Saturday, June 6, 2015

INDIAN MARKET & SECTORWISE STOCKS OUTLOOK FOR THE WEEK: 8.Jun.2015 - 12.Jun.2015

IT Stocks Outlook for the week – 08 to 12.06.2015 (Rupee movement eyed for Tech companies)

========================================================================

Indian Markets Outlook for the week – 08.Jun.2015 to 12.Jun.2015 (Global events to direct market next week)

( www.rupeedesk.in ) 

The equity market is seen weak in the next week, too, with traders likely to take cues from the advance of the Southwest monsoon and debt negotiations between Greece and its lenders. The Southwest monsoon hit the coast of Kerala with a four-day delay and the India Meteorological Department stated that conditions are favourable for its advance to states such as Karnataka, Andhra Pradesh and Tamil Nadu.

Greece deferred repaying its loan to the International Monetary Fund to the end of the month and has refused to accept the cash-for-reforms deal proposed by its lenders. Traders will also take cues from the global sovereign bond market. The volatility in sovereign bonds in US, Europe and Asia is likely to continue in the next week until Greece reaches a resolution with its lenders. It is obvious that the Greece worries would continue to boil in the background. On Monday, the market will also react to the US jobs data that will be released overnight.

Some are of the opinion that foreign institutional investors could direct funds from China to India owing to volatility in Chinese equities, but gains are unlikely to be sustainable. The market could bounce back in the next week, but traders are likely to sell on every rise.

While the overall sentiment in the market remains weak, traders remain bullish on the information technology sector as they expect the rupee to depreciate. IT stocks may gain as the rupee is likely to cross the 64-rupee level (against the dollar) in the next week. Reliance Industries will also be in focus in the next week as the company will hold its Annual General Meeting on Friday June 12.

( www.rupeedesk.in )
Posted by

Currency Market Training : Can currency futures help small traders?

Currency Market Training :
Can currency futures help small traders?
Yes. The minimum size of the USDINR futures contract is USD 1,000. Similarly EURINR future contract is EURO 1000, GBPINR future contract is GBP 1000 and JPYINR future contract is YEN 1,00,000. These are well within the reach of most small traders. All transactions on the Exchange are anonymous and are executed on a price time priority ensuring that the best price is available to all categories of market participants irrespective of their size. As the profits or losses in the futures market are also paid / collected on a daily basis, the scope of accumulation of losses for participants gets limited.
Posted by

Currency Market Training : Does the national economy of India need currency futures?

Currency Market Training :
Does the national economy of India need currency futures?
Every business exposed to foreign exchange risk needs to have a facility to hedge against such risk. Exchange-traded currency futures, as on MCX-SX, are a superior tool for such hedging because of greater transparency, liquidity, counterparty guarantee and accessibility. Since the economy is made up of businesses of all sizes, anything that is good for business is also good for the national economy.
Posted by

Currency Market Training : How and why does the demand and supply of a currency increase and decrease?

Currency Market Training :
How and why does the demand and supply of a currency increase and decrease?
There are several reasons. A rise in export earnings of a country increases foreign exchange supply. A rise in imports increases demand. These are the objective reasons, but there are many subjective reasons too. Some of the subjective reasons are: directional viewpoints of market participants, expectations of national economic performance, confidence in a country's economy and so on.
Posted by

Currency Market Training : How are currency prices determined?

Currency Market Training :
How are currency prices determined?
Currency prices are affected by a variety of economic and political conditions, but probably the most important are interest rates, international trade, inflation, and political stability. Sometimes governments actually participate in the foreign exchange market to influence the value of their currencies. They do this either by flooding the market with their domestic currency in an attempt to lower the price or, conversely, buying in order to raise the price. This is known as central bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the FOREX market make it impossible for any one entity to drive the market for any length of time.
Posted by

Currency Market Training : How do exchange-traded currency futures enable hedging against currency risk?

Currency Market Training :
How do exchange-traded currency futures enable hedging against currency risk?
On a currency exchange platform, you can buy or sell currency futures. If you are an importer, you can buy futures to "lock in" a price for your purchase of actual foreign currency at a future 10 date. You thus avoid exchange rate risk that you would otherwise have faced. On the other hand, if you are an exporter, you sell currency futures on the exchange platform and "lock in" a sale price at a future date. However, it may be noted that the contract will be marked to market at the daily settlement price and profit or loss will be paid / collected on a daily basis.
Posted by

Currency Market Training : If I am an AD Category I Bank, why should I become a member of a currency futures exchange? I have the interbank market, anyway.

