Macro -economics
Economic Analysis
Macro Economic Environment
GDP
Saving & Investment
Interest Rates
Inflation
Budget
Tax Structure
Balance of Payment
Monsoon & Agriculture
Infrastructure Facilities
Demographic Factors
Monetary Policy
Fiscal Policy
Economic Cycle
Factors in Macro Economics
Interest Rates
GDP
Inflation
Exchange Rates
IIP
Balance of Payment
Interest rates
Interest Rates
Impact of Rising Interest Rates
A Bank has taken a deposit of 100 from public and CRR is 9 and SLR is 25 then available funds to lend from deposits with the bank will be 100-9-25=66 Raising interest rates are required to control excess liquidity in the markets
Terms in Interest Rates
CRR(Cash Reserve Ratio)
Repo Rates Reverse Repo Rates SLR(Statutory Liquid Ratio)
Cash Reserve Ratio
Amount of cash that bank is to kept with RBI To secure solvency of the bank and to drain out the excessive money from the banks. Present Rate is 4%
If RBI decides to increase the percent of this, the available amount with the banks comes down (To reduce liquidity in market)
Repo Rate
Rate at which our bank borrow rupees from RBI Short term measure and to fill gaps between demand and supply of money in a bank Present Rate is 7.75%
Decreased from 8.00% which was continuing since 17/04/2012
Reverse Repo Rate
Rate which is paid by RBI to banks on Deposit of funds with RBI(surplus fund with bank) Present Rate is 6.75%
Decreased from 7.00% which was continuing since 17/04/2012
Statutory Liquidity Ratio (SLR)
Bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers
SLR rate is determined and maintained by the RBI in order to control the expansion of bank credit Present rate is 23% Decreased from 24% which was continuing since 18/12/2010
Impact of Interest Rates on Stock Market
Interest Rate in World
TOP ECONOMIES AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 3.00 7.25 6.00 0.75 0.75 0.75 7.75 0.50 0.25 PREVIOUS 3.00 7.25 6.00 0.75 0.75 0.75 8.00 0.50 0.25 HIGHEST 17.50 45.00 10.98 4.75 4.75 4.75 14.50 17.00 20.00 LOWEST 3.00 7.25 5.31 0.75 0.75 0.75 4.25 0.50 0.25
Interest Rates
Details Frequency Low Interest Rate Facts Quarterly 8 to 12 announcement High liquidity positive for Stocks, Currency but negative for bonds Low liquidity negative for stocks , currency but positive for bonds Short term Volatility
High Interest Rate
Below or above the benchmark
Gross Domestic Product (GDP)
Gross Domestic Product (GDP)
Total market value of all final Goods & Services Produced
Within the country in a given period of time
GDP = Consumption + Gross Investment + Government Spending + (Exports Imports)
Debt to GDP in World
TOP ECONOMIES AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 22.90 65.10 25.80 87.30 86.00 80.50 68.05 85.00 101.60 PREVIOUS 20.40 66.20 33.50 85.40 82.30 82.50 69.43 79.40 99.40 HIGHEST 31.70 79.80 33.50 87.30 86.00 82.50 84.30 85.00 121.70 LOWEST 9.70 63.50 1.00 66.20 20.70 55.60 67.62 31.30 31.70
GDP Rate in World
TOP ECONOMIES
AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY
LAST
3.10 1.40 7.90 -0.90 -0.30 0.10
PREVIOUS
3.70 0.90 7.40 -0.60 0.15 0.40
HIGHEST
9.00 10.10 14.20 5.00 4.90 4.70
GDP (USD Billion)
1371 2476 7298 13075 2773 3750
INDIA
ITALY JAPAN UNITED KINGDOM UNITED STATES
4.50
-2.70 0.30 0.30 1.60
5.30
-2.40 0.40 0.20 2.60
10.20
10.30 9.40 10.20 13.40
1847
2194 5867 2431 15094
GDP Rate
GDP Rate in World
GDP
Details
Frequency High GDP
Facts
Quarterly (Revised monthly) Positive for Stocks, Currency strong(Due to foreign investor) but negative for bonds (Also create risk of high inflation) Sector perform as per the growth contributed by each sector Short term Volatility
Component of GDP
Below or above the benchmark
Index of Industrial production (IIP)
Index of Industrial Production (IIP)
A short term indicator Measures industrial growth till the actual result available Used by Ministries, Industrial Associations, Research Institutes & Academicians
IIP Data & Stock Market
IIP Data & Stock Market
IIP Data & Stock Market
IIP Rate in World
