Among blinds, one eyed person is the king….

Good morning everyone,

The world of finance is really a thrilling & super dynamic. Things might appear simple but sadly it is not. Here expect the unexpected. When whole world has an eye on dollar now suddenly shifted on Euro. Thanks to Greece. Suddenly the weak dollar started to gain strength. Among the blind, "one eyed man is the king". That's what happening with the dollar, as I am writing this, news is just coming that dollar started to recede as Europe promised to help Greece. If we look to the world of finance through the frame of so called financial journalist who is in the business of telling the reason finding story of every event, it seems utterly simple. Things are much more complex and randomness factor is great.

The role of one eyed king cannot be ruled out, by simply on the news of extending helping hand by Europe to the Greece. Now the question where is the safe haven of investment. Gold is already at the high. But why we invest in gold though we know very well that we are not going to any future cash flow? Strange!!! The simplest explanation is in the gloomy situation, when risk aversion is very high we do invest in gold. Bubble in gold has been already created and I don't think that rationally we have scope of appreciation in gold. Hence the option again left with the dollar only after recent euro debacle.

World will feed again USA by parking money with US T Bills. And that will help the USA economy indirectly to come out of woods sooner than expected. Hopefully other countries too, will come out soon. J rranjan27@gmail.com

RBI in Dilemma………….

Friends, I was out of blogging due to some personal reasons, inherited laziness ..etc.. J

 

In meanwhile I am about to complete the fantastic & challenging to read book "The Black Swan". So taking lesson from the book, I restrained myself to make a prediction rather I will talk more about consequences of an event. J

Now monetary policy is due on 29^th Jan. Banks are saying that there will not be any change. But there is a case to tighten the monetary policy, FIIs are pumping money not only in equities but too in debt market in a big way. The reason is simple enough they are getting higher interest rate here plus by appreciating rupee will help them to make money too. So there is already plenty of liquidity in the system. There is going to be tough job for RBI what to do. CRR hike will suck out money from the system, but that in turn will raise the further interest rate that will not be a good news for the corporate world. As I am drafting this, NIFTY is already down 70 odd points. But no choice for RBI, neither for FIIs they are going to stay here no choices for them either.

At this juncture where inflation is all time high, economy is just recovering, plenty of money in the system and also they have to maintain the growth rate. RBI is in great dilemma but no choices left other than to tighten the monetary policy. rranjan27@gmail.com

 

 

 

 

 

Weakness of dollar and Party time in Indian Equity market…..

The dollar making new low day by day against the basket of foreign currency….. As in my previous posting, I gave the reasons about weakness of dollar. Now dollar doesn't seem to safe heaven. Money will flow into other asset classes. And one of them is emerging market equity market and here Indian equity market presenting itself to investors as favorite destination. India is comparatively less expensive then Chinese market & potential to grow more.

It is no wonder that money is flowing in Indian equity market. Chain reaction has started, money is moving out from dollar will damage it further and this situation is not going to end any soon. Strengthening of rupee against dollar making, further India an attractive destination for investment. We are not going to see any major correction on bourses. Next big move expected in mid caps. So friends It is party time here again……. Enjoy…… rranjan27@gmail.com

This is five year GOLD index chart.....


   Now any idea where it could go from here it hits already high.  Now one second simple demand law will apply here.....In near   term I am  not bullish....  But high probability to make new high in 1st Qtr of 2010. Friends its related to problem to the "green buck" .  People joke that what president Obama will do with Nobel prize money for peace (Irony is that he wins when the nation he heads is at war..) ??  Probably will use in stimulus....  ha ha good joke...   But sadly whatever happened in financial world last year.... and after that some one has to pay the price..... And this time it is Dollar which is paying the price.........  On the verge of loosing sheen as global currency....  Time will tell everything...      rranjan27@gmail.com 

It is inevitable :- Gold will make new high ..... Its matter of time..

Review this in conjunction of my previous posting.. Here, this is the chart of dollar index. strength of dollar against the major currency...  Now Gold is set to make record new high from here..  Why ??  You can ask me always..   :)   rranjan27@gmail.com

RBI... view on Inflation

Hi, Friends

  Find here.. what RBI said on monday about inflation... I marked the important..


Monday August 31, 05:12 PM Source: Financial Express

Containing inflation a challenge: RBI

With food price inflation in double digits, the Reserve Bank is faced with the daunting task of keeping inflation in check, the bank Deputy Governor K C Chakrabarty said.
Concerned over the rising food prices he said, "The food price inflation is already around 10 per cent. Our key challenge is how to keep the inflationary pressure low."
Speaking at an event of the Institute of Banking, he dwelt on a range of issues from drought to interest rates to government borrowings and said the country would continue to grow at 6 per cent-plus.
However, he pointed out that if the "drought affects the agriculture growth, it will partly affect the growth number".
On interest rates he ruled out any further cuts and said the central bank could even reverse its expansionary stance if the drought-induced inflationary prices go out of control.

"I don't think today anybody is expecting interest rates to come down further," he said.
Admitting the huge government borrowing to have exerted some pressure on interest rates, which have "already gone up a little-bit," he said he expects interest rates to be stable as of now.