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Market predictions for the week: February 21 to February 24

Last updated on: February 20, 2012 15:26 IST

Market predictions for the week: February 21 to February 24

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Geetarani B Kunder

An interesting bit of history reveals that Mr JP Morgan, yes, the Mr Morgan, mega-financial tycoon, was quoted as saying: "Millionaires don't use astrology, billionaires do!"

It is a documented fact that Mr Morgan purchased a ticket for the Titanic's maiden voyage a few weeks prior to her ill-fated departure, as so many of his elitist associates had done.

However, JP Morgan suddenly changed his itinerary for the South of France. His close friends claim that Mr Morgan had consulted with his astrologer just prior to changing his travel plans.

Last week's review

The stars kept their promise of an action-packed week giving the Sensex the much-needed boost. Extending the gaining streak for the seventh week in a row, the Nifty glided smoothly above the 5,600 mark to close three per cent higher for the week at 5564 and the Sensex at 18,290.

The week saw the midcap index gaining five per cent while the small cap index added another three per cent confirming an overall strong market rally.

Let me recap what I had said on 14th November 2011: " For interim long-term investors this year should be used to accumulate select "A" group stocks for February 2012. Even the penny stocks will rise - overall an all round rally."

The 7th February report said: "The January rally was more fundamentally based on good corporate earning numbers economic data and the RBI cut but the February one may be purely a sentiment and money power driven one."

India, which was among the worst performing markets by December 2011, is one of the best performing ones today. The main reason for the sharp 18 per cent rise in indices is the Rs 22,000 crore FII money that has entered the country, the highest ever, since Sebi started disclosing the data in 2000.

FII inflows in the first 15 days of February, at Rs 11,681.7 crore, were higher than that for the entire  month of January 2012, which stood at Rs 10,907 crore.

High liquidity to give our markets the necessary boost this week and high volumes a possibility was foretold, and FIIs pumped in Rs 4,518.09 crore for the week and high volumes of around 2.5 lakh crore shares were traded on Wednesday.

"Mid week may see some further buying activity," was another point I had foretold.

"Venus will give some spectacular aid to some stocks," was again mentioned in my last week's report. Many stocks like Tata Motors, Voltas, Bhel, Rel Power, Tata Power, Axis Bank showed stellar performance, and even some stocks with poor earning numbers did well, discounting their poor performance.

In my last week's report, I had also predicted: "Government will make a sincere effort to keep the image of India going by coming out with better policy announcements or organising funds to reduce its deficit."

In a major move, the government okayed the disinvestment of ONGC on predicted lines and initiated clearance of coal supplies to private-sector power producers and unveiled new norms for the telecom sector.

My last week's report also said: "Though problems may continue to make some headline news but since liquidity will be also high, these may not be taken seriously on certain days, though they have a bearing in the short term."

This was borne out by the fact that despite Moody's putting France, Britain and Austria on "negative outlook" and downgrading six eurozone countries, the market held steady and was unfazed by the news.

Under normal circumstances such news would have seen the markets buckling under immediate pressure, but high liquidity helped global markets to stay in the green in spite of some selling pressure.

Normally, February rallies have generally coincided with the budget but this month has been an exception and when I said that markets will rally in February many investors called to ask what I was talking about as there was no budget to provide the normal boost for the markets to rally.

This is precisely the difference between seeing things from our "logical point of view" and astrologically.

"The week may see a mixed trend where investors/institutions in the early part of the week may think of capitalising on their gains", I had said in my last week's report.

The markets on Monday and Tuesday were subdued compared to the latter part of the week.

The week started on a quiet note on predicted lines and Saturn held the market in a fragile state before stabilising, taking a cue from strong European markets on the adoption of austerity measures by Greece's parliament.

I had also mentioned in the same weekly report: The afternoon session may see a pick up based on some policy announcement or some favourable news flow on Monday a possibility.

The OECD survey said that the Indian economy showed signs of improvement, even as it said: "The international economic outlook is showing tentative signs of improvement, with the momentum shift spreading from the United States and Japan to other developed countries, the OECD's December survey of growth prospects."

