Nifty Intraday 18th Jan 2010

Short Term (5 days) : BULLISH      Medium Term (21 days) : BULLISH      Long Term (63 days) : BULLISH   

Level Type	R5	R4	R3	R2	R1	Pivot Point	S1	S2	S3	S4	S5
PIVOT POINTS	5407.77	5370.37	5332.97	5295.57	5273.88	5258.17	5236.48	5220.77	5183.37	5145.97	5108.57
FIBONACCI PIVOTS	5318.68	5305.74	5295.57	5281.28	5272.45	5258.17	5243.88	5235.05	5220.77	5210.59	5197.65
CAMARILLA PIVOTS	5293.34	5272.77	5262.49	5259.06	5255.63	5258.17	5248.77	5245.34	5241.92	5231.63	5211.06

SMAs	20D: 5169.85, 34D: 5134.71, 50D: 5082.14, 89D: 5016.92, 200D: 4518.07

EMAs	20D: 5192.25, 34D: 5145.73, 50D: 5097.50, 89D: 4962.50, 200D: 4408.06

BOLLINGER BANDS

Upper Band: 5378.83, Lower Band: 4960.87, Mid Band: 5169.85

PARABOLIC SAR

5169.55

Nifty Intraday 15th Jan 2010

Short Term (5 days) : BULLISH Medium Term (21 days) : BULLISH Long Term (63 days) : BULLISH

Level Type	R5	R4	R3	R2	R1	Pivot Point	S1	S2	S3	S4	S5
PIVOT POINTS	5416.48	5376.13	5335.78	5295.43	5277.67	5255.08	5237.32	5214.73	5174.38	5134.03	5093.68
FIBONACCI PIVOTS	5320.37	5306.41	5295.43	5280.02	5270.50	5255.08	5239.67	5230.15	5214.73	5203.76	5189.80
CAMARILLA PIVOTS	5304.29	5282.09	5271.00	5267.30	5263.60	5255.08	5256.20	5252.50	5248.80	5237.71	5215.52

SMA 20D: 5158.89, 34D: 5130.48, 50D: 5068.38, 89D: 5009.68, 200D: 4506.51

EMA 20D: 5185.94, 34D: 5139.27, 50D: 5091.18, 89D: 4956.00, 200D: 4400.53

BOLLINGER BANDS Upper Band: 5372.38, Lower Band: 4945.40, Mid Band: 5158.89

PARABOLIC SAR 5169.55

Shatakshi

 

 

Simple Charts

Simple Charts ( http://simplecharts.blogspot.com/) is for people who believe that Price is all inclusive and you need no more than Price itself to trade. The blog shows the Charts for various timeperiods - 1Day ( Intraday), 5 Day ( Intraday), 1 Year ( Daily), 1 Year ( Weekly). These charts for various time periods show us various Moving Averages ( Simple and Exponential) which are respected by markets everytime. This is still in development phase and future improvements are in pipeline. Happy Informed Trading  because beauty is in being simple.

Update: Now trade Bank Nifty ( http://nsebank.blogspot.com/ ) charts also on similar lines

Trading System for Making Profits in Confusing Markets

Friends, I am trying to implement an Trading Strategy proposed by Mr Bill Williams called Chaos Trading( read his book Trading Chaos: Applying Expert Techniques to Maximize Your Profits) on excel to give an insight in current confusing markets. This is an honest endeavour to understand what is the present trend and following steps which will lead to identify profitable trades. What I have done is to understand the theory through various sources ( books & websites) and present it in an easily comprehensive manner for all and sundry. I will be more than happy to receive your comments to improve this for future trading. Also, I am ready to remove this if it violates any copyright/intellectual rights issues.

Coming back to the Chaos Trading Strategy.
This trading strategy is a simple logic based strategy which tells us to first identify the trends, verify the trends, identify the trading signals, verify the trading signals and execute them if the sentiment is conducive. Seems like very easy and logical but I am amazed as to how it has been done in a very orderly manner in this trading strategy along with verifiable results.



Check out full Trading System at http://niftylivechart.blogspot.com/

Trading Tip For A Profitable Life

Are you looking for a short cut in Indian Stock Markets but were unable to find one.....

Your wait is over. No Technical Analysis , Stock Tips, Rumors. Its open out there and warrants your attention. Just five seconds before the market starts and you know how Nifty/Sensex would behave today. No speculation, its hard reality which forms the basis of what I say.

Check my post FII's - The Open Secrets You Would Like To Know on my blog Nifty Live Charts which has all the secrets which were never communicated to you before.

