Week Ahead – India’s Sensex Vs The World, Inflation optimism, Gold Reforms

Week Ahead – India’s Sensex Vs The World, Inflation optimism, Gold Reforms


Hello investors and welcome to another episode of the week ahead for 17th February this time we’ll be talking about a lot
of things including inflation optimism we will also be talking about how India’s GDP will be released on the 28th there is also news on how India’s market has fared against the world. My name is Prateek Singh, and let’s get started. Last week on
Friday, that was the 14th of February, we had the WPI inflation
numbers out now if you remember correctly the
previous figure did cover inflation and it was at 6%; now we have eased to comfortable 5.05 percent. Now this means that the rising
prices have seen an ease which is a good thing for the
economy so we will see some optimism on Monday, that is today, in the markets. This low inflation is painting a pretty
picture because in the 28th of February
we will be seeing GDP numbers being released and if this
number is a positive number it will show a lot of positive movement
in the mood indicator because on the one hand we
have low-inflation and on the other hand we would have high
GDP so this will be definitely good for the
economy. Last week Nifty fell 26 points on the week on week
basis it was a sideways week but I do have some facts to share with you on the
fundamental side and the technical side so let’s have a look. On the
mental side the GDP is expected to come in high as
we just spoke about and current low-inflation will bolster confidence. Strong earnings reports this
week will also be seen on a positive light. We have also seen a
lot of government reform recently. We spoke about the auto sector
last week. Now technically speaking, and this is
slightly more interesting. You see, the price charts showed
a very important event last week. We formed a Bear Flag which, if you don’t know what
a Bear Flag is, is basically a very weak rally, or an up move (a very weak weak one) within a downtrend, and usually what
happens: Bear Flags will break down and the markets
will come up slightly touching the breakdown point only to continue lower. Although 6,000 has
shown strong support the overall trend is down and I think it
is reasonable to expect that the higher time frames will tend to
be dominant, which is down. Hence, a huge sell-off may be seen if the 6,000 breaks again this week. Now let’s move forward towards gold, on the commodities side. Now there’s this policy that the RBIs announced to strengthen, or tighten rather, the gold imports. It’s called the 80/20
scheme. And what it basically means is that
anyone importing gold, or any entity importing gold, 20 percent of that has to be reserved for exporters so only
the 80 percent remaining shall be used for domestic use and that
also specified for certain entities like people dealing in the bullion markets, banks and of course jewelry. Now this is
done to bring in the current account deficit (CAD) into a surplus. You see, we’ve been seeing
a deficit since 2009 and March 2014 maybe the first time since 2009 when we
will see a surplus. So let’s see if this actually
helps bring the current account deficit into a surplus. On Monday the government is set to
announce the interim budget. Now the interim budget is
announced so that the new government, since this is
election year, does not overburdened with budgetary
concerns and it can then focus on economics and the
economic agenda. Now if mister P Chidambaram announces , or allocates, something for the auto
sector, which has been lagging if we saw the previous episode, we covered, we should see a revival in that
sector see you should look out at what the interim budget is announced
at on Monday. Now, as I said we are actually trading in a range,
so these announcements make the markets very volatile, so do remember that 6000 on the Nifty is your support zone and supports are meant to be broken (that’s what people say), and 6130 is also a small resistance, so if
that’s broken or broken down you will see some volatile
markets, so those are things that might help you for
the week ahead. I’ll if you’re trading Nifty. Also do remember
this is a bear market and rallies tend to get faded into, and we see
tremendous selling pressure. The curious case
against black money. Now I’m very sure that you have all heard that
India has a huge black money problem. You have people stowing away the unaccounted for
black money in offshore accounts. Now the OECD has announced a game changing mechanism that will be used to combat this disease. India is a a signatory in this and we will find out what this
exactly is on the 22nd and the 23rd February. In recent years
India has had a lot of challenges in the macro picture. We have had a depreciating Rupee, high inflation and an economic slowdown. However let’s look at what our stock
market has done against all other indexes
around the world including emerging and developed economies. What you see in front of you is proving
that the BSE Sensex, India’s benchmark stock index, has
outperformed all other emerging and developed
economies in the last ten years. That too in US dollar terms. This is as per an article in the Economic Times and we can see that the Sensex has
delivered an average return of 10.1 percent in dollar terms since
2004. That’s 10 years. And we believe that therein lies a big lesson for investors who
have doubts of the merits of long-term investing. Now speaking of the
long-term benefits of investing, the mutual fund industry is
now going to see impactful incentives for anyone investing
in mutual funds. Now this is fantastic news for the
90,000+ Cr. industry. You see in India people are generally very risk averse. We have people who do not intend to invest in the market
especially the middle class. And the middle class should invest
through mutual funds on a regular basis. These proactive moves to incentivize the middle class to invest in mutual funds will definitely have
middle-class invest more regularly in the economy and
India’s growth story through the stock market through
major funds. Now if you didn’t know, in India, less than 2% of the people invest in the stock market, whereas in the US its over 50 percent. We have a
very long way to go Can you imagine where the Sensex will be if we have 50% of India investing in the stock market? That’s a thought that I want to leave in
your head. And that’s it actually for the Week Ahead, I wish
you a fantastic week. My name is Prateek Singh and I will see you
again next week with more information to arm you, the investor.

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