On Tuesday the market opened in the red on expected lines despite Europe and the US markets closing positively. The day also saw Moody's putting France, Britain and Austria on "negative outlook" while India's January inflation eased to a two-year low at 6.55 per cent month-on-month helping our markets consolidate further.

Markets ended marginally higher on Tuesday and actually started recovering only after 3pm as I had said: "Market may recover especially after 3pm."

US stocks slipped on Tuesday as January's retail sales were weaker than expected, dousing some optimism about the strength of the economy, but recovered on news: "Greek government said the conservative party leader was expected to deliver a letter of commitment to the country's international lenders."

Wednesday, the markets zoomed almost two per cent with the Sensex crossing the 18,000 mark while the Nifty closed above the 5,500 mark.

My last week's report for the day said: "Market may see a big relief coming in with better market sentiment. " FIIs pumped in 1,838.85 crore.

On Wednesday the Indian market moved up, despite Europe closing in the red on Tuesday and the US markets closing marginally in the green.

The EU meet scheduled in Brussels on the Greece bailout approval was cancelled; the economy of the 17-nation euro zone shrank 0.3 per cent in the final three months of 2011 and reports that the UK unemployment continued to climb - but none of these developments made a dent to the upward trajectory of our markets.

Also on Wednesday, supportive news concerning Europe emerged from the People's Bank of China governor Zhou Xiaochuan, who said he believes the eurozone's challenges can be solved and that China will expand its investments in Europe.

Thursday was partially dominated by Mars, which I discounted and markets closed marginally in the red on support coming in from other strong positive planets.

"News flows could be dual in nature" was predicted by me for Thursday. Bomb blast in Delhi, Georgia and Bangkok by Iranian extremists added some tension. Moreover, Iran's nuclear programme and warning that it was mulling cutting exports to six EU countries, and the postponement of the Greece bailout approval to 20th Feb were other factors which caused a dip in market sentiments.

Though all these hit the headlines, none of them dented the markets from roaring on Friday. "Some negative news flows may be a possibility (domestic/global) but it may bring sentiments down for that moment or day but overall the market may downplay such news on certain days," was said in my last week's report.

Dow closing with strength on positive US economic data on Thursday saw our markets surging to cross the 5,600 mark on the Nifty on Friday. The US economy will do well was foretold earlier.

"The week will be dominated by the unpredictable planet which may give a positive result during the later part of the week" was said. The markets picked up very well on Wednesday and Friday.

Government to be distressed: In a significant political development, six chief ministers have joined hands demanding a review of the National Counter Terrorism Centre.

Crude price touched $120 per barrel on disturbing news from Iran was also foretold.

The market did see some profit taking and buying activity during the timings mentioned in my last weeks' report.

One favourable news for Greece: "The ECB, one of Greece's largest creditors, on Friday completed an exchange of its Greek bonds aimed at protecting the central bank from being forced to write down the value of its bondholdings in the restructuring, which will see Greece's private creditors receive new bonds with half of the value of their existing ones."

Germany's president resigned on Friday after a string of scandals, handing Chancellor Angela Merkel a political headache at home as she battles to lead Europe from its debt crisis.

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Image: India is one of the best performing markets today.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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The week did see downgrades, some bad global economic data, the Greek problem not getting resolved, Iran problems, etc, hitting headline news, which did not affect the overall market sentiments.

So far the other strong positive combinations have held sway but probably such news from now on will start taking centre-stage as the month progresses, affecting market sentiments on certain days - elaborated in my March report.

Some of these issues are still simmering:

i) Moody's Investors Service placed the ratings of more than 100 European financial institutions and 16 European countries on review for possible downgrade.

ii) Crude oil going up on geo-political tensions.

iii) Greek approval postponed: A three-hour teleconference between euro zone finance ministers late on Wednesday failed to resolve all the issues surrounding a second aid package for Athens, putting off any decision on the matter until February 20 at the earliest.

iv) Negotiations between Greece and its private sector creditors have been going on for months now, with little progress shown for those endeavours. Deadlines for the deal and bond swap to be finalized have repeatedly been pushed back.

v) Greek Dilemma - New loans still won't resolve crisis: EU finance ministers face a dilemma due to Greece's deteriorating financial situation. If the 130-billion euro deal is allowed to stand, Greece's debt-to-GDP ratio will still remain above 120 per cent by the year 2020.

