Commodity Trade Mantra

Nifty 4th target achieved: Equity, Commodity, Economic Weekly Snapshot

Equity, Commodity Trading

Equity, Commodity, Economic Weekly Snapshot

On 21 Feb 2012: Moneyline Nifty Positional Sell Call – Sell Nifty advised at 5689 for Targets 5365, 5185 & 5005. Add more only on a sustained momentum below 5005, for Targets 4915, 4690 & 4465.  Result: Target 4 achieved — Nifty May Futures at 4900 on 11 May 2012.

 Equity:

Key benchmark indices edged lower for the fourth straight session to their lowest level in over 16 weeks after the latest data showed a surprise contraction in industrial production in March 2012. The S&P CNX Nifty shed 36.80 points or 0.74% to 4,928.90, its lowest level since 16 January 2012. The Nifty hit a high of 4,976.25 & a low of 4,906.15 in the intraday trade. The BSE Sensex lost 127.07 points or 0.77% to settle at 16,292.98, its lowest level since 16 January 2012. The index rose 27.19 points to hit the day’s high of 16,447.24 & lost 186.29 points to decline to the day’s low of 16,233.76 in the morning trade. Weakness in global stocks also weighed on sentiment. The market breadth remained weak.

 Commodity:

MCX Gold June futures fell for a third day, declining to Rs. 28,281, the lowest price since April 2012. Comex Gold June futures sold off sharply today and Gold prices slumped to a fresh four-month low of $1,572 an ounce. MCX Silver July futures slipped to Rs. 53,561 & Comex Silver July Futures declined to $28.42. Gold futures pushed lower in European trading also today as the U.S. dollar rose for a 10th session.

Commodity futures volumes in India, the world’s biggest buyer of Gold, fell 11% on year in April  due to a decline in bullion volumes, but a rollback in excise duty could bring jewelers back to the market, arresting the fall in hedging bets this month. Volumes in April fell to Rs 1,152,000 crore from Rs1,295,000 crore a year ago. The value of trade in bullion fell 35.8% to Rs 532,000 crore in April. Trade in metals other than bullion rose 36% to Rs 268,000 crore in April.

 Indian Economic update:

Government data showed India’s industrial production / output (IIP) unexpectedly contracted 3.5% in March compared with a 4.1% increase in February, as weaker domestic demand and sliding exports hurt the economy, undermining the RBI’s efforts to shore up the weakening INR. Analysts had forecasted output to grow 1.5% to 1.7%. Manufacturing, which constitutes about 76% of industrial production, shrank an annual 4.4% from a year earlier after a 3.9% advance in February, today’s report showed. Mining fell 1.3%, compared with a 2.7% gain in the previous month. Electricity output rose 2.7%. The overall output grew 2.8% in the fiscal year that ended on March 31, much slower than 8.2% growth seen in the previous year.

Exports grew by 3.2% to $24.5 billion in April, while imports rose 3.8% leading to lowest trade deficit Indiahas logged in a year. The Reserve Bank of Indiaswung into action to support the falling rupee & said exporters will be required to convert 50% of their foreign exchange holdings into rupees. Exporters will need to convert about $2.5-$3 billion dollars into rupees from their foreign exchange accounts following the Reserve Bank of India’s (RBI) directive. India’s rubber production rose by 5.6% to 10,414 tonnes in January this year, while its consumption declined by 2.5% to 34,385 tonnes during the period.
India’s crude oil imports from Iran declined by about 34% in April compared with March, deeper than expected and the first evidence of New Delhi implementing cuts in supplies from the sanctions-hit nation under annual deals that began last month. The government collected over Rs 4.93 lakh crore as per provisional estimates from direct taxes during the 2011-12 fiscal, as against a revised estimate of Rs 5 lakh crore.

Finance Minister Pranab Mukhrjee announced amendments in the General Anti-Avoidance Rule (GAAR). The following are the highlights of the announcement:

– Proposed retro amendments do not override DTAAs
– STT on sale of unlisted tax securities at 0.2%
– Remove onus of proof from tax payer
– Amending GAAR provision in Finance Bill
– GAAR deferred by one year, to be applicable from FY14
– Not to use retro amendments on cases where assessment final
– Hikes threshold for tax on gold jewelry to Rs 5 lakh
– Withdraws levy on all branded and non-branded jewelry
– Tax neutrality if foreign banks convert branches to subs
– Clarificatory proposals will not override tax treaties
– To introduce independent member to GAAR panel

The government halved the capital gains tax for private equity investors to 10% and relaxed the norms for arrest of persons involved in violation of Customs Act. Speaking on amendments in the Finance Bill in parliament, Mukherjee also said the onus of proof will lie with the tax authorities and that the proposed retrospective amendment of income tax laws will not override DTAAs with 82 countries. The government on Monday rolled back the proposed 1% deduction at source (TDS) on transfer of immovable property. The Finance Bill proposes that every transferee of immovable property (other than agricultural land), at the time of making payment for transfer of the property, shall deduct tax at the rate of 1% of such sum.