Currency Market Training :
If I am an AD Category I Bank, why should I become a member of a currency futures exchange? I have the interbank market, anyway.
"The interbank market is a market for Banks. Small and mediumsized clients of Banks cannot directly participate in the interbank market. If a Bank is a member of a currency futures exchange, it can trade on behalf of its small and medium-sized clients, who otherwise would not have been able to benefit from fluctuations in currency exchange rates. Thus, Banks can increase their customer base if they become a member of a currency futures exchange. Banks themselves can also benefit from a currency futures exchange by arbitraging between the existing interbank market and the currency futures exchange. Larger participation in a currency futures exchange gives the exchange platform a greater vibrancy than the interbank market, which is limited to Banks."
Posted by

Currency Market Training : If I am an individual with no exposure to foreign exchange risks, does a currency futures exchange mean anything to me?

Currency Market Training :
If I am an individual with no exposure to foreign exchange risks, does a currency futures exchange mean anything to me?
Yes, it does, if you want to invest purely as an investor. You can benefit from exchange rate fluctuations just as you can benefit by investing in equities in the stockmarket. However, as in the stockmarkets, you also stand to lose money if the price movements are not in keeping with what you had anticipated. Participating in a currency futures exchange is risky, just as the stockmarket is. You should therefore be knowledgeable about the currency market if you want to participate as an investor.
Posted by

Currency Market Training : In which currency are the currency futures contracts settled?

Currency Market Training :
In which currency are the currency futures contracts settled?
They are settled in cash in Indian Rupees.
Posted by

Currency Market Training : What are benefits of spread contract?

Currency Market Training :
What are benefits of spread contract?
Spread contract give users the benefit to enter two calendar contracts simultaneously without the risk of partial (one leg) execution and at a lower impact cost.
Posted by

Currency Market Training : What are Currency Futures Contracts?

Currency Market Training :
What are Currency Futures Contracts?
Currency Futures contracts are legally binding agreement to buy or sell a financial instrument sometime in future at an agreed price. Currency Future contracts are standardized in terms of lots and delivery time. The only variable is the price, which is discovered by the market. Currency Futures contracts have different expiry validity and will expire after the completion of the specified tenure.
Posted by

Currency Market Training : What are the benefits of trading in Currency Derivatives

Currency Market Training :
What are the benefits of trading in Currency Derivatives
Currency Derivatives are very efficient risk management instruments and you can derive the below benefits:

i. Hedging: You can protect your foreign exchange exposure in business and hedge potential losses by taking appropriate positions in the same. For e.g. If you are an importer, and have USD payments to make at a future date, you can hedge your foreign exchange exposure by buying USDINR and fixing your pay out rate today. You would hedge if you were of the view that USDINR was going to depreciate. Similarly it would give hedging opportunities to Exporters to hedge thier future receivables, Borrowers to hedge foreign currency (FCY) loans for interest and principal payments, Resident Indians, who can hedge their offshore investments.

ii. Speculation: You can speculate on the short term movement of the markets by using Currency Futures. For e.g. If you expect oil prices to rise and impact India's import bill, you would buy USDINR in expectation that the INR would depreciate. Alternatively if you believed that strong exports from the IT sector, combined with strong FII flows will translate to INR appreciation you would sell USDINR.

iii. Arbitrage: You can make profits by taking advantage of the exchange rates of the currency in different markets and different exchanges.

iv. Leverage: You can trade in the currency derivatives by just paying a % value called the margin amount instead of the full traded value.
Posted by

Currency Market Training : What are the currencies traded on MCX-SX?

Currency Market Training :
What are the currencies traded on MCX-SX?
In the first phase of operations, only the USDINR currency pair was traded on MCX-SX. With the changing need of the participants, the regulators have allowed MCX-SX to facilitate trading in other major currency pairs as EURINR, GBPINR and JPYINR future contracts.
Posted by

Currency Market Training : What are the factors that affect the exchange rate of a currency?

Currency Market Training :
What are the factors that affect the exchange rate of a currency?
"A country's currency exchange rate is typically affected by the supply and demand for the country's currency in the international foreign exchange market. The demand and supply dynamics is principally influenced by factors like interest rates, inflation, trade balance and economic & political scenarios in the country. The level of confidence in the economy of a particular country also influences the currency of that country."
Posted by

Currency Market Training : What are the major fundamental factors that affect currency movements?

Currency Market Training :
What are the major fundamental factors that affect currency movements?
•Trade Balance - This refers to imports and exports, and is probably the most important determinant of a currency's value. When imports are greater than exports, you have a trade deficit. When exports are greater than imports, you have a surplus. A shift in the trade balance between two countries tends to weaken the currency of the country with greater deficit
•Wealth - Wealth is a country's reserves, in the form of gold, cash, natural resources, and so on. Basically any factor that affects a country's ability to repay loans, finance imports, and affect investments impacts the market's perception of its currency and the currency's value.
•Internal budget deficit or surplus - A country running a current account deficit has, on balance, a weaker currency than one that runs a budget surplus. This is tricky, however, in that the direction of the surplus or deficit affects perceptions and currency valuations too.
•Interest Rates - Funds move around the world electronically in response to changes in short-term interest rates. If three-month interest rates in Germany are running 1% less than three-month rates in the United States, then all other things being equal, "hot money" flows out of Euro into the Dollar.
•Inflation - Inflation in each country, and inflationary expectations, affect currency values. What good is a 10% short-term return in some country if inflation is running 15%?
•Political factors - Taxes, stability, whatever affects the international trade of a country, or the perception of "soundness" of the currency affect its valuation.
Posted by

Currency Market Training : What are the risks involved in currency futures market?