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Image: The week did see downgrades.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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I have mentioned that Greece from around the last week of February to early March will see the government distressed on many fronts.

The government will face some tough tasks to handle with many roadblocks, internal and external.

Therefore, investors need to be cautious from now on and not get carried away, as volatility will start increasing with some tensions, both on the domestic front as well as from eurozone emerging gradually and dampening spirits on certain days.

Outlook for the US

Similarly, US data which has been good so far may see some data being released around the last week of February, which may be below market expectation, or some other issues can surface or austerity measure-related policies, tightening some existing loopholes, may all be possible (depending on which day the news is relayed.).

However, from early March the image of US will be better with positive sentiments prevailing and probably helping its markets see an all-time high for the year (similar to what India is experiencing now). (This is an overall view, there could be few days their markets may close in the red).

The eurozone problems will dampen global sentiments on certain days, while positive outlook from US may help keep global sentiments up on certain days.

This duality will prevail in March giving confusing signals.

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Image: The eurozone problems will dampen global sentiments.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Another factor is that certain days in early March may force an egoistic but ill-conceived response from the country, which will not be good for it.

If this happens, then global sentiments may take a steep downward turn. This relates to some geo-political tensions prevailing now, which have so far been under wraps.

Therefore, it is advisable to see how early March unfolds before taking a plunge into the stock market. Secondly, if everything is quiet on the geo-political front then will positive sentiments in the US result in investors taking their funds back to reinvest in US, as India's domestic problems may mar market sentiments.

Chances of Indian domestic funds being active in March may be a possibility. (I need to put my though on this topic.)

Steep fall may be a possibility from end February to early March

The chances of a steep fall around end February to early March cannot be ruled out. This may be seen on the domestic front as well as in global markets especially Europe.

An astute investor needs to select his stocks (from select sectors) from the "A" group list, as the rally will be led by large caps.

Timing when to buy and timely exit is crucial to capitalize on your gains. But have patience till March 7 to see how things span out. Having said this, one needs to keep in mind that it will be a volatile period. Therefore, read the March report sent earlier very, very carefully.

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Image: Global sentiments may take a steep downward turn.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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I would like to reiterate that this is a period where chances of getting over-confident are very high - utmost caution needs to be exercised.

This week's trend

The spectacular movement seen last week may be somewhat subdued this week but select stocks may still outperform. The week may see a dual trend where investors/institutions may think of capitalising on their gains but there is some more buying steam left, which may be seen in select stocks on certain days (probably Wednesday).

Policy announcements will continue through the week but in some cases some strong opposition coming in may be a possibility.

The early part of the week may still see some large cap stocks supporting the market but some disturbing news on certain days can affect markets.

Though some stocks may excel, it may be prudent to be stock-specific rather than index-specific. So far the planets have given excellent support to the country's image and to the government but from now on, some disturbances on certain days cannot be ruled out and the government may find it difficult to handle some situations.

Though there is a cushioning factor but issues that have taken a back seat can start surfacing as the month progresses. One classic example is the NCTC issue where Congress allies like Mamata Banerjee have joined hands with six other chief ministers of different states in vociferously opposing the government's move.

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Image: This is a period where chances of getting over-confident are very high.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Quite a few issues have already emerged last week like which side the government will ultimately take on the Iran issue given the global pressure, etc.

Many other issues may also emerge for the government to handle, which may be an uphill task from now on.

NSE chart will start to show some disturbances and other negative parameters too will gradually start becoming more potent as the month progress. Negative news on stock exchange-related issues/government/politician/large corporate/scams/opposition parties/allies, etc, are possible on certain days.