You will miss this post at your own risk.

Terrific or Terrible

What do you thing next week can be? The focus is Tuesday .. so is it going to be Terrific or Terrible week for Nifty and Sensex?

Learn more on the same in Mangal ya Amangal

Something to chew on

Lets dispel some myths with some hard facts. I did an analysis of Sensex for last two years data and this is what I found.

Free Live Nifty Trading Terminal

It gives me immense pleasure to share with my valued visitors that I have created a new blog Nifty Live Chart for effective short term trading for 4-5 days range. Now people like me don't have to go hunting for tips and techniques from other sites and analysts. We have it for free.

The unique part of the blog is that I have created a live technical indicator Slow Stoch which is not commonly available for free. The technique to trade with this technical indicator is that you have to BUY when the BLUE line is on the TOP of the RED line and SELL when the RED line is on the TOP of the BLUE line. If you notice the chart for Slow Stoch you will notice that it moves in cycles and thus you can easily trade the TOPS and BOTTOMS in share market.Just keep noticing the Slow stoch live indicator for the day. If positive then bullish and if negative then bearish.The best part is that it is FREE for use of my valued visitors. Try it for yourself!!!!

Charts available on this live blog includes:
5 Day Nifty Spot Interactive chart
Live Nifty Futures Chart
Live Nifty Spot and Futures Chart

Live Quotes for major global indices are also displayed on the blog.

Happy Trading!!!!

Great Site for trading

Check out this great site I came across. I found it very useful for trading. The only drawback is that it has info only on NSE stocks.

Buzzing Stocks

The best part is that it has real time data and updates every 2-3 minutes. Now you don't have to go hunting for tips. This site gives real time tips for intra day trading. To top it there is Short Term Stock picks, Medium Term Stock picks, Long Term Stock picks, all for free.

Check out the left hand bar it has all what you need for trading

My best picks are

REAL-TIME MARKET REPORTS

Intraday Stock Screener

NIFTY Dynamic Heatmap

NEWS, RESEARCH& ANALYSIS

Instant Stock Analysis
Stock Search/Screener
Search Builder

The malaise of "Stock Advisors"

I was surfing one of my favorite sites Valuenotes.com and spilled over to the new forum which was started a few days back. A common question doing rounds was "Market Crash" . I am quite surprised at the fickle mindedness of the people who are glued on to TV channels to get some "Tips" by the "Advisors". I am damn sure that these very people might have been banking on the "advisors" who were shouting on all business channels about how soon Sensex will be touching that 25000 mark. I still remember how quick people were in giving their own judgement on how Sensex would touch 20000 in 2-3 days after it touched 19000.

As in my previous article I enumerated the anomalies doing rounds in the market, I feel a desire to prick the bubbles created by the "advisors" on business channels . I would like to remind that I am not averse to such advisors but I take their advice with a pinch of salt. I'll tell you why. First things first, the "advisors" business is thriving only because the market is doing good.This point is very important and has the hidden message why you should not believe these "advisors" 100%. Have you seen any advisor who was not advocating for further investment when everything was hunky dory? I have not seen any one. This because they know that their business happens only when the market is on an upward rally. Any break in that would mean people being apprehensive and a downfall in their business. This is why all "advisors" like rallies and even when they know in their heart that something is wrong, they would still suggest investment. Today only I saw a question put up by an investor on future course of action on investment of 500 shares of Reliance Energy @ 1850's in the current market. Do you sense something wrong here? That poor investor got himself in the market at a time when the scrip was running amok. Now he is in mess because he is not clear what to do now. Who are the people who are driving such innocent people into the D-street? The "advisors" offcourse. The investor is also not so innocent because its your hard earned money and you should have given a thought when you invested at such high levels.

A piece of advice for all new gurus of stock market. Think before you invest.

A sensible take is to wait for 3 important triggers in a very short term
1. SEBI decision on P notes on Oct 25
2. RBI’s mid term review of annual policy due on 30 October 2007
3. US Fed take on interests

Any definite course of action can only be determined after these near term triggers.

Till then ... Peace Ho!

Wobbly Wednesday - Sensex,Nifty in Turmoil - October 17 2007

The last few weeks have seen what the experienced hands had not seen in their lifetime - Equity markets at all time high, Gold at 28 year high and Oil at unprecendented heights. This is an anomaly in the flow of money from one markets and other. Traditionally money moves from one market to another with the results visible from gaining and losing markets. However this time the markets had behaved as if there was no logic and only exuberance had a say on sentiments.

