India Morning Report August 06, 2012: Here we go again, a bolt from the blue

Markets had barely gained 5200 last week and the 5350 test is upon us. However the Rupee will lead equities by the nose first as the Dollar falls to the Euro and the Euro liquidity measures sink in on the unsuspecting market, blindsided by looking for an extra dose of liquidity that never came about

However, as myself others were caught even when trying to short the Dollar on Friday and traders looking to open a new position may be similarily disappointed today as it lands at 55.5 in the August series. Markets are capped in the next 100 points or so in the Nifty so someone could really use this time for uncomfortable policy announcements and failures in terms of expectations of reforms though much has been tempered in the last 6 weeks

Markets have made a mockery of its moves aving redone them so many times, it now moves unwarned upon you overnight and shoots out in the middle of the day on some small discomfort, most retail capital having been decimated but unlikely to further shakeout the INR 100B brokerage industry who are their most vulnerable with 40% increase in volumes growing the income unoiverse by barely 10%  from 2004 to 2010 Midcap players like Anand Rathi and Motilal Oswal look for Foreign partners/buyers in this market situation, ideally poised for a bigger influx. The ICRA report however may not be the final word on the industry relying today on larger prop desks, a risky strategy that orked for IIFL and the retail denoument not worked as evident for Edelweiss and the new MCX brigade relying on a INR 1m minimum to become members of the ne platform. MCX was given permission to trade Currency Options last week and test trading was carried out on Saturday. Indian CDS volumes could bankrupt any marketmaker or holder with the sudden variations in prices and large spreads. 

 

 

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