HOW TO INVEST IN RISKY MARKET

INVESTMENT IN RISKY MARKET

We are discussing in how many form we can invest in todays risky market. The rupee has been giving tough time to investors by its unpredictable movements in global market. The currency, which slumped and touched a record low of 68.36 to a dollar on 28 August 2013, has risen 12.75% since the new RBI governor Mr. Raghuram Rajan takes in charge of India’s monetary regulator; it was at 59.64 on April 2.

Invest in Risky marketThe currency has gained from a host of factors in late. Improved sentiment due to steps taken by the Reserve Bank of India, or RBI, to stem the slide and hope of a stable government at the Center have helped it conquer the 60 level and even push towards 59.50. Experts are not too sure about the way INR is behaving in the midst of global inflation, Iraqi crisis, and heavy demand for US dollar, but say it may touch 50-55 in the short term if India gets a stable government in the next 5 months. This is because in such a case foreign investors are expected to pump in huge money into Indian equity and debt markets. This will increase demand for the rupee.

Let us understand factors that are giving upward direction to the rupee and how you can structure investments to gain from its movements in risky market.   How to structure investments to gain in INR fluctuation? Since September, the RBI has taken a number of steps to lower banks’ non-performing assets, deepen financial markets and ensure clear monetary policy guidance. It has also shown resolve in preventing currency volatility by buying and selling US dollars.

The government, too, has played its part by controlling the country’s current account deficit or CAD. This has given investors confidence about India’s macroeconomic stability. A lower CAD means less demand for foreign currencies to bridge the gap and, hence, lesser risk of rupee depreciation. As a result, they have been buying a lot of Indian securities. Indian equity markets have surged to their lifetime highs. On a year-to-date basis, till May 16, foreign institutional investors, or FIIs, had put in over Rs 77,958 crore in Indian equity and debt markets. Government and corporate debt has received a lion’s share of Rs. 36,000 crore. However, with FIIs preferring short-term debt over long-term debt, there is little room for further inflows.

KINDS OF ASSETS AND ITS BEHAVE IN THE MARKET

1. Equities: Assets like equities depends upon different kinds of goods and services sector wise. The fast moving consumer goods are pharma and IT which will be under pressure from a rising rupee due to dependence on exports, and if rupee is declining then there is favorable time for exporter. While core sectors such as engineering, infrastructure, banking and capital goods are expected to perform better than the index in the medium to long term.” A stronger rupee makes exports expensive and less competitive. Typically, engineering goods and gems and jewellery makers also gain when the rupee rises as they import a lot of raw materials or vise versa. While investing, it is important to have glance on rupee value and should have the knowledge of goods India exports and imports.

 

2. Debt: “High interest rates and rupee rise will give a boost to returns that foreign investors can earn from fixed income instruments. However, lower inflation will translate into lower interest rates, reducing the attractiveness of fixed income investments, as well as to loose before attractive interest rate provider. Fiscal deficit and government borrowings will decide the trend in 10-year G-secs, which shall determine the level of interest rates in India. Rupee appreciation will tame inflation and, thus, support the cause for reducing interest rates.

 

 

3. Commodities: India is a huge importer of various commodities, including crude oil, copper, urea and gold. Rupee appreciation brings down the landed cost of imports. This reduces inflation. Lower rupee volatility helps users of these commodities price their finished products in an orderly manner. If rupee strong then the import will rise, and if rupee weak then export will have favorable time of business. Perhaps, India must increase its exports than imports by measuring maximising alternative use of resources whose demand is high.

 

4. Real estate: The sector has been under pressure due to high interest rates over the last few years. Any easing of inflation and interest rates will revive demand. However its investment moving very fast, as its give handsome return within a year, and maximise its return if invest for a long terms. The investment should be make on the gound of area developments measures passed by the Government, like national highways, airports, metro rail facilities etc. It is very important for the investor, to have good judgment from every sector before landing to invest in order to get good return.  