Time to be cautious is old gents say when such times are prevalent. Market were trading at P/E of 26 which rose from P/E of 22-23 just a few weeks back. Do fundmentals change so quickly? This creates doubts and rightly so our FM said which was taken lightly by the bulls. The bulls didn't notice that the bubble which arose from the easy liquidity comng from the Fed cut since September 18 was as hot as water on a hot pan. It can vanish as quickly as it appears on the scene.

The other side of the story was that the friendly FII's were not sentimentally attached with the stock markets and they were simply minting money where it is possible. Recent Fed cut coupled with strong rupee transaled into a money spinner for the FII's who cannot manage such returns in the recessionary US and European markets. This resulted into a slosh of hot liquidity which chases strong returns. The concerns on such liquidity was evident when all concerned with the Indian economy viz SEBI,RBI and Finance Ministry collabrated to come out with a way to control such liquidity. Todays clamp on the Participatory notes was just the kind of trigger which can prick buubles and take air out of them.

Talking about PN's or P notes action taken by SEBI is not unwarranted as some would say. SEBI has actually tried to control the quality of funds and not the inflow of funds. FII's who are still bullish on the India Story will still be interested. It's just that the regulator initated at the wrong time for the raging bulls.

However things should not be gloomy and markets are still fundamentally strong when you compare with other bubbles in the past. Japan stocks traded at an unrealistic P/E of 100
at the high of the Japanese bubble. So, we are still miles away from that kind of bubble but it is good be cautious because Precaution is better than cure.

A word of advise for the retails investors. When your doodhwala and panwalla starts investing in stock markets, its time that you make exit.

Stock Tips - Thursday 13 September 2007

Stocks with Uptrend on Thursday 13 September

Name
ABB
ACC
BAJAJAUTO
BHARTIART
DABUR
GAIL
GRASIM
HDFC
HDFCBANK
IPCL
ITC
LT
M&M
MARUTI
NATIONALU
RANBAXY
RCOM
RELIANCE
RPL
SAIL
SBIN
SIEMENS
STER
TATAPOWER
TATASTEEL
ZEEL

SENSEX

For 12/09/2007 the closing price was 15,505.3604.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 15,130.33.

The projected upper bound is: 16,185.39.

The projected lower bound is: 14,853.29.

The projected closing price is: 15,519.34.

NIFTY

For 12/09/2007 the closing price was 4,496.8501.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are ranging.

The projected upper bound is: 4,699.93.

The projected lower bound is: 4,299.34.

The projected closing price is: 4,499.64.



Stocks with Downtrend on Thursday 13 September

Stock Tips - Wednesday 12 September 2007

Stocks with Downtrend on Wednesday 12 September

Name
BHEL
BPCL
CIPLA
DRREDDY
GLAXO
HCLTECH
HEROHONDA
HINDPETRO
ICICIBANK
INFOSYSTC
MTNL
ONGC
PNB
REL
SATYAMCOM
SUNPHARMA
SUZLON
TATAMOTOR
TCS
VSNL
WIPRO

SENSEX

For 11/09/2007 the closing price was 15,542.7695.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 15,112.69.

The projected upper bound is: 16,228.17.

The projected lower bound is: 14,892.51.

The projected closing price is: 15,560.34.

Note: these price projections are for reference only, and can be easily exceeded by the market.

NIFTY

For 11/09/2007 the closing price was 4,497.0498.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are ranging.

By the way, prices are vulnerable to a correction towards 4,398.26.

The projected upper bound is: 4,701.74.

The projected lower bound is: 4,299.69.

The projected closing price is: 4,500.72.

Note: these price projections are for reference only, and can be easily exceeded by the market.

Stocks with Uptrend on Wednesday 12 September

Stock Tips - Tuesday 11 September 2007

Stocks with Downtrend for Tuesday 11 September 2007



Name
ACC
BHEL
BPCL
CIPLA
DRREDDY
GLAXO
HCLTECH
HEROHONDA
HINDPETRO
ICICIBANK
INFOSYSTC
M&M
MTNL
ONGC
PNB
REL
SATYAMCOM
SUNPHARMA
SUZLON
TATAMOTOR
TCS
VSNL
WIPRO

SENSEX

For 10/09/2007 the closing price was 15,596.8301.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 15,086.93.

The projected upper bound is: 16,282.88.

The projected lower bound is: 14,948.63.

The projected closing price is: 15,615.76.


NIFTY

For 10/09/2007 the closing price was 4,507.8501.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

By the way, prices are vulnerable to a correction towards 4,396.08.

The projected upper bound is: 4,712.60.

The projected lower bound is: 4,310.68.