TOP ECONOMIES AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 4.33 -3.60 10.30 -2.40 -3.10 -1.10 -0.60 -1.70 2.10 PREVIOUS 2.69 -1.00 10.10 -4.00 -3.20 -3.10 -0.10 -2.40 2.20 HIGHEST 13.72 20.12 29.40 9.80 8.50 15.00 20.00 22.60 62.00 LOWEST -8.00 -17.47 -21.10 -21.40 -19.30 -22.00 -7.20 -11.90 -33.70 FREQUENCY Quarterly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly
Unemployment Rate in World
TOP ECONOMIES AUSTRALIA BRAZIL CANADA CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 5.40 5.40 7.00 4.10 11.90 10.30 5.90 3.80 7.80 7.90 PREVIOUS 5.40 4.60 7.10 4.10 11.80 10.20 5.30 9.40 7.70 7.80 HIGHEST 10.90 13.10 13.10 4.30 11.90 11.20 14.20 9.40 12.00 10.80 LOWEST 4.00 4.60 2.90 3.90 7.20 7.50 0.40 3.80 3.40 2.50
IIP
Details
Frequency High IIP
Facts
Monthly Positive for Stocks, Currency strong, Commodity but negative for bonds (Also create risk of high inflation) Short term Volatility
Below or above the benchmark
Balance of payment
Balance of Payment
Measures the payments that flow between any individual country and all other country
Summarizes all international transaction for that country in a year It includes Export-Import, Financial capitals,deposits,borrowings etc
Balance of Payment
Current Account Capital Account Financial Account
Consists of Goods & Services Account, Primary Income Account & Secondary Income Account
Capital transfers receivables and payable The acquisition and disposal of non produced non financial assets. Involve financial assets & liabilities Take place between residents & nonresidents
Balance of Trade
Imports
Exports
Balance of Trade
TOP ECONOMIES BRAZIL CHINA FRANCE GERMANY LAST -1276.00 291.46 -5349.00 12.00 PREVIOUS -4036.33 316.18 -4289.00 17.00 HIGHEST 5659.37 404.00 2674.00 20.10 LOWEST -4036.33 -319.81 -7021.00 -0.50 UNIT USD Million
USD Hundred Million
EUR Million EUR Billion
INDIA
JAPAN UNITED KINGDOM UNITED STATES
-1086.12
-1629.44 -3201.00 -38539.00
-965.73
-643.29 -3577.00 -48613.00
13.91
1608.68 2946.00 -831.00
-1111.46
-1629.44 -6067.00 -67351.00
INR Billion
Billion JPY GBP Million USD Million
Balance Of Payment
Details
Frequency High deficit on BOP
Facts
Monthly Negative for the currency (Low inflow of foreign currency) Also International commodities are also rising Short term Volatility
Below or above the benchmark
Exchange Rates
Why Rupee Appreciate or Depreciate?
Exchange Rate
Exchange rate means how much one currency is worth in terms of another currency. If we can buy $ 1 with Rs. 46, the exchange rate of the two currencies would be $1 = Rs. 46. Two types of exchange rate: Fixed and Floating In India, we have a Managed Floating Exchange Rate System- Indian government intervenes only if the exchange rate seems to go out of hand by increasing or reducing the money supply as the situation demands.
Factors drive the demand for a currency
Interest Rates Differential rates between two countries
(For ex in India interest rates 7-8% and in US 2-3% this lead to greater capital inflow in India) rupee Appreciate
Inflation Rates- If inflation rate is lower than more good
are exported which lead to currency inflow .then Rupee Appreciate
Export-Import- If export is more than import ,more
currency inflow of other country, which lead to currency appreciation
Trading in currency in Forex Market
INflation
INflation
Inflation Rate in World
COUNTRIES
AUSTRALIA BRAZIL CANADA CHINA EURO AREA FRANCE GERMANY INDIA ITALY JAPAN UNITED KINGDOM UNITED STATES
PREVIOUS
2.20 6.15 0.50 2.00 1.80 1.20 1.55 6.62 1.91 -0.30 2.70 1.60
HIGHEST
2.00 5.84 0.80 2.50 2.00 1.30 1.70 7.18 2.20 -0.10 2.70 1.70
LOWEST
23.90 6821.31 21.60 28.40 5.00 18.80 11.40 34.68 25.64 25.00 8.50 23.70
FREQUENCY
Dec/2012 Jan/2013 Jan/2013 Jan/2013 Feb/2013 Jan/2013 Feb/2013 Jan/2013 Feb/2013 Jan/2013 Jan/2013
Inflation Rate in World
Inflation
Details
Frequency High Inflation
Facts
Monthly Negative for currency , Increase risk interest rate hike which effect stock market ,Bonds are stable commodity are rising Short term Volatility
Below or above the benchmark
Major Obstacles in Indian Economy
Infrastructure Shortage Inflation V/s GDP Fiscal Deficit Unemployment Rate Financial Sector
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