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                                                MARKET SUMMARY & DAY FORWARD

 

                                                     DATE:    9th SEPTEMBER 2010.                                   

 

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

 

ABOUT AMERICAN ECONOMY & markets:

 

The US economy has shown "widespread signs" of slowing over recent weeks, the Federal Reserve said on Wednesday in a report suggesting that while the recovery has been faltering, the economy may skirt a second recession. The Obama administration’s latest economic proposals for infrastructure spending and tax relief for businesses won’t make a difference to the U.S. economy, said New York University Professor Nouriel Roubini. “All three proposals -- the R&D tax credit, investment tax credit and infrastructure -- make reasonable economic sense,” Roubini told reporters before an evening speech hosted by the C.D. Howe Institute in Toronto. “However, the size of them is not large enough to make a difference for the economic outlook.”

 

The Dow rose by 46.32 points, or 0.5 percent, to close at 10,387.01 points. The S&P 500 rose by 7.03 points, or 0.6 percent, to close at 1,098.87 points and the NASDAQ rose by 19.98 points, or 0.9 percent, to close at 2,228.87.

 

A volatile political environment is boosting the possibility that U.S. lawmakers will pass legislation designed to prod China into letting its currency rise more rapidly against the dollar. China said in June that it would permit market forces greater sway in setting the Yuan’s value, yet it has only appreciated about 0.6 percent since then. Pressure is building in both the House of Representatives and Senate over the issue, creating some nervousness among analysts about the risk that legislative proposals may stir more trade tensions. "There is no real question that China's deliberately undervalued exchange rate is unfair, contributes to global trade imbalances, and costs the United States jobs and economic growth, particularly in the manufacturing sector," Ways and Means Committee Chairman Sander Levin said in a statement on Wednesday.

 

ASIAN MARKETS:

 

Chinese commodity futures prices fell about 2 percent on Thursday as traders scrambled to identify the cause of the widespread sell-off."We are investigating why there is a sharp decrease. There is market talk over a crackdown over illegal funds, but we do not have any reliable source for that," said Shi Yan, chief analyst with Xinhu Futures Co. Ltd. The commodities sell-off prompted a slide in China stocks. The Shanghai Composite Index was down 1 percent at 2,667.6 by midday Thursday, after trading narrowly for most of the session below the 2,700 mark, a level the index has failed to breach multiple times in the past month.

 

 

INDIAN economy & stock MARKET:

 

India's industrial expansion is likely to slow down in coming months, though farm growth would pick up in the second half of the year, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, said on Thursday.

 

IT firms on Wednesday said they were concerned about growing protectionism in the US but added that a recent ban on off shoring of government projects by Ohio will not have significant impact on the industry at the moment.

 

Food inflation went up to 11.47 per cent for the week ended August 28, on the back of increase in prices of cereals, fruits and milk. This is the second consecutive week when food inflation has shown an upward trend, after a brief period of moderation in July and first half of August. Food inflation was 10.86 per cent during the previous week ending on August 21.

 

Nifty continued its uptrend for the fourth consecutive day on backing of buying in financial, telecom, Tata group and select auto shares. After the news of inflation going up market reacted little but from middle session market gained the momentum and headed for another high. In today’s session banking stocks gained the most leading the way was SBI followed by capital goods, select auto, metal and realty companies' shares. NTPC, HUL, Infosys. However, private power, cement, healthcare and PSU oil & gas companies' shares along with Tata Motors, ITC, Sterlite Industries, HDFC and Reliance Communications were witnessing selling pressure, which capped the gains. The main events to watch on Monday will be of IIP numbers and RBI’s meeting on 16.

 

COMMODITY – GOLD:

 

Gold pared earlier gains during a three day rally to settle slightly down toward $1,257 ahead of the fed's beige book reading on the U.S. economy. Gold has risen by about 15 percent so far in 2010, marking ten years of continuous increases, and looks set for its third all-time high this year. It last hit a record $1,264.90 in June. The rally has been driven in large part by the emergence of the difficulties of several euro zone member states in covering the spiraling cost of financing their debt burdens as the regional economy sputtered. Evidence of cracks in the U.S economic recovery and cooler Chinese data, combined with doubt about the strenuousness of stress tests conducted on European banks has created a springboard for investors to dive into gold. "It's a perfect storm, which will now take us up to challenge the all-time high and maybe even make new highs," said Credit Agricole analyst Robin Bhar. "All the factors seem to have come together at a time when physical demand is also propping up the market, but as with all the other precious metals, physical demand is probably not going to be the factor that drives it to new highs. It has to be this investment desire."

 

UBS precious metals strategist Edel Tully said she had upgraded her gold price forecasts based on gold's traditional outperformance in September, coupled with safe-haven demand emanating from the focus on sovereign fiscal burdens. "Given the range of factors conspiring to push gold higher in September, we raise our one-month forecast to $1,300, from $1,230 previously. We also lift our three-month target to $1,300, from $1,200 previously," she wrote in a report. Also supporting prices was news that China, the world's biggest gold miner, saw a fall in output in July. The country is a major consumer of gold, and speculation its output may fail to satisfy domestic demand is likely to firmly underpin prices.

 

 

                                                                                                                

COMMODITY – CRUDE: 

 

Oil rose on Wednesday for the first time in three sessions, bouncing with equities and supported by a weaker dollar as concerns over the European banking system eased and investors cautiously bought riskier assets. Crude futures extended gains in post-settlement trading after industry data showed a surprise large stock drawdown in domestic crude inventories last week. A raised forecast for 2010 global oil demands and lowered forecast for non-OPEC crude oil production growth in 2010, both issued by the U.S. Energy Information Administration on Wednesday added to the bullish sentiment. While boosting the 2010 demand growth forecast by 50,000 barrels per day, the EIA lowered its forecast for 2011 demand growth by 100,000 bpd. With little disruption to energy operations from tropical weather so far this season, the U.S. National Hurricane Center was monitoring newly formed Tropical Storm Igor and two other systems in the Atlantic Ocean. The systems were not yet expected to threaten energy operations in the Gulf of Mexico.

 

 

 

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