Sunday, December 30, 2012

2013 forecast

INR - The inflation adjusted REER or the forward points suggest that INR will touch 60 this year. But I dont think this is gonna happen. The money pumped by QE machines are finally going to reach India this year. And we may see INR reaching 50 by end June possibly.

Nifty- Fiscal cliff will create short term bumps, but road is smooth beyond that. Nifty to breach 6000 by q1 and trade above 6000 for most of the year. I see nifty scaling all time high this year.

Bonds- Bond yields could slip to 7.5 as rate cuts begin but will start inching up from there on. Chances of more than 100 bps cut are bleak in 2013

Gold - Gold will show $1500 this year. Could be the worst performing asset this year. Some central banks may unite to prick this bubble.

Sunday, December 23, 2012

Fiscal cliff approaching climax

Time to fasten seat belts. Consider buying put options before heading off to beaches

Sunday, December 16, 2012

At the mercy of RBI

So I was right that markets will take a breather last week, but I was wrong why. Well not for the first time and hence time to share some learnings here. Macroeconomic events by themselves can not dictate market momentum in any major way, rather they only shape narratives to reinforce market dynamics for a certain while. For example, not a soul in the world knows whether 120k NFP addition next month will be bullish for the market or 160k. It would only depend on the context of the market at that time and a little bit on what market consensus will estimate then. In the slow changing world that we live in, mind you, nothing is a game changer. And certainly not that thing which an economist is telling you.

Having taken a heavy dose of self deprecation, I hope ordinary folks should start liking me now- my cherished dream since long. The market will correct further this week. In fact my guess is market wouldnt recover till rest of December. Central bank is at a kissing distance from victory over inflation, and whether they double their gusto or choose to uncork the bubbly, will be known this week. The only reason Nifty remains a medium term buy is due to Chidambaram. He knows his stuff and is the best man in charge.

Sunday, December 9, 2012

QE4 not now

I am having second thoughts about writing this blog. Because I suspect audiences of blogs like this are yet to develop the taste for the quality that I am going to provide. Also I am not a big fan of firing airguns aimlessly. But existential questions for later

First a recap of last week:

It was FDI on and FDI off market last week with unexpected twists and turns in the two houses. It ended on a positive note for the government and so for the markets. FDI in MBR is now a law and very soon walmarts and tescos will show up. The reform processes unleashed by PC got a boost and stage is now set for more bold actions. Separately RBI guvs rambled about growth inflation dynamics and how they would take that into account in subsequent policies even though current inflation is above their comfort zone. Whatever that meant, but bonds rallied.

This week:

Heavy week in terms of domestic data and also the week where FOMC members decide upon the trillion dollar question. I believe markets will take a breather as Fed may play spoil sport this week and RBI repeats the same next week

Sunday, December 2, 2012

Nifty 6200 or 5600?

It is no secret that this ball is clearly in government's court. The latest leg of rally has come after political stars began to align for retail fdi. Global risk appetite has also been supportive esp after fiscal cliff (or bluff) stopped making sense. Better captured here

So now cutting to the chase, go with Obama and PC, and therefore for 6200.

Hello World

This blog is about stuff that matter.

The complex interplay between financial markets and the macroeconomic forces that act upon them has always fascinated this author. He has no delusion about markets being rational. He does however believe that there is some method in this madness. To see that design amid the randomness of chaos is the source of alpha for him. He wants to share it with the world as an act of giving back.

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