Continued bad news from China, and weak earnings of large caps caused correction in Nifty, as Nifty cracks below 8500, and closes at 8462. On the international front, The People’s Bank of China (PBOC) allowed the yuan to depreciate almost 2 percent against the US dollar to levels last seen 3 years ago, sending a shock through global Forex markets. Indian investors are worried about impact of devaluation of Chinese currency. India’s largest bank State Bank of India (SBI) reported a mixed set of results. Net Profits beat market estimates but NPAs were a bit higher than last year. SBI Chairperson Arundhati Bhattacharya is confident that there will be a decline in NPAs. She pointed towards certain cyclical factors that affect SBI in the first quarter (April-June), and that NPAs have always shown up in the first quarter and going forward SBI is seeing reduction of stressed loans. SBI stock fell by 5% and closed 269. As expected, it was a high volume day for SBI. At P/E 11, the stock is attractively valued for investors who believe economic recovery is possible in 1-2 years from today.
Tag Archives: China
Markets Review – 27March2015
US Markets: The US markets opened lackluster on Monday morning and remained in profit booking mode throughout the weak. Investor sentiment was jittery on the back of better than expected domestic data thereby reviving possibility of an early rate hike by US Federal Reserve and geo-political headwinds. On the macroeconomic data front, a report from the US Commerce Department showed that new home sales grew 7.8% to an annual rate of 539,000 in February (analyst expected it at 462,000). US consumer price index increased up 0.2% in February 2015 after falling by 0.7% in January 2015. A report from the US Commerce Department mid-week also depicted an unexpected drop in durable goods order in Feb 2015 (down 1.4%). US initial jobless claims fell more than expected for the week ended 21st March 2015. Initial jobless claims fell to 282,000 from the earlier week levels of 291,000. Continue reading Markets Review – 27March2015
China Cuts Interest Rate by 25 bps – First Time in 4 Years
The People’s Bank of China (PBOC) has cut the interest rate by 25 bps in a surprise move for the first time in 4 years. Though the rate cut is not large, the timing was a surprise and the action indicates that the Chinese central bank is ready to act to prevent a much feared hard landing of the Chinese economy. The Chinese economy has faced the maximum impact from the ongoing slowdown in demand from the Euro region because the European Union (EU) is China’s single largest customer, and weak demand from EU has led to worries about the knock-on effect to domestic consumption if industrial activity loses steam dramatically. Continue reading China Cuts Interest Rate by 25 bps – First Time in 4 Years