There is also a possibility of certain stocks that can come under the influence of the bears on certain days. This week may be the last week where we can see some news related to India's foreign affairs or corporate tie-ups, etc.

There could also be some disturbances in existing cases, which the country has turned a blind eye to, or in some past corporate tie-ups or future ones undertaken in the balance part of February/early March that may create problems for the company/country going forward depending on which day the deal is done.

Foreign-related affairs for the country may not be good from now onward in some instances. Problems from neighbouring countries may also be a possibility.

News flows may be dual in nature (domestic/global) and volatility can affect markets on certain days from here on.

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Image: Foreign-related affairs for the country may not be good from now onward in some instances.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Going forward, differences of opinions on global issues by world leaders can come out in the open thereby delaying the finalizations of important issues to contain the eurozone problems or going back on their promise or putting more stringent measures which maybe difficult to implement etc.

Few eurozone countries, which have fared well, may slowly see some unfavourable news/issues/data on certain days. Crude has touched $120 per barrel last week and certain issues can see crude prices rising further.

This can act as a dampener going forward as elaborated in my last week's report. Overall, if one is stock-specific, there is a good chance of making money, but caution needs to be taken from now on as any geo-political news and eurozone news can tilt the markets suddenly leaving you holding your stocks for some time.

Daily guidance

The opening period continues to remain in the positive zone except probably on 23rd   and 24th February while the closing will be volatile on certain days.

Intra-day volatility will be high this week. Overall, the market may add some weight or move sideways. Tuesday, 21st February: Though the market will open well, some selling pressure will be noticed during certain periods of the day. Chances of some recovery or pick after 2.45pm may be a possibility.

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Image: Crude has touched $120 per barrel last week.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Wednesday, 22nd February: Some policy announcements may be on the cards indicating a positive sentiment and some buying activity may be seen but the market may turn volatile in the afternoon session.

Thursday 23rd February: Negative. Some negative news flows (domestic/global) may mar market sentiments. Some stocks can take a drubbing on this day's trade. Data/policies released today may not be good or some confusion may prevail.

Friday, 24th February: A volatile positive opening a possibility. Volatility may be strong today and the market may close on a marginal positive note or negative. The unpredictable has a role to play, therefore the swings can be either way.

News based on prediction

"India will shine in February 2012 - Expect an unimaginable stock market rally,''was foretold in November 2011.

Now, look at the news that has come out:Surging capital inflows, booming stock markets suggest India story is again shining: An improved global funding environment, relatively attractive valuations of Indian equities and hopes for rate cuts by the central bank have lured foreign institutions. They are net buyers of $3.2 billion Indian equities this year after having sold $357 million last year.

India retains world's most optimistic market tag: India has once again emerged as the most optimistic market, driven by its buoyant domestic consumption levels, but slowing growth and inflationary concerns could put pressure on consumer confidence for the year ahead, says a survey.

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Image: India retains world's most optimistic market tag.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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According to the latest global consumer confidence findings from Nielsen, a provider of information and insights into what consumers watch and buy, India remained the world's most optimistic market for the eighth consecutive quarter with a one-point consumer confidence index increase to 122.

Investor wealth grows by Rs 10 lakh crore in 2012 rally: Barely one and a half months into the new year, the stock market has made its investors richer by more than Rs 10 lakh crore on the back of a smart pull-back rally since the beginning of 2012. In the process, the stock market has recovered more than half of the losses suffered during the entire year in 2011.

Growth story is intact, says India Inc: The Indian growth story is still intact, if the industry leaders are to be believed. Speaking at the Nasscom Summit, Rajiv Bajaj, managing director, Bajaj Auto, emphasised that India would continue to be his company's focus in the future.

Subir Gokarn sees signs of accelerating growth in FY13: Speaking at the IIFL 2012 India Conference, Gokarn said, he sees signs that growth is getting back on track in this fiscal.

OECD survey said India showed evidence of improvement. India's reading rose 0.6 points even if, at 95.6 in December, it was still well below its long-term average.

