Thursday, June 14, 2018

Derivative strategy on Tata Elxsi

Buy June 1300 Call at Rs 33
of Rs 24
Rs 50
Rationale: We have seen Long positions being built in futures today where we have seen Rise in Open Interest with Price rise of 1%.
During this week, Stock price has broken out from multiple top resistances placed at 1250 odd levels to close at all time high level with rise in Volumes.
Short term moving averages are trading above long term moving averages Indicating bullish trend for the short to medium term.
Momentum Indicators and Oscillators are Indicating strength in the stock for the short to medium term.

Trade war: Trump approves plan to impose stiff tariff on Chinese goods

President has approved a plan to impose punishing tariffs on tens of billions of dollars of Chinese goods as early as today, a move that could put his trade policies on a collision course with his push to rid the of nuclear weapons.
Trump has long vowed to fulfill his campaign pledge to clamp down on what he considers unfair practices. But his calls for billions in tariffs could complicate his efforts to maintain China's support in his negotiations with 

ALSO READ: China's economy is slowing as Trump renews threats to impose tariffs
Trump met several Cabinet members and trade advisers yesterday and was expected to impose tariffs of at least $35 billion to $40 billion on Chinese imports, according to an industry official and an administration official familiar with the plans. The tariffs could reach $55 billion, said the industry official. The officials spoke on condition of anonymity in order to discuss the matter ahead of a formal announcement.
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If the president presses forward as expected, it could set the stage for a series of trade actions against China and lead to retaliation from Trump has already slapped tariffs on from Canada, and European allies, and his proposed risk starting a involving the world's two biggest economies.

Trump ready to impose tariffs on about $50 billion in Chinese goods - official

WASHINGTON (Reuters) - U.S. President Trump has made up his mind to impose “pretty significant” tariffs on Chinese goods, an administration official said on Thursday, as Beijing warned that it was ready to respond if Washington chose to ratchet up trade tensions.
Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday. The list will contain 800 product categories, down from 1,300 previously, according to another administration official and an industry source familiar with the list.
Trump no longer believes that Beijing’s influence over North Korea is a compelling reason to ease up on trade talks now that his administration has opened up a direct line of communication with the nuclear-armed country, the first administration official said.
U.S. Treasury Secretary Steven Mnuchin argued against imposing the tariffs at a White House meeting on Thursday but he was not expected to prevail, the official said.
The Chinese government’s top diplomat, State Councillor Wang Yi, said his country was prepared to respond if Trump went ahead with the tariffs.
Speaking to reporters in Beijing, with U.S. Secretary of State Mike Pompeo at his side, Wang said there were two choices when it came to the trade issue.
“The first choice is cooperation and mutual benefit. The other choice is confrontation and mutual loss. China chooses the first,” Wang said. “We hope the U.S. side can also make the same wise choice. Of course, we have also made preparations to respond to the second kind of choice.”
The move toward imposing U.S. tariffs on Chinese goods follows negotiations between U.S. and Chinese officials centred on increased purchases by Beijing of American farm and energy commodities and cutting the U.S. trade deficit with China.
Commerce Secretary Wilbur Ross this month met Chinese officials in Beijing and brought back a Chinese proposal to buy around $70 billion worth of additional commodities and manufactured goods. But that offer has not been accepted by Trump, people familiar with the matter said.
Wang said the two countries had agreed to use “constructive means” to handle disagreements.
Pompeo said the U.S. deficit with China was still too high, but that they had good talks.
“I stressed how important it is for President Trump to rectify that situation so that trade becomes more balanced, more reciprocal and more fair, with the opportunity to have American workers be treated fairly,” he said.
Pompeo met with Chinese President Xi Jinping later in the evening, and wished Xi a happy birthday for Friday.
Xi told Pompeo he hoped that the United States could “cautiously and appropriately” handle sensitive issues to avoid “major disturbances” to Sino-U.S. ties, the Chinese Foreign Ministry said in a statement.

