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Dear Traders and Investors,
Welcome to this week's The Week Ahead.
We'll be talking about a lot of interesting things this week for the 3rd of Februrary,
2014.
There is the Aviation Sector. There is the Quantitative Easing Tapering that we will
speak about at the end of the video. And also we'll be talking about Hot Sectors, Oil and
Gas.
Before we move on to the week ahead, let's have a recap of the week that just went by.
We saw Nifty fall almost 300 points last week on the announcement of the RBI. Now the Reserve
Bank of India announced a 25 basis points increase from 7.75% to the new present 8%.
So this Repo Rate hike is a complete surprise. The RBI has been keeping economists on their
toes.
The last four announcements have been completely a surprise versus what the economists had
been expecting. What's interesting is that this time the RBI announcement of the 25 basis
point hike was a complete surprise. There was a survey of economists done by Bloomberg
in which they did not expect the RBI to raise the interest rate because of the inflation,
which has actually softened from last week's numbers and came in below expected levels.
However, there is a reason why the Repo rates were hiked.
This, I will cover at the end of this video.
Also, after the announcement was made, markets plunged, and if you look at a chart of Nifty
Futures quickly right here, we can see that Nifty is now officially in a Bear Market.
The markets are now a sell on rise market.
With that, let's begin the upcoming stories for this week. I am Prateek Singh, and let's
get started.
In major news, the US downgraded India's Aviation sector from the existing category 1 to category
2. Now this is bad news for the aviation sector, especially if you look at a specific stock
like Jet Airways. It's been falling for several months with no signs of an upturn, fundamentally
speaking or even technically speaking. So this news will not be seen in a good light.
The second sector that I'd like to touch upon is in the Telecom sector, particularly Tata
Communications and Tata teleservices. Now, this is not confirmed news; this is based
a strong rumor. You want to should look out for confirmation officially before making
any investment decisions. So, there is a strong rumor that Tata Teleservices and Communications,
owned by the $100 billion Tata Group, will be sold to Vodafone. You should look for confirmation
of this acquisition because this will create value for shareholders so if you do hold on
to this stock do track news very, very closely. Now let's get started with this week's Hot
Sector: Oil and Gas. Now the outlook that we'll be discussing is not based on the next
few weeks, but at least the next twelve months
So this sector has been seeing a lot of pressure on the financial front, mainly because of the fluctuation between the Rupee and the dollar.
Now the Rupee has fluctuated wildly and has seen a depreciation. We've seen it to from 50 to 55, and after April it's gone past the 55 mark
all the way past 65 against the American Dollar. now, this is a bad thing because most of our consumption in India
comes from gas resources and is through imports, so if the Rupee depreciates it becomes more expensive to buy that same amount of resource.
Now, we've seen a lot of pressure on the oil and gas sector, but things are not that gloomy. Let's see what the government is doing to counter this.
There are three major moves by the government. First, is that the diesel prices have been hiked to help the ailing companies manage the burden expenses of their imports.
Number two, and perhaps the most important, the government is trying to incentivize the research and development.
Through incentivizing exploration of oil and gas within India. Now this is very, very good. The next 12 months should see a brighter,
And better, more optimistic oil and gas sector. The rupee is expected to be more stabl, thanks for Mr. Raghuram Rajan our governor.
of the Reserve Bank of India. And secondly, the incentivization of locally sourced and produced coal
reducing our dependance on the imports. This will help the Indian economy grow faster and better.
And just like the past few weeks, this is the earnings season, so we will be looking at what India Inc. has to offer for its earnings next week.
If you're wondering how you can use earnings season as a way to profit or invest, you should probably check out the link here. and see how you can the information we are about the present.
So let's start with Monday. Monday has Tata Chemicals, Lupin, and a whole other set of stocks releasing their earnings.
Tuesday has a long list including Tech Mahindra and Power Finance corporation.
Wednesday is also interesting with pharmaceuticals GlaxoSmithKline and Ranbaxy, also BHEL.
Thursday has a long list with pharmaceuticals and MRF, which has outperformed the market the past one year.
Friday, just like the past two weeks, has a long list of stocks releasing their earnings. Including Godrej, Reliance Capital, and Jet Airways, the aviation powerhouse.
Finally, let's end the video with the announcement the US made on the quantiative easing tapering.
Of another $10 billion until March, 2014. Now what this basically means is that the amount of notes circulated
Decreases, expectedly. This causes the dollar to appreciate. It's safe to say that the cheap liquidity the US was offering
is now coming an end. And the RBI has a whole new set of challenges. They increased the Repo rate by 25 basis points last week.
And this was possibly done to combat what's happening in the US to further appreciate the Rupee because a Repo rate hike
strengthens the Indian currency against the US currency. As I said, the Repo rate also causes the Rupee to stabalize
However, the equity markets see this adversely, and is also negative news for the GDP. So we can say that the RBI has its plate full
Trying to manage what's happening in the global macro event and also manage the growth and prosperity back here home in India.
We are now done with this week's Market Outlook! I will see you again next week with more information to arm you so that you can become a better trader, and investor.
On behalf of RKSV and Market Scientist, I bid you a fantastic week ahead!