Expect EMs to outperform developed markets ahead: Finaport: "ECB showed the willingness to expand their balance sheet by almost unlimited amounts. That liquidity finds its way into asset markets and one of the beneficiaries are emerging markets, where returns are potentially the highest.

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Image: India remained the world's most optimistic market for the eighth consecutive quarter.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Pakistan will grant MFN status to India very soon: Pakistan today said the process for giving India the Most Favoured Nation status is expected to be finalised "very soon".

Finally, India to give nod to investments from Pakistan: Commerce and industry minister Anand Sharma may announce the government's "in-principle" decision to lift the ban on investments from Pakistan in return for concessions from across the border.

Gati inked a joint venture with a Japanese logistics player, Kintetsu World Express. HCL Technologies has received a strategic infrastructure management contract from Norway's Statoil.

Media reports said Reliance Industries has signed a deal with France's Dassault Aviation for partnering in the defence and homeland security sector in India.

Global Offshore may sell stake in vessel Global Offshore might sell 40 per cent stake in its upcoming vessel to the Norwegian shipyard which is building it.

Tata Power to invest $125 million in Indonesian project: Tata Power expects to pump an equity investment of $125 million in a joint venture to develop the 240 MW geothermal project in Indonesia.

Nova Medical to open 10 centres by FY'13 end; to invest Rs 200 crore: Nova Medical Centres, a specialised day-care surgery firm, today said it will open 10 canters by the end of next financial year at an investment Rs 200 crore.

TCS pips CSC for multi-year deal from Danish Telco: TCS has bagged a multi-year deal from Denmark's largest telecommunications firm TDC, replacing incumbent CSC and the exact value of the deal is likely to be worth over $100 million.

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Image: Pakistan will grant MFN status to India very soon.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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UK government likely to launch two IT deals; Infy, IBM, Capegemini in fray: The government of UK is likely to launch two major IT deals worth over $1 billion.

Marico to acquire erstwhile Paras Personal Care Business from Reckitt Benckiser.

LVMH's PE arm buys eight per cent of Fabindia: L Capital, the private equity arm of LVMH, the world's biggest luxury goods group, has bought the eight per cent stake held by Wolfensohn Capital Partners in unlisted Indian ethnic wear chain Fabindia, two sources with direct knowledge of the matter said.

Stock market related news

Sebi to tighten price-sensitive information disclosure norms: Sebi may tighten norms related to mandatory disclosure of price-sensitive information by listed companies, amid an emerging trend of key business developments being announced outside the regulatory framework, especially to the media.

Share transfer among promoters amounts to equity sale: Sebi: Sebi has said that any transfer of shares even within the promoter group of a company would be considered as an equity sale, when it comes to promoters getting a preferential treatment for allotment of fresh shares or warrants.

Govt to make an amnesty move to get the money back in March or some favourable policy for NRIs may be a possibility: Indians have stashed over $500 billion in banks abroad: CBI: Indians are the largest depositors in banks abroad with an estimated $500 billion (nearly Rs 24.5 lakh crore) of illegal money stashed by them in tax havens, the CBI Director said today.

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Image: UK government likely to launch two IT deals.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Headaches for the government were fewer except for the Salman Khurshid and Beni Prasad Varma facing the ire of the Election Commission but the opposition parties seem to be getting the flak now with Kamal Chauhan, a disgruntled RSS worker having been arrested by the NIA on Tuesday, claiming that he had planted bombs on Samjhauta Express in 2007.

The Uttar Pradesh health department accountant Mahendra Sharma, who was found murdered in his home, was smothered to death, said the autopsy report.

News related to Iran possibly affecting our trade was foretold: Attack on Israeli may hurt Indian trade with Iran.

India is in a catch 22 situation with Israel and Iran after the Delhi bomb blast. However, as predicted, foreign affairs relationship will be maintained. India has remained neutral so far. Unfazed by US sanctions and Israel linking Iran to the attack on an Israeli embassy car in Delhi, India is set to ramp up its energy and business ties with Iran, with a commerce ministry team heading to Tehran to explore fresh business opportunities.