India’s merchandise exports in April rose by 3.2% to US$24.5bn while imports were up by 3.8% at US$37.9bn. The trade gap at US$13.4bn is the lowest in last one year.

 Global Headlines:

Nicolas Sarkozy expectantly lost the French Presidential race, as people across the debt-stricken euro area continued to vote out regimes in favor of stringent austerity measures. Poll results showed a dramatic collapse in support for the two main parties in Greece while a radical left-wing party that rejects the country’s bailouts put up a strong show.

European markets were hit by worries that outcome of weekend elections in France and Greece will put the EU fiscal compact in jeopardy. The euro came under pressure while the dollar has strengthened. The Spanish government effectively nationalized the parent company of Bankia, a troubled lender formed from the merger of seven savings banks. Rodrigo Rato stepped down as chairman of the bank, which is struggling with souring property loans.

 Bank of Japan minutes show the government pressing for “visible results” from efforts to end decade-long deflation that is weighing on the nation’s recovery from last year’s earthquake and economic contraction.

Australia’s retail sales posted their biggest jump in nearly a year in March, an encouraging end to the quarter amid industry hopes for a sustained pick-up after a surprisingly large interest rate cut last week.
Monday’s data showed retail sales rose 0.9% to A$21.2 billion ($21.6 billion), handily beating forecasts for a rise of 0.2% as households spend more on eating out and shopping for clothing and footwear.
Orders in Germany’s key manufacturing sector rose sharply in March amid resurgent domestic demand and a surge in orders from outside the euro zone, but analysts question how far Germany can continue to defy broader euro-zone weakness. Manufacturing orders increased 2.2% on the month in March in adjusted terms.  The ministry also raised its estimate of orders in February, to an increase of 0.6% from an original estimated rise of 0.3%. The data indicate that German industry is not yet running out of fuel.

French industrial output declined in March as warmer weather led to a drop in demand for electricity and gas for heating. Output from factories, mines and power plants fell 0.9% from February, when it rose 0.3%. Manufacturing production climbed 1.4%, the first increase this year, amid concern about France’s ability to revive growth in the face of a deepening euro-area recession.

Italian industrial production rebounded in March even as the country’s fourth recession since 2001 weighs on demand for manufactured goods. Output rose by 0.5% from February when it declined 0.7%. Production fell 5.8% from a year ago on a workday-adjusted basis.

U.K. industrial output declined in the first quarter despite a stronger-than-expected bounce in manufacturing in March. Manufacturing production increased 0.9% from February, but was 0.9% weaker than in March last year, the third consecutive month of year-on-year declines. The Bank of England paused its bond-buying stimulus program Thursday as rate-setters decided that a stubbornly high annual rate of inflation is a bigger worry than official data showing the U.K. slid back into recession in the first quarter. The U.K. central bank said in a statement that after two days of meetings, its Monetary Policy Committee left the size of its asset purchase program at GBP 325 billion and the BOE’s key interest rate at a record low of 0.5%.

U.S. consumers went back to using their credit cards in March to keep spending while student and new-car loans shot up as the value of outstanding consumer credit jumped at the fastest rate since late 2001. Total consumer credit grew by $21.36 billion – more than twice the $9.8 billion rise that Wall Street economist surveyed. U.S. chain-store sales rose 3.3% year on year for the week that ended on May 5, according to the International Council of Shopping Centers (ICSC) and Goldman Sachs. However, on a week-to-week basis, comparable-store sales declined by 0.8% marking the second consecutive decrease. The fiscal month of May got off to soft start as consumers were focused on non-retail activities this past week. The good news is that the industry should see a pick-up in weekly sales as the upcoming week does provide some shopping incentives with Mother’s Day on Sunday, May 13. The number of people filing for first-time unemployment benefits in the U.S. fell 1,000 to 367,000 in the latest week.

The US Energy Information Administration (EIA) released its weekly petroleum status report this morning.US commercial crude inventories increased by 2.8 million barrels last week, bringing the total US commercial crude inventory to 375.9 million barrels, within the upper limit of the five-year range for this time of the year. Total gasoline inventories fell by 2 million barrels last week and remain in the upper limit of the five-year average range. Over the last four weeks, gasoline supplied has declined by -4.7% compared to the same period last year. Total motor gasoline supplied averaged 8.7 million barrels/day for the four weeks.

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