Currency Market Training :
What are the risks involved in currency futures market?
Risks in currency futures pertain to movements in the currency exchange rate. There is no rule of thumb to determine whether a currency rate will rise or fall or remain unchanged. A judgement on this will depend on the knowledge and understanding of the variables that affect currency rates
Posted by

Currency Market Training : What are the terms and conditions set by RBI for Banks to participate in exchange traded fx futures?

Currency Market Training :
What are the terms and conditions set by RBI for Banks to participate in exchange traded fx futures?
RBI has allowed Banks to participate in currency futures market. The AD Category I Banks which fulfill stipulated prudential requirements are eligible to become a clearing member and / or trading member of the currency derivatives segment of MCX-SX. AD Category I Banks which are urban co-operative banks or state co-operative banks can participate in the currency futures 09 market only as a client, subject to approval thereof, from the respective regulatory department of RBI.
Posted by

Currency Market Training : What are the trading hours on MCX-SX?

Currency Market Training :
What are the trading hours on MCX-SX?
Trading in currency futures is on all working days from Monday to Friday and is between 9.00 am to 5.00 pm.
Posted by

Currency Market Training : What are the various types of margins that are levied to manage the risk?

Currency Market Training :
What are the various types of margins that are levied to manage the risk?
The trading of currency futures is subject to maintenance of initial, extreme loss, and calendar spread margins with the clearing house / corporation. The details of the margins levied are mentioned in the respective product specifications.
Posted by

Currency Market Training : What is a currency futures contract?

Currency Market Training :
What is a currency futures contract?
A currency futures contract is a standardized version of a forward contract that is traded on a regulated exchange. It is an agreement to buy or sell a specified quantity of an underlying currency on a specified date in future at a specified rate (e.g., USD 1 = INR 46.00). (Note: USD is abbreviation for the US Dollar, and INR for the Indian Rupee)."
Posted by

Currency Market Training : What is a Spot Market?

Currency Market Training :
What is a Spot Market?
A spot market is any market that deals in the current price of a financial instrument. Futures markets, such as the Chicago Mercantile Exchange ( CME ), National Stock Exchange (NSE), MCX' SX, BSE offer currency futures contracts whose delivery dates may span several months into the future. Settlement of FOREX spot transactions usually occurs within two business days.
Posted by

Currency Market Training : What is Currency Derivatives?

Currency Market Training :
What is Currency Derivatives?
The term 'Derivatives' indicates it derives its value from some underlying i.e. it has no independent value. Underlying can be securities, stock market index, commodities, bullion, currency or anything else. From Currency Derivatives market point of view, underlying would be the Currency Exchange rate. To put it simply an example of Derivatives is curd which is derived from Milk. Derivatives are unique product, which helps in hedging the portfolio against the future risk. At the same time, derivatives are used constructively for arbitrage and speculation too.
Posted by

Currency Market Training : What is currency trading?

Currency Market Training :
What is currency trading?
"While trade is international, currencies are national. As international transactions are settled in global currencies, usually they are brought/sold for one another and this constitutes 'currency trading'."
Posted by

Currency Market Training : What is Forex?

Currency Market Training :
What is Forex?
Foreign exchange is the simultaneous buying of one currency and selling of another. Currencies are traded through a broker or dealer and are executed in currency pairs; for example, the Euro and the US dollar ( EUR / USD ) or the British pound and the Japanese yen ( GBP / JPY ). The Foreign Exchange Market ( FOREX ) is the largest financial market in the world, with a daily volume of over $4 trillion. This is more than three times the total amount of the stocks and futures markets combined. Unlike other financial markets, the FOREX spot market has neither a physical location nor a central exchange. It operates through an electronic network of banks, corporations, and individuals trading one currency for another. The lack of a physical exchange enables the FOREX market to operate on a 24 - hour basis, spanning from one time zone to another across the major financial centers. This fact - that there is no centralized exchange - is important to keep in mind as it permeates all aspects of the FOREX experience.
Posted by

Currency Market Training : What is the last trading day of these currency futures contract?