The projected closing price is: 4,511.64.

Stocks with Uptrend for Tuesday 11 September 2007

Stock Tips - Monday 10 September 2007

Stocks with Downtrend for Monday 10 September 2007

Name
ACC
BHEL
BPCL
CIPLA
DRREDDY
GLAXO
HCLTECH
HEROHONDA
HINDPETRO
ICICIBANK
INFOSYSTC
M&M
MTNL
ONGC
PNB
RANBAXY
REL
SATYAMCOM
SUNPHARMA
SUZLON
TATAMOTOR
TCS
VSNL
WIPRO

SENSEX
For 07/09/2007 the closing price was 15,590.4199.
Overall, the bias in prices is: Upwards.
Short term: Prices are moving.
Intermediate term: Prices are trending.
By the way, prices are vulnerable to a correction towards 15,049.79.
The projected upper bound is: 16,281.36.
The projected lower bound is: 14,942.91.
The projected closing price is: 15,612.14

NIFTY
For 07/09/2007 the closing price was 4,509.5000.
Overall, the bias in prices is: Upwards.
Short term: Prices are moving.
Intermediate term: Prices are ranging.
By the way, prices are vulnerable to a correction towards 4,385.04.
The projected upper bound is: 4,715.46.
The projected lower bound is: 4,312.64.
The projected closing price is: 4,514.05.



Stocks with Uptrend for Monday 10 September 2007

Making your money work for you

Beta
Risk is an important consideration in holding any portfolio. The risk in holding securities is generally associated with the possibility that realised returns will be less than the returns expected.

Risks can be classified as Systematic risks and Unsystematic risks.

Unsystematic risks:
These are risks that are unique to a firm or industry. Factors such as management capability, consumer preferences, labour, etc. contribute to unsystematic risks. Unsystematic risks are controllable by nature and can be considerably reduced by sufficiently diversifying one's portfolio.


Systematic risks:
These are risks associated with the economic, political, sociological and other macro-level changes. They affect the entire market as a whole and cannot be controlled or eliminated merely by diversifying one's portfolio.


What is Beta?

The degree to which different portfolios are affected by these systematic risks as compared to the effect on the market as a whole, is different and is measured by Beta. To put it differently, the systematic risks of various securities differ due to their relationships with the market. The Beta factor describes the movement in a stock's or a portfolio's returns in relation to that of the market returns. For all practical purposes, the market returns are measured by the returns on the index (Nifty, Sensex), since the index is a good reflector of the market.

I have provided Beta values ( from NSE) with volatility for many companies.A good combination can ensure stable profit

Sr. No > Security Symbol > Industry > Beta > Volatility %
1 > ABB > Electrical Equipment > 0.91 > 2.69
2 > ACC > Cement & Cement Products > 1.02 > 3
3 > BAJAJAUTO > Automobiles - 2 and 3 wheelers > 0.74 > 2.46
4 > BHARTIARTL > Telecommunication - Services > 1.11 > 1.83
5 > BHEL > Electrical Equipment > 1.13 > 2.84
6 > BPCL > Refineries > 0.66 > 1.75
7 > CIPLA > Pharmaceuticals > 0.85 > 1.94
8 > DABUR > Personal Care > 0.54 > 2.1
9 > DRREDDY > Pharmaceuticals > 0.6 > 1.3
10 > GAIL > Gas > 0.56 > 1.89
11 > GLAXO > Pharmaceuticals > 0.5 > 1.48
12 > GRASIM > Cement & Cement Products > 0.85 > 1.81
13 > AMBUJACEM > Cement & Cement Products > 0.89 > 2.24
14 > HCLTECH > Computers - Software > 0.97 > 1.92
15 > HDFC > Finance - Housing > 0.89 > 2.28
16 > HDFCBANK > Banks > 1.02 > 1.95
17 > HEROHONDA > Automohiles - 2 and 3 wheelers > 0.52 > 2.09
18 > HINDALCO > Aluminium > 0.88 > 2.85
19 > HINDUNILVR > Diversified > 0.84 > 2.71
20 > HINDPETRO > Refineries > 0.71 > 1.41
21 > ICICIBANK > Banks > 1.1 > 1.4
22 > INFOSYSTCH > Computers - Software > 0.8 > 1.67
23 > IPCL > Petrochemicals > 1.05 > 1.64
24 > ITC > Cigarettes > 0.64 > 2.35
25 > RPL > Refineries > 0.55 > 1.61
26 > LT > Engineering > 1.18 > 2.79
27 > MARUTI > Automobile - 4 wheelers > 1 > 1.41
28 > M&M > Automobile - 4 wheelers > 1.12 > 2.28
29 > MTNL > Telecommunication - Services > 0.9 > 1.94
30 > NATIONALUM > Aluminium > 0.67 > 2.96
31 > ONGC > Oil Exploration > 0.9 > 1.71
32 > STER > Metals > 1.24 > 2.89
33 > PNB > Banks > 1.32 > 2.54
34 > RANBAXY > Pharmaceuticals > 0.7 > 2.47
35 > REL > Power > 0.85 > 3.09
36 > RELIANCE > Refineries > 0.99 > 1.68
37 > SAIL > Steel & Steel Products > 1.4 > 3.28
38 > SATYAMCOMP > Computers - Software > 1.09 > 2.8
39 > SBIN > Banks > 1.26 > 2.04
40 > SIEMENS > Electrical Equipment > 1.11 > 2.35
41 > SUNPHARMA > Pharmaceuticals > 0.66 > 1.13
42 > SUZLON > Electrical Equipment > 1.1 > 2.73
43 > TATAPOWER > Power > 0.71 > 1.97
44 > RCOM > Telecommunication - Services > 1.36 > 2.17
45 > TATAMOTORS > Automobile - 4 wheelers > 1.11 > 2.22
46 > TCS > Computers - Software > 0.95 > 2.02
47 > TATASTEEL > Steel & Steel Products > 1.11 > 2.55
48 > VSNL > Telecommunication - Services > 1.11 > 1.53
49 > WIPRO > Computers - Software > 1.15 > 1.58
50 > ZEEL > Media & Entertainment > 1.11 > 2.49

