Tue, 24th May 2016

Anirudh Sethi Report


Archives of “rbi” Tag

Bank Nifty-Below 16226,Intraday PANIC Upto 16130 is possible.Grab Unitech -Target 27-28.Sell SKS Micro,IRB ,DLF…If U can


Last Close :16229 level.

1405313303664 (1)

No Rate……………………….Means ??Sharp Correction in Bank Nifty ??

Below 16226 level ,Intraday PANIC upto 16154———–16130 is possible.


Now ,Break below 16130 level with volumes and stays below for 15-20 minutes ,Watch Sharp slide upto 16058–16034

101% More Details to our Subscribers during trading hrs



Do U Remember :We Told u about Triangle and Target of 423 level.

On 8th Sept @ 394 told u………..stock will zoom by 28 points ??Just see …Yesterday it kissed  421 level.

World Was Running for PNB ,BOB ,SYNDICATE BANK ,PSU BANK Stocks


On 5th Told Sell at 619,Again at 635……..Sell and Relax !


We see PANIC upto 597——————592 level.

Yes ,Watch Bloodbath below 592 level if sustains with volumes upto 577–572 in hrs only.


24 +3.40 = 27.4+ ( level…………..we can see )

Above 24.75 level if trades with volumes we see 26—27 level in hrs only.

Buy 28 Call & RELAX !!


Major Hurdles at 2667———————2693 level.

Now around 2650-2670 level ,Fresh Short u can Do…………..Stop will be 2693 on closing basis.


In Cash Segment :Below 322 level…………….if remains it will favour Bears only

Slide upto 307————302 level 

On Rise ,Sell Sell Sell….Short Term Looking Tired.FO levels to our Subscribers


Just watch :1047———————1037 ( major support or last hope )

Break below 1037 with volumes and stays below we see sharp panic upto 1006—996 level.


Below 258 level if trades with volumes and not crosses 262 level………….Then ??

Watch PANIC upto 252.50—–250 level in hrs only.


Below 174 level……………………………….???With volumes if trades then ?

Watch PANIC upto 171—170 & then who will save ?

More Details ,Intraday levels to our Subscribers ,Updated at 8:59/16th Sept/Baroda/India

Emerging Markets-An Update

1) Brazil’s central bank is not tapering its FX intervention plan

2) The Philippine central bank outlined the tools it will use to counter Fed tapering
3) The RBI is taking further steps to improve the liquidity situation and help stabilized capital markets
4) There were some notable trade data surprises out of Asia
5) Israel central bank delivered a dovish surprise rate cut
1) Brazil’s central bank is not tapering its FX intervention plan. Central bank president Tombini assured markets that the $60 bln intervention plan is not about to change. Given the positive performance of the BRL and the Bovespa, many had started to speculate that officials would soon start to get concerned again about excessive currency strength, especially after USD/BRL broke below the 2.20 level. The real should continue to trade on the strong side for now, but we would soon start to look for opportunities to take the other side, especially against the Mexican peso.
2) The Philippine central bank outlined the tools it will use to counter Fed tapering. The bank is sounding very confident about its ability to deal with further volatility in the PHP – and we mostly agree, at least compared with many other EM countries. According to Deputy Governor Guinigundo, “We can ride out any turbulence, as we have policy tools in our hand that we can deploy anytime.” He also said the measures include boosting dollar and peso liquidity, careful surveillance of risk, use of forward guidance, tapping currency swap agreements, and possible tightening of monetary policy. Read More 

Trade Credits for Import into India- RBI (Full Text )

 As per the extant guidelines, AD Category – I banks may approve availing of trade credit not exceeding USD 20 million up to a maximum period of five years (from the date of shipment) for companies in the infrastructure sector, subject to certain terms and conditions stipulated therein. It is also stipulated that AD Category – I banks are not permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution for the extended period beyond three years. No roll-over/extension is permitted beyond the permissible period.

3. On a review, it has been decided to allow companies in all sectors to avail of trade credit not exceeding USD 20 million up to a maximum period of five years for import of capital goods as classified by Director General of Foreign Trade (DGFT). It has also been decided to relax the ab-initio contract period of 15 (fifteen) months for all trade credits to 6 (six) months.

4. AD Category – I banks are, however, not permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution for the extended period beyond three years.

