Its pouring dollars!!!Can we have it???

Pre Script: Thank you all for the comments and the criticism too!!!But i would appreciate if you post your comments queries or criticism here rather than on GTALK.

Pre Script2: For the Critics...The previous two posts were compiled, the data was accumulated from sources and was filtered and presented. The data is bound to be taken form somewhere. So these posts, you cannot call them copied but ya compiled..

Frantic Injection of huge amount of dollars in the Financial System...
Its pouring Dollars friend!!!!(and weirdly, water here in Pilani)
Are we going to get some of it??????or only financial institutions will take it home and clear their Bad Debts????(Quite Obvious meaning...)

$247 billion... FED????? Let me put it in figures
247,00 crores or 247000 million or 247000000000 Dollars........ or 1136200000000 rupees at Dollar to ruppee being 46.. This has already surpassed the total budget of the Government of India for the last fiscal.
So much of dollars?????? Into the market!! FED is ready to weaken dollar against the currencies!!!!
But den this just FED..

Bank of Japan(BoJ) injects 3 trillion yen into markets..Now i cannot handle the amout of zeroes trillion has...

Russian President Dmitry Medvedev, pledges $20 billion( Dont know the conversion in roubles!!!) injection into the stock market and also cut oil taxes.

China to scrap down duty on stock purchases and buy shares in three of the biggest banks in China to boost investors confidence..

India???????Nothing!!!!!!!!!Just supporting!! No 'explicit' injection of Liquidity! No rates cuts!! No 'explicit' heavy purchases in Stock markets?????Why?????

So far we Indians have shown strong resilience to such great pressures. Our markets follow the Global trend but by the end of day recover and negate off most of the losses. With these kind of dramatic pull backs, you might be proud to be an Indian..
The only dominant fallout in India is ICICI hit, by Lehmann bankruptcy,of $350 million,large but relatively meager..
Apart from ICICI, No explicit hit.
This shows how fundamentally strong we are and the extent to which we have decoupled(Yes!!Again the literal meaning will suffice.) from the Global turmoil.
Injection of humongous amount of dollars!! What does this predict???
It simply states how pathetic the present state is.. It states how disastrous future can be. It shows how vulnerable are the Policy makers.. It shows how the world is coupled to THE US(our Uncle SAM!!).

After Bear Sterns, we got Merill Lynch. After Merill lynch we got Fannie Mac and Freddie Mae bailout??. Then the bankruptcy of Lehman.(FED negotiating a proper price for Barclays to buy most of Lehman though!!). AIG $85.8 billion bailout..
What next?????
Morgan stanley??? Goldmann Sachs....???

Haven't it been for the timely intervention of FED, we would have had the same Great Depression of the 1930's when classical economics was followed. 200 banks were closed down,people were on roads and all this just because of a simple assumption- "There exists some restoring forces or an Invisible Hand that will rehabilitate the situation and equilibrium will be restored".

Where is India heading???? The Sensex just kissed our previous estimate of 12.5k. (Very soon than expected though!!). There's ambiguity, fear in the minds of people. Certainty has certainly taken a hit. Half the analysts, optimistic, predict sensex might be resilient and 12k would not be breached but the pessimistic half think that 12k support would be broken and not only broken but shattered.

What does this mean for us??? We students???? Placements worse!! No recourse there!! Acads??? always worse!! So no recourse there!!!
What i believe if we go by the analysis of the pessimists or the optimists fate would never again give us this opportunity.
Let it breach the psychological 12k and make the market conducive and affordable.Then we plunge in our saved pocket money( Or watever) into these so called Efficient Demand Supply driven markets.
But den, the other side of the coin says OIL has started gaining its lost ground, Inflation will not allow the market to have its run. FII( Foreign Institutional investors) sucking out money. Already a billion dollar has been sucked out in the first half of the September.
What to believe??? what theory to go by???
But den its worth to take the risk!!
Its an opportunity that takes a lifetime to come... I dont think so again can we see such great economical, political or psychlogical state of affairs.
How i wish i could exploit it!!!!How i wish i could.......

By
Riddhiman Jain

Save my Rupee...Uncle SAM!!!!

Save my rupeee.... Save my Money.
Leave me Dollar, forgive me for appreciating against you...

The rupee posted its biggest fall in a decade on Tuesday 16th September 2008, hit by risk aversion and banks arbitraging a weaker offshore rate, although suspected central bank intervention stopped the slide just short of 47 per dollar.

Confused?????Let me Explain...