Sr.no. > Security Symbol > Beta > Volatility
1 > ANDHRABANK > 0.99 > 2.44
2 > APOLLOTYRE > 0.59 > 2.79
3 > ASHOKLEY > 1.11 > 1.63
4 > ASIANPAINT > 0.4 > 1.27
5 > AUROPHARMA > 0.59 > 0.89
6 > AVENTIS > 0.39 > 1.26
7 > BANKBARODA > 1.36 > 2.32
8 > BANKINDIA > 1.67 > 2.61
9 > BEL > 1.04 > 1.49
10 > BHARATFORG > 0.89 > 1.41
11 > BIOCON > 0.59 > 2.04
12 > BONGAIREFN > 0.76 > 2.04
13 > CADILAHC > 0.51 > 1.47
14 > CANBK > 1.54 > 2.6
15 > CHENNPETRO > 0.69 > 2.15
16 > RELCAPITAL > 1.37 > 2.48
17 > ULTRACEMCO > 0.95 > 2.92
18 > CORPBANK > 1.27 > 2.52
19 > CUMMINSIND > 1.15 > 2.51
20 > INDHOTEL > 0.78 > 0.72
21 > CONCOR > 0.44 > 0.94
22 > I-FLEX > 0.58 > 1.37
23 > GMRINFRA > 1.33 > 4.83
24 > IDBI > 1.72 > 2.1
25 > IFCI > 1.7 > 3.91
26 > INGERRAND > 0.69 > 3.49
27 > IOB > 1.08 > 2.87
28 > JPASSOCIAT > 1.29 > 2.86
29 > KOTAKBANK > 0.94 > 1.9
30 > LICHSGFIN > 0.99 > 2.15
31 > LUPIN > 0.64 > 1.95
32 > MOSERBAER > 1.13 > 2.23
33 > MPHASIS > 1.1 > 2.98
34 > NICOLASPIR > 0.84 > 1.86
35 > NIRMA > 0.42 > 0.82
36 > PATNI > 0.74 > 2.26
37 > PFIZER > 0.43 > 0.81
38 > POLARIS > 1.27 > 2.09
39 > PUNJABTRAC > 0.4 > 1.51
40 > RAYMOND > 0.42 > 1.12
41 > IDFC > 1.44 > 2.81
42 > TECHM > 0.85 > 2.03
43 > SYNDIBANK > 1.33 > 2.45
44 > TTML > 1 > 2.53
45 > TVSMOTOR > 1.14 > 2.02
46 > UNIONBANK > 1.25 > 3.45
47 > UTIBANK > 1.01 > 1.6
48 > VIJAYABANK > 1.12 > 2.41
49 > INGVYSYABK > 0.71 > 2.78
50 > WOCKPHARMA > 0.75 > 1.5

Monday Blues

Good news : Bounce in US markets.Dow up on Friday

Bad news : Left Right problems over nuclear deal.