Government policies to continue

EGoM okays divestment in ONGC, Bhel to follow suit in FY13: The EGoM, will meet soon to decide on the date and the price at which divestment in ONGC will take place.

Coal India to sign FSAs with private power companies by March 31: Coal India, the largest coal producer in the country has agreed to sign the Fuel Supply Agreements with power firms to ensure sufficient supply of dry fuel, even if the coal miner has to import it.

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Image: India is in a catch 22 situation with Israel and Iran.
Photographs: Reuters

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New spectrum regime to augur well for telecom sector: Trai: Telecom Minister Kapil Sibal unveiled new norms for the telecom sector. India will allow mergers and acquisitions in the telecoms sector that create combined market share of up to 35 per cent, under a quick and simple process.

Trai for 74 per cent cap on foreign holding in telecom towers: The Telecom Regulatory Authority of India has suggested capping foreign holding at 74 per cent in telecom tower companies, a proposal if accepted could dissuade buyouts by overseas companies.

Govt may have to send legal notice to RIL: Reddy: Oil minister S Jaipal Reddy today said the government may have to send a notice to Reliance Industries to curtail cost-recovery at its KG-D6 gas fields as the company drilled fewer number of wells than planned.

New norms to nab retired corrupt babus: The Centre has issued a new set of guidelines to seize properties or money of corrupt government officials even after their retirement.

Some disturbing news

FY12 fiscal deficit likely to widen to 5.6 per cent: The deficit figure for the current financial year may come around the 5.6 per cent mark which is significantly higher than the government's 4.6 per cent target

Leela parts ways with Kempinski: After being together for nearly 25 years, Leela Hotels, one of India's luxury chains, and the Geneva-based Kempinski Hotels, a luxury hotel and marketing group, have parted ways.

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Image: New spectrum regime to augur well for telecom sector.
Photographs: Reuters

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Scam-hit telcos fight back for subscribers: New operators might be on the dock after Supreme Court cancelled their licences. But that is not stopping them from fighting to win more subscribers.

Wyeth slaps $960-million damage suit on Sun Pharma: Wyeth Pharmaceuticals Inc, a Pfizer group company, has claimed $960 million (Rs 4,700 crore) in damages from Sun Pharma for allegedly infringing the patent on its anti-ulcer brand, Protonix.

Public sector banks are overstating profits: Fin Min: The finance ministry has written to all public sector banks pointing out that these banks are not adhering to RBI's income recognition and asset classification norms. The finance ministry is of the view that over the last several years banks have been overstating profits by under provisioning for loans

Greece problem to continue, this month - a temporary respite was foretold

Greece still to convince sceptical euro zone: The Greek government was under pressure on Monday to convince a sceptical euro zone that it would stick to the terms of a multi-billion-euro rescue package endorsed by law Brussels also wants written commitments from party leaders that they will implement the terms of the deal even after an election pencilled in for April.

"Yesterday's vote in the parliament may have saved the country temporarily from default, but the Greek economy is going bankrupt and the country's political system is failing," the head of the Greek Commerce Confederation, Vassilis Korkidis, said in a statement.

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Image: Greece still to convince sceptical euro zone.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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Eurozone countries to get help, and the week being crucial for such support was also foretold.

China to keep investing in euro zone debt: China will continue to invest in euro zone government debt, Chinese central bank governor Zhou Xiaochuan said on Wednesday, expressing his confidence in both the euro and in the ability of eurozone members to solve their debt problems.

China will play a bigger role in solving Europe's problems vis the International Monetary Fund and the European Financial Stability Fund, or EFSF, Zhou said, echoing earlier remarks made by Chinese Premier Wen Jiabao.

China Premier Wen Jiabao vows to help on eurozone debt: China has promised to help resolve the eurozone's debt crisis, after talks with EU leaders in Beijing.Premier Wen Jiabao offered co-operation to help stabilise debt-ridden EU nations, but made no specific promise to invest in a European bailout fund.