5. All other aspects of Trade Credit policy will remain unchanged and should be complied with. The amended Trade Credit policy will come into force with immediate effect and is subject to review based on the experience gained in this regard.

6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals required, if any, under any other law.

RBI wastes Fed moment

Given that there is little evidence of RBI’s draconian rate hikes of July 15 helping the rupee stabilise—indeed, it only fell after the moves—it comes as a big surprise that RBI Governor Raghuram Rajan has not just refused to fully roll back the interest rate hikes, he has gone on to raise the repo rate, and indicated there could be more in the near future. That the Governor spoke of RBI’s moves to “dampen volatility in the foreign exchange market” is not surprising since he supported the moves when he was chief economic advisor—on Friday, he spoke of the “timing and direction of further actions on exceptional measures” being “contingent upon exchange market stability, and can be two-way”. This is surprising, and it would have been nice if he had dwelled on it more in the press conference since a simple plot of various EM currencies over the past few months makes it clear the rupee’s movement—the sharp collapse and the quick, though not complete, pullback—was not unusual. To the extent, the rupee’s pullback in recent weeks has been sharper than that of some other currencies, this was due to the decision to keep oil companies’ demand out of the market by opening a separate window at RBI for them—this will have only a temporary impact as this lowers India’s forex reserves—and the announcement of the $50 billion Japanese swap, $10 billion of which can be drawn down almost immediately. For the rest, all EM currencies appreciated once it was clear the Syria situation was not going to spiral out of control into a larger war and when the US’ weak jobs data suggested the Fed taper would be a mild one—eventually, the data looked weak to even the Fed, and the taper itself has been put off for a few months. Read More 

IIP likely to be 1-2 % in August: Dun & Bradstreet

Factory output is likely to be in the range of 1-2 per cent in August and industrial performance will remain a concern for the next few months due to a slew of reasons like low demand, high interest rates and pessimistic investment scenario, says a report by Dun & Bradstreet.

According to the global research firm, the index of industrial production (IIP) is expected to remain subdued for the next few months, except for the festive months during which demand usually uplifts industrial production.

“Going ahead, IIP is expected to remain in the range of 1.0 per cent—2.0 per cent during August 2013,” the report said.

Industrial production grew 2.6 per cent in July, expanding for the first time in three months, on improved performances in the manufacturing and power sectors, raising hopes of a recovery and expectations the RBI will cut interest rates to boost consumer demand. Read More 

North Block in favour of fresh dose of liquidity

The finance ministry wants the Reserve Bank of India to inject liquidity into the economy by cutting the daily cash reserve ratio (CRR), while keeping the key rates unchanged.

The North Block’s expectations come on the back of a surprise breather given by the US Federal Reserve to emerging economies by deciding not to withdraw its bond buying programme.

CRR is the amount of money banks have to compulsorily hold with the RBI on a daily basis.

The RBI had asked banks to maintain an average cash reserve of 99 per cent of their requirements on a daily basis from 70 per cent to check the volatility in the rupee.

With the rupee appreciating from its all-time low of Rs 68.8 to the dollar on August 28 to Rs 61.77 today, economists with the government feel there is a scope for a CRR cut.

However, top finance ministry officials said the RBI might want to hold on to key policy rates as inflation continued to be a concern, especially because crude oil prices might go up now after the US Fed’s decision.

The officials also pointed out that the Fed might start tapering its stimulus later this year or early next year. Hence, there was a need to continue the curbs on imports along with the search for new markets and moves to buy foreign oil assets at reasonable prices. Read More 

India’s feedback loops and the divisive Mr Modi

eagleOr, the line between a pretty standard EM problem and those of a uniquely enormous democracy heading into an election which happens to suffer from many of those standard EM issues.

First, the negative loopiness from Goldman’s Tushar Poddar:

Contextualizing the channels of transmission in India’s case—its large current account deficit and external funding needs have led to the INR depreciating by 18% against the USD since early May as capital inflows have slowed. This induced the RBI to raise short-end rates by 300bp on July 15. The increase in short-end rates is impacting the banking sector—both in terms of higher costs of funding and losses on their investment portfolios. Banks may reduce credit to the private sector as a result.