Surprise factors: Some more news on Subprime crashes from the US. Bank of Japan meet on Aug 23.


Nifty Intraday support & resistance:

S 2 3924.80
S 1 4016.40
Pivot 4093.75
R 1 4185.30
R 2 4262.65

First Quarter Review of the Annual Policy Statement on Monetary Policy for the Year 2007-08

Highlights

Bank Rate kept unchanged.
Reverse Repo Rate and Repo Rate under LAF kept unchanged.

Withdrawal of the ceiling of Rs. 3,000 crore on daily reverse repo under the LAF with effect from Monday, August 6, 2007. The Reserve Bank, however, retains the discretion to re-impose a ceiling as appropriate.



The second LAF, conducted between 3.00 p.m. and 3.45 p.m. on a daily basis, is withdrawn with effect from Monday, August 6, 2007.



Cash Reserve Ratio to be increased by 50 basis points to 7.0 per cent with effect from the fortnight beginning August 4, 2007.



GDP growth projection for 2007-08 retained at around 8.5 per cent, barring domestic or external shocks.



Holding inflation within 5.0 per cent in 2007-08 assumes priority in the policy hierarchy, while reinforcing the medium-term objective to condition policy and perceptions to reduce inflation to 4.0-4.5 per cent on a sustained basis.



While non-food credit growth has decelerated, the acceleration in money supply and reserve money warrants an appropriate response.



Recent financial market developments in India and potential uncertainties in global markets warrant a higher priority in the policy hierarchy for managing appropriate liquidity conditions at the current juncture.



Barring the emergence of any adverse and unexpected developments in various sectors of the economy and keeping in view the current assessment of the economy including the outlook for inflation, the overall stance of monetary policy in the period ahead will broadly continue to be:



To reinforce the emphasis on price stability and well-anchored inflation expectations while ensuring a monetary and interest rate environment that supports export and investment demand in the economy so as to enable continuation of the growth momentum.



To re-emphasise credit quality and orderly conditions in financial markets for securing macroeconomic and, in particular, financial stability while simultaneously pursuing greater credit penetration and financial inclusion.



To respond swiftly with all possible measures as appropriate to the evolving global and domestic situation impinging on inflation expectations, financial stability and the growth momentum.





Domestic Developments


Real GDP growth during the quarter January-March 2007 is placed at 9.1 per cent as against 10.0 per cent in the corresponding quarter a year ago and real GDP growth for the year 2006-07 is revised upwards from 9.2 per cent to 9.4 per cent.


Inflation, measured by variations in the wholesale price index (WPI) on a year-on-year basis, declined from 5.9 per cent at end-March 2007 to 4.4 per cent as on July 14, 2007.


The average international price of the Indian crude oil basket increased from US $ 56.2 per barrel in January-March 2007 to US $ 66.2 per barrel in April-June 2007 and to around US $ 73.5 per barrel on July 27, 2007.


Growth in money supply (M3) at 21.6 per cent on a year-on-year basis on July 6, 2007 was above the projected trajectory of 17.0-17.5 per cent indicated in the Annual Policy Statement for 2007-08 and higher than 19.0 per cent a year ago.


The year-on-year increase in aggregate deposits of scheduled commercial banks (SCBs) at 24.4 per cent (Rs.5,31,881 crore) up to July 6, 2007 was higher than 20.9 per cent (Rs.3,77, 392 crore) a year ago.


The year-on-year non-food credit growth of SCBs at 24.4 per cent (Rs.3,67,258 crore) on July 6, 2007 was lower than 32.8 per cent (Rs.3,70,899 crore) a year ago.


The total overhang of liquidity under the LAF, the MSS and cash balances of the Central Government taken together declined from an average of Rs.97,449 crore in March 2007 to Rs.72,823 crore on July 27, 2007. An assessment of the total liquidity overhang, however, should also reflect the transfer of Rs.35,351 crore from the Central Government to the Reserve Bank during this period on account of transfer of shares from the Reserve Bank to the Central Government.


During the first quarter of 2007-08, financial markets experienced sizeable fluctuations in liquidity and attendant episodes of volatility in the money market with overnight rates in the call, market repo and collateralised borrowing and lending obligations (CBLO) segments displaying close co-movement.


Banks had generally increased their deposit rates by about 25-50 basis points across various maturities between March 2007 and June 2007, but reduced them during July 2007, especially in the shorter maturities. The majority of public sector banks (PSBs) adjusted their deposit rates upwards by10-25 basis points on maturities above one year, particularly at the longer end.