 

INDIAN RAILWAY FARE HIKE ARTICLE : http://www.seedsofloveindia.org/why-govt-hike-railway-fare-without-thinking-about-common-man-budget/


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WHY INR IS WEAK AGAINST GBP & USD

INR VS USD / GBP

The INR was weaker against the GBP/ USD on Monday and was close to reaching its lowest level in seven weeks against the US Dollar as concerns over rising oil prices due to Iraq fresh violence by ISIS and increased demand for Dollars weighed.
The fighting in Iraq sent oil prices gradually pick up to higher level last week which in turn increased concerns that the higher cost of the crude oil would have a negative impact upon India’s trade deficit and have a knock on effect upon inflation. This is  unfavorable time as the price of oil increase, the exchange value increase due to import and 2nd highest population nation demand for oil also increase leads to massive pressure to control in stable rupee value against GBP and USD. As India imports around 80% of its oil any rise in prices has a negative effect upon the nation’s trade deficit data.

  INR“The currency is likely to be volatile given the concerns over uncontrolled emerging out of Iraq. The Rupee is likely to be under pressure given that India is a net importer of oil,” said the co-head of currency and strategy at Edelweiss Financial Services Ltd. As the financial year comes to a close the Indian Rupee was also weakened by an increased demand for US Dollars from Indian importers.   Ending a two-day falling trend, the rupee on Tuesday recovered by seven paisa to close at 60.13 against the US dollar on the back of a sharp rise in local equities following a drop in global crude oil prices. Concerns over the current macroeconomic situation after recent spike in global crude oil arose due to Iraq’s crisis, lessened as crude prices dropped giving some relief. This led to sharp rise in domestic equities, giving respite to the investor fraternity and also helped the rupee recovery. At the Inter bank Foreign Exchange (Forex) market, the local currency commenced higher at 60.13 a dollar from last close of 60.20. It was trapped in a narrow breadth of 60.07 and 60.18 before concluding at its opening level of 60.13, a net rise of seven paisa or 0.12 per cent.

 REASONS FOR WEAK VALUE  OF (INR) INDIAN RUPEE

 1. It is because of large scale pulling out of investments by Foreign Institutional Investment.  

2. Short selling of shares by the FII in the spot as well as future market since effect of inflation throughout the world, especially in USA.  

3. Due to excessive demand of US Dollar.

4. Excess import of available materials in India over less export as compare to import.  

5. Indian using foreign company products and service where Indian product and service available but souring.  

6. Vanishing of Indian currency in black money and corruption, where records unavailable.  

7. Circulation of duplicate notes of Rs. 1000 and Rs. 500 also played a vital role falling of Rupee value.

8. Many Indian MNC’s are earning high profit due to higher exchange rate or weak Rupee value, as they get more profit from weak Rupee value.  

9. Valuation of liquid gold i.e petrol by middle east in terms of Dollar and not in terms of Rupees, hence the demand for US dollar goes higher day by day.  

10. Excessive corruption in defence product purchase also lead unexpected loss of money to foriegn arms company. India should developed its own weapon and discover more research like DRDO. 

11. Losing of Indian skilled labour and HRD to foriegn nation, India need skilled labour and HRD to develop building towards positive growth.  

For more details click the link: https://www.youtube.com/watch?v=GW7wu3uyz9g



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INDIA & CHINA BILATERAL RELATION



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India & China comparison

India China trade relations are the most important part of bilateral relations  for basic equality of world’s most populous countries and fastest growing economics. The India China trade relations are regulated by the India China JBC, which ensures a free exchange of products and services between the two nations.
 
 Indian Exports to China
The principal items of Indian exports to China are ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. In order to increase the extent of exporting Indian goods to China, however, there should be a special emphasis on investments and trade in services and knowledge-based sectors. The other potential items of trade between India and China are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy products. Great potential also exists in areas like biotechnology, IT and ITES, health, education, tourism, and financial sector. 
 
Chinese Exports to India
The main items that comprise Chinese exports to India are electrical machinery and equipment, cement, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils. Value added items like electrical machinery dominates Chinese exports to India. This exhibits that Chinese exports to India are fairly diversified and includes resource-based products, manufactured items, and low and medium technology products. It is said that if India is to capture the markets of China and enjoy profits, then it would have to discover new merchandise and branch out its exports to China
The most imporatnt things is that India and China should keep in mind, that, to control the most populous country is not the easy task. Beside having most populous nation, both the countries government did a good job to there citizen by keeping peace relationship among the nation. Both India and China is totally different from the world’s economy in comparing the per capita GDP. Both the nations should discuss, on the issue how to generate more employment, in there nation regarding the two countries investment. Both India and China is focusing on fastest growing economy, hence it is very important that the two nation need to co-operate each other regarding the better development in every area.
 

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