The corporate sector, which had already scaled back on investment activity, may retrench further. GDP growth slowed to 4.4% in Q2 2013, and we see risks that it could slow further as a result. A slowdown in growth is already affecting India’s economy through multiple channels. It is leading to weaker tax revenue growth—which fell to 6.5% yoy in April-July compared to 21% yoy over the same period in FY13. A slowdown can also lead to a rise in non-performing loans in the banking system. Our India Banks team expects impaired assets to rise by 30% in FY14E from the current level of 9.1% of total loans at end-March 2013. In a scenario that assumes a very aggressive 50% write-off of impaired assets, with the latter reaching 12% of total loans, the fiscal costs of recapitalization could be 3% of GDP. Finally, the weaker growth could lead to a further slowdown in capital inflows and affect funding available to Indian companies. This may be an area of concern as short-term borrowings by companies, largely trade-related credit, stood at US$87bn as of March 2013, while the total external debt of companies was US$145bn. Read More 

India’s waiting game

The Reserve Bank of India’s first policy update under governor Raghuram Rajan this Friday is unlikely to inject much optimism into the economy.

The global backdrop has improved since its last meeting in July — particularly with upbeat data in China — but India’s own situation has worsened. Growth is slowing, high inflation is proving to be sticky, and measures to bolster the rupee from record-lows are likely to slow growth even further.

HSBC’s chief economist for the region, Leif Eskesen, calls it “global strengthening, local weakening.”

The heightened macroeconomic uncertainty prevailing because of the pressures on the currency are making consumers and businesses more cautious about spending. Capital outflows, falling equity prices and rising yields are also hurting the investment cycle.

The government, meanwhile, isn’t in any position to stimulate — instead it must rein it spending, focus on trimming one of the widest current account deficits in the emerging world, and fend off rating agencies from cutting its credit status into junk territory.

There’s little the RBI can do about this. Read More 

Too early to celebrate on rupee, current account deficit

The kind of commentary that has greeted the arrival of Raghuram Rajan at the Reserve Bank of India (RBI) betrays the absence of serious thinking in the country. He might have warned of financial sector imbalances in the world but I do not think he would have predicted that India would greet his arrival with commentary that is blatantly sexist. Imagine the reaction that would have awaited male journalists writing about a good-looking lady governor at the central bank. There is far too much of escapism and denial on display. That is why most commentary has jumped from being despondent to euphoric on a fortnight of relief rally in Indian stocks and the currency. Market prices often overshoot on either side before settling down in the middle.

For example, the government reported that the Index of Industrial Production (IIP) rose in July by 2.6% year-on-year and the decline in June was revised down to -1.8% from the previously reported -2.2%. In terms of sectors, manufacturing and electricity output went up in July while mining output contracted. According to use-based classification, capital goods led the output improvement in July with a gain of 15.6%. This was due to a category called “Electrical Machinery and apparatus” that has a weight of about 2% in the overall IIP. It jumped to 573.9 from 312.5 in July last year! One of the products that made a specific contribution to this category is “Insulated Rubber Cables”. The production of this item jumped 336% year-on-year. Production of ayurvedic medicaments and vitamins jumped on an annual basis. Certainly, none of these are signs of sustainable turnaround in industrial production, in areas where they matter. Read More 

Crisil sees banks’ restructured assets at Rs 4 Lakh Crore by FY14-end

warningSounding an alarm of the detoriating asset quality of banks, ratings agency CrisilBSE -0.49 % has said gross non-performing assets will touch 4.4 per cent and the restructured book will balloon to Rs 4 lakh crore by the end of this fiscal. 

“Gross NPAs (non-performing assets) were at 3.3 per cent in March 2013 and grew to 3.7 per cent by the June quarter. We feel they will grow to 4.4 per cent by March 2014,” CRISIL Managing Director and Chief Executive Roopa Kudva said here over the weekend. 

An NPA is a debt obligation where the borrower has not paid the interest and principal repayments to the lender for an extended period of time. Corporate Debt Restructuring (CDR) allows the reorganisation of a company’s outstanding obligations. 

Kudva said restructured assets, under which an account’s repayment period is extended or interest payment delayed without classifying it as an NPA, will touch Rs 4 lakh crore this fiscal, up from the Rs 3.1 lakh crore in March, 2013. 

“The system will add up to Rs 1 trillion (lakh crore) of restructured assets during the fiscal and considering some assets will be reclassified during the fiscal, we feel the total component will touch Rs 4 trillion by March 2014,” Kudva said.  Read More