MOVE COULD COME FRIDAY

The International Monetary Fund warned that Trump’s new tariffs threaten to undermine the global trading system, prompt retaliation by other countries and damage the U.S. economy.
FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018. REUTERS/Aly Song/File Photo
It remains unclear when Trump would activate the tariffs, if he decides to do so. Several industry lobbyists told Reuters they expected the move to come as early as Friday, with publication of a Federal Register notice, or it could be put off until next week.
If Washington adopts tariffs, Beijing is expected to hit back with its own duties on U.S. imports, including soybeans, cars, chemicals and planes, according to a list it released in early April.
Under the 1974 trade law that Trump invoked to pursue a tariff investigation into China’s intellectual property practices, he could delay the activation by 30 days. He couldn’t also delay the tariffs by another 180 days if the U.S. Trade Representative’s office finds negotiations with China are yielding progress.
A USTR spokeswoman could not immediately be reached for comment.
In an interview aired on Wednesday, Trump told Fox News he was “very strongly clamping down on trade” with China.
Asked how strong, Trump said: “Well, I think very strongly. I mean you’ll see over the next couple of weeks. They understand what we are doing.”
U.S. President Donald Trump is pictured during a meeting at the Istana in Singapore June 11, 2018. REUTERS/Jonathan Ernst
Trump did not specifically mention the tariffs and added that he had “a very good relationship with President Xi (Jinping) of China.”
The administration’s trade hawks, including U.S. Trade Representative Robert Lighthizer and White House trade and manufacturing adviser Peter Navarro, have advocated a tougher approach to address U.S. allegations that China has misappropriated American intellectual property through joint venture requirements, state-backed acquisitions of U.S. technology firms and outright theft.
Amid the rising trade tension, China’s Commerce Ministry spokesman Gao Feng said Chinese exporters have been front-loading their shipments due to changes in the international trade environment.

WPI inflation soars to 14-mth high; rises to 4.43% in May from 3.18% in Apr

A rebound in and a jump in in May led to wholesale inflation in the country rising to 4.43 per cent, from 3.18 per cent in April, its fastest uptick in 14 months.
Figures released by the commerce ministry on Thursday showed that rising inflation in the wholesale price index (WPI) was mainly led by double-digit inflation in petrol prices, while food prices rose by 1.6 per cent after low growth or deflation for the last three months.
Pressure on inflation as a whole is mounting. On the other hand, retail inflation - measured by the widely-tracked (CPI) - had jumped to a four-month high of 4.87 per cent in May. “Perhaps anticipating this trend in core inflation, the Reserve Bank of India (RBI) did not wait till August and went for a 25-basis point (bps) rate hike in the June review of the 2018-19 monetary policy. We expect one more rate hike by the RBI during the current fiscal,” Sunil Kumar Sinha, principal economist at India Ratings and Research, said.
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Wholesale inflation had been on a downward curve since November, closely imitating which had crashed over the period. But the price rise in the food segment accelerated in May, with at 1.6 per cent, up from 0.87 per cent in April.
Reports of farm distress and subsequent protests by in and Maharashtra, among other places, had pointed out acute loss in farm income due to continuing drop in food prices across the country.
The WPI is more relevant than the CPI in gauging farmers’ distress, though it also has its own inadequacies because there are middlemen between and the mandis. So, Thursday’s figures are set to come as a relief for across the country.
May saw the prices of most food commodities rising at a faster clip. After two straight months of price fall, vegetable prices rose by 2.31 per cent in May. The same was true for wheat, which saw inflation of 3.05 per cent after sustained deflation for more than six months. Potato prices rose by 81.93 per cent in May, up from the 67.94 per cent rise in April. This continued the five-month long trend whereby the wholesale prices of the tuber have skyrocketed.
But prices of milk and fruits rose at a slower pace in May than the month before. Also, prices of pulses continued to remain deflationary. While pulses have been witnessing deflation for the longest period among all food items, the rate of deflation fell in May to 21.13 per cent, from 22.46 per cent in April. 

