore, for the quarter ended September (Q2). The drug company’s consolidated revenue stood at Rs 827.9 crore, during the same period. The Board of Directors of Natco Pharma has approved an interim dividend of Rs 2 per share.

Read more here.

Advanced Enzymes Q2 Results: Net Profit rises 21% YoY to Rs 38 crore

Advanced Enzymes Technologies Ltd. reported a 21% YoY increase in net profit to Rs 38.56 crore, for the quarter ended September (Q2). The company’s revenue increased by 8.03% YoY to Rs 120.39 crore, during the same period. The research-driven company has stated that a majority of the revenue came from its healthcare segment. Its performance had not been adversely affected by the Covid-19 pandemic.

Read more here.

India imposes anti-dumping duty on clear float glass imports from Malaysia

India has imposed an anti-dumping duty on clear float glass from Malaysia for five years. The main aim of this duty is to protect the domestic industry from cheap imports. This was announced after a recommendation was made by the Directorate General of Trade Remedies (DGTR). Clear float glass is a material used in the automobile and refrigeration industries.

Read more here.

Jubilant Foodworks Q2 Results: Net Profit rises 4% YoY to Rs 76 crore

Jubilant Foodworks Ltd. reported a 3.82% YoY increase in consolidated net profit to Rs 75.77 crore, for the quarter ended September (Q2). The company’s revenue from operations declined by 18.20% YoY to Rs 816.32 crore, during the same period. The group had to close down 105 stores in Q2 FY21. Jubilant Foodworks is the master franchisee of Domino’s Pizza in India.

Read more here.

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Jargons

What is Inflation? What are its Effects?

Post author By marketfeed Team
Post date September 10, 2020

Inflation is simply the rise in the prices of goods and services offered. In India, inflation is measured based on two metrics: CPI and WPI. Retail inflation and wholesale inflation are mapped by Consumer Price Index (CPI) and Wholesale Price Index (WPI), respectively. Today, we will see how inflation really affects various participants in the economy.

Impact on the Stock Market

When inflation occurs in an economy, the Reserve Bank tries to control it by increasing the interest rates. As the interest rate increases, debt instruments become more attractive to investors. They get a higher return and that too at a lower risk. Thus, more of the investment shift from equities into the debt market.

With inflation, prices of inputs/raw materials required by companies become more expensive which adds to their expenses. Generally, this cost is passed on to the end consumer. If a company’s sales decrease due to this reason, revenues and profits will take a hit. The falling financials might give a negative indication to the stock market participants.

At the same time, if the company is able to maintain a similar level of sales, and does not show any other negative effect of inflation on itself, then its share price won’t take a hit.

Impact on Loans

Does inflation favour lenders or borrowers? This question has always been in the mind of people. A borrower takes money from a creditor and promises him/her to pay it back at a later date. If inflation occurs during that tenure, it will aid the debtor by decreasing the real value of the money which he has to pay.

When the prices of goods rise, you can buy a lesser number of goods at a specific amount as compared to earlier when the prices were stable. The debtor is still obliged to pay a fixed amount that was agreed upon earlier. Thus, the real value of money that a debtor is paying back is less as the creditor will be able to buy less number of goods. Thus, the burden of the debt is reduced for the lender.

If that’s the case, is the bank at a loss? The answer is both a yes and no. The loan which is already credited will give lesser real money to the creditor as the amount or the interest rate is fixed. But with inflation in the economy, demand for credit will increase. Suppose an individual needs a loan to buy a ring worth Rs 50,000. Inflation has increased the prices to Rs 60,000. As the bank charges a 10% interest rate, then instead of getting Rs 50,000, he will get Rs 60,000. Thus, a creditor might face dual effects of inflation.

Impact on your Savings Account

Inflation negatively impacts your saving account interest, especially if the inflation rate surpasses your savings account interest rate. Suppose your savings account interest rate is 1.5%. That means you would earn 150 rupees if your account had Rs 10,000. Suppose the inflation rate rises to 3%, then the increase to Rs 10,150 would not mean an actual increase in your income. In real terms, you will feel like you are actually losing money.

Tags economy, inflation