By the beginning of the current financial year, several banks had drawn down holdings of statutory liquidity ratio (SLR)-eligible securities close to the statutory floor. Exclusive of liquidity adjustment facility (LAF) operations, however, banks’ investments in Government and other approved securities increased by Rs.27,331 crore during the current year so far (up to July 6,2007) as compared with an increase of Rs.751 crore in the corresponding period of the previous year.


Gross market borrowings (dated securities and 364-day Treasury Bills) of the Central Government during 2007-08 at Rs.85,628 crore up to July 27, 2007 (Rs.70,813 crore a year ago) constituted 45.4 per cent of the budget estimates while net market borrowings at Rs.46,047 crore (Rs.34,822 crore) constituted 42.0 per cent of the budget estimates.


External Developments


During the first two months of 2007-08, export growth rose to 20.2 per cent from 19.2 per cent in the corresponding period of the previous year. Imports also posted a sharp rise of 33.0 per cent as compared with 16.9 per cent in the corresponding period of the previous year.


Non-POL imports rose by 47.3 per cent whereas oil imports remained broadly stable at the level recorded a year ago. As a result, the merchandise trade deficit widened to US $ 13.3 billion during April-May 2007 from US $ 8.2 billion in April-May 2006.


As on July 20, 2007 India’s foreign exchange reserves increased by US $ 22.9 billion over their end-March 2007 level to US $ 222.0 billion.


During April-June 2007, the rupee appreciated by 6.63 per cent against the US dollar, by 5.19 per cent against the euro, by 4.41 per cent against the pound sterling and by 10.44 per cent against the Japanese yen.

Global Developments


According to the World Economic Outlook (WEO) of the International Monetary Fund (IMF) released in April 2007, global real GDP growth was expected to decline from 5.4 per cent in 2006 to 4.9 per cent in 2007 and 2008. The update of the WEO released in July 2007 has revised this estimate upwards to 5.5 per cent for 2006 and its forecast for 2007 and 2008 to 5.2 per cent.


Globally, headline inflation has picked up in the wake of increase in commodity prices and core inflation has also generally remained firm. The inflation outlook remains a matter of concern on account of energy and other commodity prices, increased capacity utilisation rates in developed and major emerging economies and the impact of rising wages on inflation in advanced industrial economies.


Perceptions of inflation pressures ahead have prompted monetary authorities generally to persevere in withdrawing monetary accommodation. The central banks that have tightened their policy rates include the ECB; the Bank of England; the Bank of Japan; the Bank of Canada; the Reserve Bank of Australia; the Reserve Bank of New Zealand; the People’s Bank of China; the Bank of Korea; the Banco de Mexico; and the Banco Central de Chile. Some central banks, such as China and Korea, have used supplementary measures for tightening, besides increasing the key policy rates such as increases in reserve requirements.


In the first half of 2007, emerging markets outperformed stocks in developed markets. Foreign investor demand for emerging market assets was reflected in a broad-based rise in inflows into dedicated bond and equity markets of the EMEs. Emerging market corporate bond issuance in international bond markets rose to a record level in 2006. The exposure of emerging markets to risky financial assets of the mature markets has increased, and therefore, the overall global financial risks have increased.


Overall Assessment


Domestic economic activity has continued to expand at a strong pace and there are indications that the impulses of growth are getting broad-based. The recent gains in bringing down inflation and in stabilising inflation expectations should support the current expansionary phase of the growth cycle.


It is, however, necessary to note that demand pressures and cyclical effects persist, mirrored in investment and consumer demand, monetary and banking aggregates, capacity constraints and a widening trade deficit. Financial markets are reflecting the interplay of these factors, although increases in capital inflows and large changes in liquidity conditions are obscuring an accurate assessment of risks, with attendant uncertainty.


While there is an abatement of inflation in the recent period, upward pressures persist. In this regard, it is essential to carefully monitor developments relating to aggregate supply conditions and the supply response to the impulses of demand in the short-term, while stepping up efforts to expand production capabilities over the medium-term.


It is also necessary to continuously assess the risks to the inflation outlook emanating from high and volatile international crude prices, the continuing firmness in key food prices and the uncertainties surrounding the evolution of demand-supply gaps, both globally as well as in India.


Risks from global developments continue to persist, especially in the form of inflationary pressures, re-pricing of risks by financial markets and danger of downturn in some asset classes, with implications for EMEs in general. International food and energy prices are likely to settle at higher levels than before with indications that the sharp acceleration recorded in 2006 will not reverse. In addition, there are risks emanating from the developments in global financial markets.

