Financial Awareness

Currency Carry Trade

 

Carry trade in simple terms means borrowing in one currency where the interest rates are low and investing this loan money in high yielding assets some where else. A classic example of this is the carry trade going on since so many years using the Japanese Yen as the borrowing currency. Interest rates in Japan have been at near zero percent since the last 7-8 years. Traders all over the globe have taken Japanese Yen loans at very low interest rates and invested the same in other potential high assets like equities, commodities, real estate, government bonds, art, gold etc all across the globe. A simple example of this can be taking a loan in Japanese Yen at say 0.50% and converting this money into US Dollars and investing it in US Treasuries yielding say 2%. Due to the difference between the interest earned (2%) and the borrowing interest rate (0.5%) the trader makes a clean profit of 1.5%. This might look like a risk free trade and the most lucrative one. But hold on. Currency exchange rates may play spoilsport in this trade which seems risk free in the first look. We will see this later how currency exchange rates play a very important role in carry trade.

Read more...

Economy

Second Quarter Review of Monetary Policy 2009-10

The RBI announced its Second Quarter Review of Monetary Policy for the Year 2009-10 today and as expected, has left the key rates unchanged. Though the RBI kept key rates unchanged, it hiked Statutory Liquidity Ratio (SLR), the deposits that commercial banks are to park in government securities, by one percentage points to 25 per cent.

While this should have brought some cheer to the markets, they plunged deeper into the red not only because the RBI looks set to raise interest rates going forward, but also because the central bank has upwardly revised its target inflation by March 2010 end to 6.5% from 5% earlier.

The upward bias in interest rates was apparent from the RBI's move to hike the statutory liquidity ratio (SLR) to 25% from 24%. Having said that, whether interest rates in the future rise or not will depend on whether the inflation continues to rise the way it is doing now, and the economic momentum continues to pick up pace.

Read more...

Editor's Choice

RBI Governor on Emerging Market Economies

Remarks by Dr. D. Subbarao, Governor, Reserve Bank of India at G-30 International Banking Seminar in Istanbul on October 5, 2009 organized on the occasion of the IMF-World Bank Annual Meetings 2009.

 

1. From the perspective of Emerging Market Economies (EMEs) and particularly for that of India, I will highlight five concerns. These are: first, timing of exit from the accommodative monetary policy in the context of rising food price-led inflation but still weak growth; second, the possibility of another surge in capital flows, especially if we turn out to be an outlier in withdrawal of monetary stimulus; third, monetary transmission mechanism as it is evolving from the crisis period; fourth, return to fiscal consolidation and quality of fiscal adjustment; and finally, the implications of the efforts towards financial stability on financial inclusion and growth.

 

Read more...
Stocks
Behavioural Aspects of Investing in Stocks PDF Print E-mail
AddThis Social Bookmark Button

Let me tell you a short story : There was once a smart young guy who like all of us was a charming, intelligent and hard working fellow (please replace guy with gal – for the ladies reading this blog). Now this guy, like others knew that the stock market is the place to invest your money if you want to get a good return. So he would occasionally dabble in the stock market and would make a few bucks here and there, nothing serious though.

One day our friend was relaxing at home, watching CNBC, where a smart confident looking analyst recommended the stock of a hot upcoming company (lets call the company longshot). The analyst was extremely bullish and was going ga-ga over the prospects of the company. This was a hot company in a hot sector (hot – hot !!). The company had increased its profits by 5 times in the last 3 years and was growing rapidly. The promoters were confident that sky was the limit and they would be the next infosys of their industry.

Read more...
 
Quick Analysis of Essar Oil, Jai Corp and KLG PDF Print E-mail
AddThis Social Bookmark Button

Rohit Chauhan has been investing his own money for the last 10 years and his long term goal is to continue to beat the stock market by 5-8% per annum in a 3 year rolling cycle. He has been blogging on investing for the last 4 years now. His blog is an online diary of his investment philosophy based on the teachings of Warren Buffett, Ben Graham, Phil Fisher and other value investors.

Rohit writes, "I recently came across this article which highlighted some stocks which have jumped more than 100% in the last one month. Out of curiosity, I decided to do a quick analysis of some of these stocks to see if I may have picked any of these stocks based on the fundamentals and valuation. The analysis which follows has not been done in depth and is usually the quick check I do to reject or continue further research on the stock."


Read more...
 
Stock Picking in the Cement Industry PDF Print E-mail
AddThis Social Bookmark Button

The Indian construction industry is very large and is a growth driver to various sectors of the economy. It employs about 31 million persons – second only to agriculture in terms of employment. It consumes 40-50% of the National Plan outlay and contributes 20% of GDP

The cement industry is the most visible beneficiary of the housing and construction boom in the country. The importance of the housing sector in cement demand can be gauged from the fact that it consumes almost 70%-80% of the country’s cement.

Read more...
 
Strategy to adopt for picking up stocks in a volatile market PDF Print E-mail
AddThis Social Bookmark Button

In this volatile market, what should you do as an investor? What strategy to adopt while picking up stocks?

 

The equity markets have been in a volatile mode since last few quarters. Most of the retail investors have been stranded with long positions, after the massive fall in the month of January. Since then their participation in the equity markets has been very low. The reason behind this is that most of the investors are confused in which way the market will head because of the high volatility.

Read more...
 
Smart Traders make Rs 1000 crore in a month; Under SEBI scanner PDF Print E-mail
AddThis Social Bookmark Button
Raghu had blogged about the Friday sale of 4% equity in Reliance Petroleum on his blog . This fact has bought RPL under the SEBI scanner and Raghu sincerely hopes that these sharks are taken to task for such dubious acts which ruin the stability of the market.

Mint  has carried an article on this and also the so called Smart Traders, who are a hoax group, also made it to the news in Financial Express

Read on to read how this group made Rs 1000 crores within a month!
Read more...
 
<< Start < Prev 1 2 Next > End >>

Page 1 of 2
RocketTheme Joomla Templates