China's central-bank chief upbeat on euro crisis: People's Bank of China governor Zhou Xiaochuan on Wednesday gave the eurozone a vote of confidence, saying he believes the challenges it faces can be solved.

Global sentiments mixed

German investor sentiment up sharply in February: Germany's ZEW institute says its index of investor optimism is up sharply due to better US economic data and steady progress in working out a new bailout for Greece. The reading for February hit 5.4 points, up 27 points from minus 21.6 from the month before.

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Image: China to keep investing in euro zone debt.
Photographs: Reuters

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German President Wulff quits over corruption claims: German President Christian Wulff has announced his resignation, after prosecutors called for his immunity to be lifted.

Greece debt auction: Despite Greece's dire economic condition, the government sold 1.3 billion euros of debt on Tuesday at an interest rate of 4.61 per cent, slightly less than the previous auction in January.

Italy Bond Yields Fall: Italy's borrowing costs fell at an auction of short and medium-term bonds Tuesday, as banks' abundant liquidity from the ECB continued to support demand and despite the country's downgrade overnight by credit firm Moody's Investors Service.

Italy sold the maximum targeted six billion euros ($7.91 billion) of BTP government bonds at 9.481 billion euros, implying a solid demand.

OECD Hints at Developed-Economy Recovery: The world's developed economies may be set to emerge from several months of slowdown, led by the US and Japan, according to the Organization for Economic Cooperation and Development.

China showing signs of slowing

In addition to signs of a recovery in Russia and India, OECD pointed to a slowdown in China - the world's second-largest economy.

Europe economy: Recession hits Italy and Netherlands: Italy and the Netherlands both saw their economies shrink by 0.7 per cent in the fourth quarter, the second consecutive quarter of economic contraction.

UK unemployment continues to climb: UK unemployment rose by 48,000 to 2.67 million in the three months to December. The unemployment rate was 8.4 per cent, the Office for National Statistics said, the highest for 16 years.

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Image: German President Wulff.
Photographs: Reuters

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Bank of England says UK economy 'to zigzag' this year: The UK economy will "zigzag" this year, dipping in and out of growth, Bank of England chief Sir Mervyn King has said.The Bank's quarterly inflation report predicts inflation will continue to fall in the coming months.

Surprise jump in UK retail sales: UK retail sales rose by a stronger-than-expected 0.9 per cent in January, according to the latest figures from the Office for National Statistics. Retail spending rise boosts hopes UK can avoid double-dip recession.

Euro-zone GDP shrinks, cushioned by core: The economy of the 17-nation euro zone shrank 0.3 per cent in the final three months of 2011 as the sovereign debt crisis took its toll, with Italy slipping back into recession while France unexpectedly grew and Germany saw a smaller-than-expected contraction.

Moody's may downgrade 17 banks, securities firms: Moody's Investor Service warned on Thursday it could downgrade the credit ratings of 17 global banks and securities firms due to more fragile funding conditions, increased regulatory burdens and a more difficult operating environment.

US will perform well

US jobs, factory data strengthen growth outlook: The number of Americans filing for new unemployment benefits unexpectedly fell to a near four-year low last week, suggesting the labour market recovery was quickening.

Other data on Thursday showed solid expansion in factory activity in the Mid-Atlantic area this month and builders breaking more ground on new residential projects in January offered more evidence of a sustained momentum in the economy.

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Image: Surprise jump in UK retail sales.
Photographs: Reuters

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Market predictions for the week: February 21 to February 24

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US Congress backs payroll tax cut: The US Congress has voted in favour of extending a payroll tax cut until the end of 2012, ending months of debate.

US President Barack Obama asks China to follow 'same rules' in trade: US President Barack Obama has reiterated that China needs to follow fair trade practices as it plays an increasingly important global role. Beijing has been accused of keeping the value of its currency artificially low in a bid to help its exporters.

NOTE: This reading is done purely at a very macro level and is only indicative in nature. Those taking positions on this analysis will do so their own risk.

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Image: US President Barack Obama.
Photographs: Reuters

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