Stance of Monetary Policy for the Remaining Period of 2007-08


The projection of real GDP growth in 2007-08 at around 8.5 per cent, as set out in the Annual Policy Statement of April 2007, is retained, barring domestic or external shocks.


The outlook for inflation in 2007-08 remains unchanged. Accordingly, holding headline inflation within 5.0 per cent in 2007-08 assumes priority in the policy hierarchy; while reinforcing the medium-term objective to condition policy and perceptions to reduce inflation to 4.0-4.5 per cent on a sustained basis.


For the purpose of monetary policy formulation, the Annual Policy Statement of April 2007 projected growth of money supply (M3) at around 17.0-17.5 per cent for 2007-08 in consonance with the outlook on growth and inflation. Consistent with the projections of money supply, the growth in aggregate deposits in 2007-08 was placed at around Rs.4,90,000 crore while non-food credit including investments in bonds/debentures/shares of public sector undertakings and private corporate sector and commercial paper (CP) was projected to decelerate to 24.0-25.0 per cent in 2007-08 from the average of 29.8 per cent over 2004-07. While non-food credit growth has decelerated, the acceleration in money supply and reserve money warrants an appropriate response.


The global outlook is positive with continuing prospects for strong and stable growth but there are concerns about inflationary pressures worldwide. Monetary authorities are inclined to regard the current levels of real interest rates as warranting further withdrawal of monetary accommodation and are indicating a preparedness to respond to the manner in which the inflation scenario evolves. Financial markets have been aggressively re-pricing risks; however, the wide diffusion of risks and the abundance of liquidity have imparted considerable uncertainty. These developments are necessitating intensified policy monitoring with a policy preference for insulating domestic real activity from these shocks.


Monetary policy in India would continue to be vigilant and pro-active in the context of any accentuation of global uncertainties that pose threats to growth and stability in the domestic economy. The domestic outlook continues to be favourable and would dominate the dynamic setting of monetary policy in the period ahead.


It is important to design monetary policy such that it protects growth by contributing to the maintenance of stability. Accordingly, while the stance of monetary policy would continue to reinforce the emphasis on price stability and well-anchored inflation expectations and thereby sustain the growth momentum, contextually, financial stability may assume greater importance in the months to come.


Recent developments in financial markets in India and potential uncertainties in global markets warrant a higher priority for managing appropriate liquidity conditions in the policy hierarchy at the current juncture.


The Reserve Bank will continue with its policy of active demand management of liquidity through appropriate use of the CRR stipulations and open market operations (OMO) including the MSS and LAF, using all the policy instruments at its disposal flexibly, as and when the situation warrants.


Barring the emergence of any adverse and unexpected developments in various sectors of the economy and keeping in view the current assessment of the economy including the outlook for inflation, the overall stance of monetary policy in the period ahead will broadly continue to be:

• To reinforce the emphasis on price stability and
well-anchored inflation expectations while ensuring a monetary and interest rate environment that supports export and investment demand in the economy so as to enable continuation of the growth momentum.

• To re-emphasise credit quality and orderly conditions in financial markets for securing macroeconomic and, in particular, financial stability while simultaneously pursuing greater credit penetration and financial inclusion.

• To respond swiftly with all possible measures as appropriate to the evolving global and domestic situation impinging on inflation expectations, financial stability and the growth momentum.

Monetary Measures


Bank Rate kept unchanged at 6.0 per cent.


Reverse Repo Rate and Repo Rate under LAF kept unchanged at 6.00 per cent and 7.75 per cent, respectively.


In view of the current macroeconomic and overall monetary and liquidity conditions, it has been decided to withdraw the ceiling of Rs. 3,000 crore on daily reverse repo under the LAF with effect from Monday, August 6, 2007. The Reserve Bank, however, retains the discretion to re-impose a ceiling as appropriate and has the flexibility to conduct repo/reverse repo auctions at a fixed rate or at variable rates as circumstances warrant.


The Reserve Bank retains the option to conduct overnight or longer term repo/reverse repo under the LAF depending on market conditions and other relevant factors. The Reserve Bank will continue to use this flexibility including the right to accept or reject tender(s) under the LAF, wholly or partially, if deemed fit, so as to make efficient use of the LAF in daily liquidity management.


The second LAF, which was introduced from November 28, 2005 and is conducted between 3.00 p.m. and 3.45 p.m. on a daily basis, is withdrawn with effect from Monday, August 6, 2007.


On a review of the current liquidity situation, it is considered desirable to increase the CRR by 50 basis points to 7.0 per cent with effect from the fortnight beginning August 4, 2007.

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