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                                                MARKET SUMMARY & DAY FORWARD

 

                                                     DATE:    3rd SEPTEMBER 2010.                                   

 

We have started giving commodity calls in crude, Gold & silver.  

 

ABOUT AMERICAN ECONOMY & markets:

 

 

Friday's jobs report is expected it to be pivotal not only for stock and bond investors but for the Federal Reserve, which is weighing whether to take further steps to boost the struggling US economy. A negative number would obviously be bad news, and if private payrolls rise as expected, "it's still somewhat disappointing," said Jeff Kleintop, chief market strategist at LPL Financial. A positive private sector number, however, won't guarantee a market rally, Kleintop said. That's because if the number comes in at, say, 100,000 jobs, the market ends up in a Catch-22: a number too small to signal a true economic recovery, but too big to justify the Federal Reserve stepping in to stimulate the economy, as many market participants hope, he said. "It might be bad news no matter what the data is tomorrow," Kleintop said. Several economic reports brought good news to investors on Thursday causing stocks to close higher for a third session. The Dow gained 50.63 points. The S&P 500 rose by 9.81 points and the NASDAQ rose by 23.17 points.

 

 

The weak labor market threatens to derail the economy's recovery from the most painful recession since the Great Depression. Growth is losing steam as the boost from an $814 billion government stimulus package and the rebuilding of inventories by businesses fade. The Fed has acknowledged the slowing recovery pace and minutes of the U.S. central bank's last policy meeting released this week showed the economy's outlook would have to deteriorate "appreciably" to spur fresh support from the Fed. The White House stressed on Thursday that no second economic stimulus package is being considered as part of new measures under review by President Barack Obama's team.  

 

 

Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the "critical list" are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics. In the second half, fiscal policy becomes a headwind, no more cash for clunkers," Roubini said. "The positive scenario is that growth will be below par. News Corp Chief Executive Rupert Murdoch said the global economy is still in an uncertain state and the media industry is going through a fundamental transformation that is unpredictable."I do not believe we are out of the turmoil yet. Sovereign debt pressures, soaring deficits and unacceptable U.S. unemployment levels are key obstacles to the global economic recovery," said Murdoch in a letter to shareholders in his company's annual report published on Thursday. "I see a third to fourth of a chance of a double-dip (in the US economy)," noted American economist and former chairman of the Federal Reserve of the United States, Alan Greenspan, said. The chances that the US might slip into another recession are 25-30 per cent, Greenspan said. Jim O'Neill of Goldman Sachs believes that the US is facing some challenges and a 25% chance of a recession next year cannot be ruled out.

 

 

ASIAN MARKETS:

 

China’s stocks fell, paring a weekly advance, on concern banks’ bad loans may increase amid speculation the government will introduce additional measures to curb property speculation. The nation’s home prices will decline from September as the government maintains its lending curbs and increases the supply of public housing, forcing property developers to cut prices to stimulate sales, BNP Paribas said. Property prices rose at the slowest pace in six months in July as the value of sales fell 19.3 percent from a year earlier, according to government data. The property market is in a “very big bubble” that may last until the government increases interest rates and introduces a real-estate tax, Jiang Hui, investment director at Star Rock Investment Management, said at a conference in Shanghai yesterday. Policy makers in April intensified a crackdown on speculation by enforcing higher down-payment for loans to buy second homes and telling banks to halt mortgages for third homes in areas with “excessive price gains.”

 

 

INDIAN economy & stock MARKET:

 

The Reserve Bank of India has their next policy review taking place on September 16. Gaurav Kapoor, Senior Economist at Royal Bank of Scotland (RBS) is of the view that the RBI will increase key rates by 25 basis points (bps). On the back of robust growth he said, “I think they would go ahead with another 25 bps hike in both policy rates. I think that will be followed by another round of policy rate hikes in October as well.”

 

Annual food inflation rose marginally to 10.86 per cent for the week ended August 21, after the previous two-week decline, despite a fall in vegetables prices. Food inflation had softened to 10.05 per cent for the week ended August 14 against 10.35 per cent in the previous week.

 

Our market opens the last day of the week on a reasonably stable note. Earlier, the US markets closed marginally higher with the Dow Jones up 51 points while Asia is trading mixed this morning. Europe has opened in the green but is now trading quiet and with marginal gains. Markets were flat and range bound for full day. Market breath was positive. Looking at a futures and options side of the market is at very high proportion and if market to go up from here this Futures and Options build up has to come down. This situation is same as when market was at his peak in January 2008. This really scares us, so we are not aggressive in terms of taking any new bets. We don’t say market will not go up but the situation is giving some other picture.

 

 

COMMODITY – GOLD:

 

Gold rose on Thursday to settle above $1,253 ahead of the August jobs report on Friday. Prices have reached new two-month highs at $1,254.65, this week after a raft of U.S. data suggested the world's largest economy could be slowing enough to warrant further quantitative easing from the Federal Reserve. Monthly ETF inflows turned positive in August; these need to accelerate for gold to overcome potential scrap supply at these prices and rise sustainably through $1,250," Swiss bank UBS noted in a daily report. The data coming out of the United States is the key driver for the broader financial markets right now as investors weigh up the chances the world's largest economy will slip back into recession, which will erode global growth.

 

 

                                                                                                                

COMMODITY – CRUDE: 

 

U.S. crude oil futures rose for a second day Thursday as Hurricane Earl threatened U.S. East Coast refineries and a fire damaged an offshore oil and gas platform in the Gulf of Maxico. The market was generally heading lower before the Mariner Platform news broke—at the point we did see a shift in the market as it created a degree of uncertainty, though prices do remain volatile," said Stephen Schork of The Schork Report daily trading note in Pennsylvania. Traders remained cautious about the economy ahead of Friday's key nonfarm payrolls and unemployment data.

 

 

AS STOCK MARKET IS RANGE BOUND AND NOT GIVING ENOUGH OPPORTUNITY TO DAY TRASERS NOW WE SHIFTED OUR FOCUS ON COMMODITY AND ALL CLIENTS ARE EARNING GOOD PROFITS.

 

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