Posts Tagged ‘ Inflation ’

Economic Indicators – IIP or PMI data..

Thursday, February 6th, 2014

Economic data or indicators provide measurements for evaluating the health of the economy. They also give us a fair view of the current business cycles, Investment and consumption patterns.

Economic Indicators are broadly categorized as Leading Indicators & Lagging Indicators.

Leading Indicators : These Indicators indicate a change even before the economy factors the adjustments. They are based on current data & are forward looking , discount the current values according to future expectations. Stock Markets are the perfect example of a Leading Indicator.

Lagging Indicators :  These Indicators reflect the economy’s  historical performance and confirm the trends with a time lag. They provide us a confirmation of where we are and where we have been.  Unemployment data is a lagging indicator. The unemployment rate may show increase even if the economy is recovering. Historically data suggests the Markets turn much before the Unemployment rate peaks.

Today we are going to discuss two important manufacturing data points

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Identifying Opportunities in the Debt Mutual Funds

Tuesday, January 21st, 2014

Fixed Income Investments serve to diversify your portfolio, help to stabilise your over all return and create a predictable income stream to support your desired lifestyle.

Bonds can provide excellent Risk-adjusted returns. Let’s evaluate where we should invest in the current market scenario.

  • The 10 year G-sec Yield has cooled off to 8.52% after moving above 9% last month.
  • Largely led by primary articles, Inflation at both wholesale and consumer levels have shown a large down-tick.
  • On Account of fall in food inflation the Retail inflation dropped to 9.87% in December.
  • WPI fell to 6.16% the lowest level of Inflation in last 5 months.
  • The fall in inflation is in line with RBI expectations.
  • For the month of January the inflation number may come even softer driven by further cut in agri inflation and base effect.
  • The Inflation data coupled with weak demand and possible fiscal cuts may signal a plateau for interest rates.Please go through the movement of Yields in last few days.

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Understanding RBI Steps to Arrest Rupee Decline

Saturday, November 16th, 2013

RBI

The RBI Governor had a Media Briefing on last Wednesday. The Governor tried to calm market fears on major two issues. One, the Impact on the Rupee as the Oil Marketing Companies (OMCs) Dollar Demand is back into the market and Second the concern on RBI Policy rates.

The Key takeaways from his briefing are as below:

  • The Governor Expressed satisfaction on the fact that the trade deficit has been quite in control and he estimated current account deficit at USD56 Billion for the current year. This estimate stands USD32 Billion lower than last year and well under 3% of the GDP. The Exports over the last five months have been growing in double digits. Additionally RBI has already raised USD 18 billion through recent initiatives of FCNR (B) and banking capital.

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Understanding the Yield Curve

Thursday, July 25th, 2013

The recent upheavals in the Debt market have left the investors puzzled and frightened about the debt markets. Let us understand some of the basic concept of debt markets.

What is a Yield Curve?

Interest rates typically vary with maturity.

The graph or figure which depicts the yield on bonds of the same credit quality and liquidity against maturity is called a Yield Curve.

Ideally, yield curve should be plotted for bonds that are alike in all respects other than the maturity; but this is extremely difficult in practice. Bonds that have similar risks of default may be different in coupon rates, options etc.

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