Currency Market Training :
What is the last trading day of these currency futures contract?
The last trading day of a futures contract on MCX-SX shall be two working days prior to the last working day (excluding Saturdays) of the month. The settlement price is the Reserve Bank of India's reference rate on the last trading day
Posted by

Currency Market Training : What is the minimum trading unit (i.e. contract size) and tenure of the USDINR, EURINR, GBPINR and JPYINR futures contract?

Currency Market Training :
What is the minimum trading unit (i.e. contract size) and tenure of the USDINR, EURINR, GBPINR and JPYINR futures contract?
The contract size of the USDINR futures contract is USD 1,000, EURINR future contract is EURO 1,000, GBPINR future contract is GBP 1,000 and JPYINR future contract is YEN 1,00,000. The contracts shall have a maximum maturity of twelve months. All monthly maturities from 1 to 12 months are available.
Posted by

Currency Market Training : What is the need of currency futures?

Currency Market Training :
What is the need of currency futures?
Currency futures are needed if your business is influenced by fluctuations in currency exchange rates. If you are in India and are importing something, you have done the costing of your imports on the basis of a certain exchange rate between the Indian Rupee and the relevant foreign currency. By the time you actually import, the value of the Indian Rupee may have gone down and you may lose out on your income in terms of Indian Rupees by paying higher. On the contrary, if you are exporting something and the value of the Indian Rupee has gone up, you earn less in terms of Rupees than you had anticipated. Currency futures help you hedge against these exchange rate risks.
Posted by

Currency Market Training : Which are the global exchanges that provide trading in currency futures?

Currency Market Training :
Which are the global exchanges that provide trading in currency futures?
Internationally, exchanges such as Chicago Mercantile Exchange (CME), Johannesburg Stock Exchange, Euronext.liffe, BM&FBOVESPA and Tokyo Financial Exchange provide trading in currency futures
Posted by

Currency Market Training : Who can trade in Currency futures markets in India?

Currency Market Training :
Who can trade in Currency futures markets in India?
Any resident Indian or company including banks and financial institutions can participate in the futures market. However, at present, Foreign Institutional Investors (FIIs) and Non-Resident Indians (NRIs) are not permitted to participate in currency futures market.
Posted by

Currency Market Training : Who is eligible to trade in Currency Derivatives?

Currency Market Training :
Who is eligible to trade in Currency Derivatives?
All Resident Indians as defined in section 2(v) of the Foreign Exchange Management Act, 1999 (FEMA, Act 42 of 1999) are eligible to trade in the Currency Derivatives segment. For participation by regulated entities, concurrence from respective regulators should be obtained. Currently, trading facility in Currency Futures at I-Sec will be offered to all Resident Individuals / HUFs / eligible Corporates fulfilling the FEMA criteria.
Posted by

Currency Market Training : Who trades Foreign Exchanges?

Currency Market Training :
Who trades Foreign Exchanges?
There are two main groups that trade currencies. About 5 - 10 percent of daily volume is from companies and governments that buy or sell products and services in a foreign country and must subsequently convert profits made in foreign currencies into their own domestic currency in the course of doing business. This is primarily hedging activity. The other 90 - 95 percent consists of investors trading for profit, or speculation. Speculators range from large banks trading 10,000,000 million currency units or more and the home-based operator trading perhaps 10,000 units or less. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders, and hedge funds all use the FOREX market to pay for goods and services, to transact in financial assets, or to reduce the risk of currency movements by hedging their exposure in other markets. The speculator trades to make a profit by purchasing one currency and simultaneously selling another. The hedger trades to protect his or her margin on an international sale from adverse currency fluctuations. The hedger has an intrinsic interest in one side of the market or the other. The speculator does not.
Posted by

Currency Market Training : Why exchange-traded futures? What's wrong with the currency forward market that has been existing in India for a long time?

Currency Market Training :
Why exchange-traded futures? What's wrong with the currency forward market that has been existing in India for a long time?
The exchange-traded futures, as compared to OTC forwards, serve the same economic purpose, yet differ in fundamental ways. Exchange-traded contracts are standardised. In an exchange-traded scenario where the market lot is fixed at a much lesser size than the OTC market, equitable opportunity is provided to all classes of investors whether large or small to participate in the futures market. The other advantages of an Exchange traded market would be greater transparency, efficiency and accessibility. The counterparty risk (credit risk) in a futures contract is eliminated by the presence of a clearing house/ corporation, which by assuming counterparty guarantee, eliminates default risk. Thus, introduction of exchange-traded futures help in overall development of the forex market in the country
Posted by

Currency Market Training : Why should one trade in Indian exchanges as compared to international exchanges?

Currency Market Training :
Why should one trade in Indian exchanges as compared to international exchanges?
Indian currency futures enable individuals and companies in India to hedge and trade their Indian Rupee risk. Most international exchanges offer contracts denominated in other currencies.
Posted by
Subscribe to: Posts (Atom)