The recent attacks on the financial markets have turned out to be a money making opportunity for players with overseas presence. Multinational banks operating in India, large corporates and diamond houses have cashed in on the difference that has surfaced in the dollar-rupee exchange rate between the Mumbai currency market and the unregulated, unofficial, offshore markets Singapore, Dubai and London.

The difference (that reflects the arbitrage opportunity) was as high as 40 paise to one rupee last week. Its the outcome of hedging and foreign portfolio managers taking big bets that the rupee will slip further against the US currency. Such bets, which primarily boil down to these players shorting( Selling the rupee in the anticipation of a fall without actually owning it) the Indian currency, have made the rupee weaker in the overseas market than in India. In other words dollar has become stronger in offshore market than what is quoted here.

Corporates and Institutions that have the flexibility and the wherewithal have profited by buying the dollar in India and selling it on the offshore market- better known as Non deliverable Forward market(NDF).
As the name suggests, all deals in the NDF markets are forward deals settled in dollars.(Just for the readers-A forward contract is an agreement between two parties to buy or sell an asset at a specified point of time in the future. The price of the underlying instrument, in whatever form, is paid before control of the instrument changes. This is one of the many forms of buy/sell orders where the time of trade is not the time where the securities themselves are exchanged.).
Its not a spot market( immediate dealing market) since rupee, a non-convertible currency, cannot be 'delivered' on the offshore market. So the deals are settled in cash. On maturity of the forward contract, the differnce between the Forward rate( Future rate) and the RBI(local) refernce rate on the date of maturity is either paid or received in dollar by the party. The RBI refernce rate is based on the 12pm rates of the few active banks in Mumbai.

The following example might make it clearer...

The one month forward dollar was 45.83 in India against 45.96 on the NDF market. Many corporates will take advantage of this differnce- buying forward in India and selling forward abroad to lock in a gain of 13 paise.

Therefore this has lead to shooting up of Volumes and and therefore banks are ( Yes!!! banks have to be paid a margin for NDF positions) charging less margin for NDF trades. Its a billion dollar market which believes that rupee will fall faster than the official exchange rate.

Under the prevailing onslaught of arbitragers its only RBI who is selling the dollar and we can say it, without any doubt, that it is the intervention of RBI that accounts for the difference in the rupee rates.

Adding to it,there is lot of oil, equity and NDF-related dollar demand, and even importers are covering near-term imports.( Importers tend to loose by Dollar gain..Its easy Think!!!)



On a black Sunday for Wall Street, 10 of the world's biggest banks also agreed to establish a $70 billion emergency fund while the Federal Reserve said for the first time it will accept stocks in exchange for cash loans.
Such is the case where FED agreed to take the most unsecured form of collateral( Equity) for Cash loans. This depicts the pitiful situation of the Financial system across the globe. This would nothing but worsen the situation for the short term and hurt sentiments.
Hence, Uncle Sam is drowning so are the third world countries.....


Compiled By
Riddhiman Jain
For refernce please refer here

Blood Bath... A bomb blast in the markets!!

Terrorists - Lehmann brothers, Merill lynch, Bear Sterns( arrested long back) had been planting bombs here in the markets for over a week. Some of them were detonated by the Indian Investors, many were silent ones but the one that blasted today 15th September, 2008 at 9.55 was the worse of its kind.. Pulling the index down 728 points and the NIFTY index down below 4000. Not even a single blue chip survived the explosion. Reliance Infrastructure ricocheted by 9% . RIL breaching its psychological 1900 mark. Even IT sector was not spared. Satyam down 8.85%..
Investors dumped shares across the board. Realty counters faced the brunt of the bear onslaught. Technology and power shares also took a sharp knock.


The crack on Dalal Street widened as global financial worries mounted. The US financial system took a turn for the worse after investment bank Lehman Brothers' filed for bankruptcy, troubled insurer American International Group asked the Fed for a lifeline and Bank of America agreed to buy Merrill Lynch.

With Lehman and Merrill out of the picture, three of the top five US investment banks have effectively departed the scene in less than six months. Bear Stearns was acquired in a fire sale by JPMorgan in March.

On a black Sunday for Wall Street, 10 of the world's biggest banks also agreed to establish a $70 billion emergency fund while the Federal Reserve said for the first time it will accept stocks in exchange for cash loans.

Tracking the weak sentiment globally, the Bombay Stock Exchange 30-share barometer tumbled by 724.99 points or 5.18 per cent at 13,275.82.

The previous terrorist OIl is nw trading below $100 a barrel...Still no respite..
Inflation now is all set to take a forward leap again. 13.5% is its next target( Base Effect). Rupee weakening by arbitragers now....

Next target 12.5k!!! Lets see how far will this take us!!
Hey mighty Lord, Spare us from this turmoil.