Imports continue to see pressure from gold and oil…

   Imports for the month of August stayed elevated at the level of $35.46 billion. For the month of August, the imports of crude were up by 14.22%, which is understandable considering the stronger crude prices globally. Electrical goods imports were up by 27% and machinery imports were also up by around 19%. But the big worry is that gold imports for the month of August were up by 69%. Part of this can be attributed to the fact that last year was a weak year for gold imports due to tepid demand and a jeweller’s strike. All the same, the Indian economy can ill-afford such a massive growth in gold imports. Remember, that gold imports are an unproductive import and, unlike machinery or electrical goods, they do not add to domestic productivity. That is why a rise in gold imports is worrisome. The RBI and the government may have to seriously look at either reducing the level of gold imports, attaching export obligations or give special incentives for soaking up domestic gold supply.

                                 

                                                                                                                Source:-Angel Broking blog.

In the equity markets the only thing that matters is returns.

   More people have made money in the equity markets by focusing on risk than by focusing on returns. Once you learn to control and measure your risks your returns in the markets will automatically follow. It does not matter whether you are a small trader or a billionaire trader; you will effectively have to trade with finite capital. As long as capital is finite, the core challenge is to manage your risk.

There is another perspective to the superiority of risk over return. Let us say you took a wrong decision and lost 50% of your capital. Now on this smaller base you need to earn a 100% return to come back to parity. Which is why risk becomes so important? Risk management is not just about putting stop losses but it is also about when you should hedge your equity holdings and when you should stay out of the market altogether. The biggest challenge for any trader or investor is to ensure that the capital does not get depleted beyond a point. The bottom-line is that you must put more focus on managing risk. The returns will follow logically.

   

IIP RECOVERS BUT MANUFACTURING STILL DISAPPOINTs.

  

The IIP for the month of July 2017 was slightly higher at 1.2% compared to the negative growth shown in the month of June. However, manufacturing continued to disappoint. This IIP number was important for a variety of reasons. For the first quarter ended June 2017, the GDP had come at a multi-year low of just 5.7%. This had positioned the Indian economy a full 100 points below the Chinese economy in terms of economic growth. Even on the GDP front the major pressure came from the manufacturing sector with the SME sector being the worst hit due to the lag effect of demonetization. Additionally, the precautionary strategy around GST was also coaxing manufacturers to focus more on inventory depletion rather than on fresh production.

INDUSIND AND BHARAT FINANCIAL FINALLY AGREE TO EXPLORE A MERGER.

 

The proposed merger between IndusInd Bank and Bharat Financial has been a matter of discussion for a fairly long time. It was seen by many analysts as the perfect fit between the first mile and the last mile of financial services. IndusInd Bank with its strong client base and corporate relationships needed headway into the lucrative rural and semi-urban markets of India. That is where Bharat Financial has built granular expertise over the years. Bharat Financial, on the other hand, needed the support of a large player with a sound balance sheet and a healthy capital adequacy. IndusInd surely fitted the bill. Where there was little by way of surprise in the merger announcement, it would be interesting to understanding the modus operandi of the merger and the mutual synergies accruing to both the parties to the transaction.

                                                                                                                                    Source:-Angel broking blog.

WHY HAVE FIIS BEEN SELLERS IN THE MONTH OF AUGUST?

 Foreign Institutional Investors (FIIs) have been aggressively selling across emerging markets and India has been no exception. In the 4 weeks of August, FIIs have pulled out over Rs.15,000 crore from Indian equity markets with the trend turning sharply negative due to a combination of geopolitical uncertainty and weak earnings season in the June quarter. In fact, the month of April has been one of the worst months in terms of FII flows into India in the last 8 months. On the other hand, domestic institutions (DFIs) have been aggressive buyers in Indian equities in August and have infused nearly Rs.15,400 crore in August, which is holding up the markets. Consider the chart below which captures the gist of the cumulative FII selling that has happened in Indian equities.

                                                                                      

                                                                                                                                     Source:-Angel Broking Blog