Inflation in the energy category rose sharply to 11.22 per cent in May, up from the 7.85 per cent in the previous month. This was mostly due to the rising cost of petrol. Petrol prices rose by 13.90 per cent, up from the 9.45 per cent in the previous month. Prices of high-speed diesel also continued to rise at a fast clip, with inflation accelerating to 17.34 per cent, up from 13.01 per cent in April, when it had risen by more than double the previous rate.
However, liquefied petroleum gas (cooking fuel) prices continued to drop for the third straight month, although the rate of deflation reduced sharply to 0.74 per cent, down from 11 per cent in the previous month.
Inflation in manufactured products stood at 3.73 per cent, slightly higher than the 3.11 per cent in April. Continuing drop in sugar prices indicated that the crisis in the sector is far from over. Sugar prices fell for the fifth straight month, with deflation remaining at 19.46 per cent, up from 15 per cent in April.
“The is expected to harden by up to 80 bps in the ongoing month before easing somewhat in the second quarter of FY19. Key factors that would influence the inflation trajectory include the level at which global crude oil prices stabilise and the extent to which they are transmitted to domestic fuel prices, the trend in the monsoon dispersion, and the extent of change in MSPs,” said Aditi Nayar, principal economist, Icra.
The inflation data for March was revised upwards to 2.74 per cent, from the provisional estimate of 2.47 per cent.

Wednesday, June 13, 2018

Trump to meet with top trade advisers on activation of China tariffs: source

WASHINGTON (Reuters) - U.S. President Donald Trump will meet with his top trade advisers on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods, a senior Trump administration official said.
U.S. President Donald Trump speaks to reporters as he arrives aboard Air Force One from Singapore at Joint Base Andrews, Maryland, U.S. June 13, 2018. REUTERS/Jonathan Ernst
Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday. People familiar with the revisions said that the list will be slightly smaller than the original, with some goods deleted and others added, particularly in the technology sector.
Another administration official said that a draft document showed that the new list would still be close to $50 billion, with about 1,300 product categories, but both the dollar amount and quantity of products were still subject to change.
It remains unclear when Trump would activate the tariffs if he decides to do so. Several industry lobbyists told Reuters that they expect the move to come as early as Friday, with publication of a Federal Register notice, or it could be put off until next week.
Under the 1974 trade law that Trump invoked to pursue a tariff investigation into China’s intellectual property practices, he could delay the activation by 30 days. He can also delay the tariffs by another 180 days if the U.S. Trade Representative’s office finds that negotiations with China are yielding progress.
“The president’s trade team has recommended tariffs. If there are not tariffs, it will be because the president has decided that he’s not ready to implement tariffs,” a person familiar with the administration’s deliberations told Reuters.
But that recommendation came prior to Trump’s trip late last week to Canada for the G7 leaders summit and to Singapore for the nuclear summit with North Korean leader Kim Jong Un.
Trump arrived in Washington early on Wednesday morning.
Trump told Fox News in an interview aired on Wednesday that he was “very strongly clamping down on trade” with China.
Asked how strong, Trump said: “Well, I think very strongly. I mean you’ll see over the next couple of weeks. They understand what we are doing.”
Trump did not specifically mention the tariffs and added that he has “a very good relationship with President Xi (Jinping) of China.”
The move towards activating U.S. tariffs on Chinese goods follows negotiations between U.S. and Chinese officials centred on increased purchases by Beijing of American farm and energy commodities and cutting the U.S. trade deficit with China.
Commerce Secretary Wilbur Ross earlier this month met with Chinese officials in Beijing and brought back a Chinese proposal to purchase around $70 billion worth of additional commodities and manufactured goods. But that offer has not been accepted by Trump, people familiar with the matter said.
The administration’s trade hawks, including U.S. Trade Representative Robert Lighthizer and White House trade and manufacturing adviser Peter Navarro, have been pushing for a tougher approach to the negotiations to address U.S. allegations that China has misappropriated American intellectual property through joint venture requirements, state-backed acquisitions of U.S. technology firms and outright theft.

Fitch downgrades viability rating of SBI, Bank of Baroda on poor asset quality

Fitch Ratings on Wednesday downgraded the Viability Rating (VR) of State Bank of IndiaNSE 1.71 % and Bank of BarodaNSE 2.55 % by one-notch, reflecting weak risk profile due to negative effect of poor asset quality. 

Fitch, which has a negative sector outlook on Indian banks, however, affirmed the 'BBB' Long-Term Issuer Default Ratings (IDRs) of SBI, BoB, Canara Bank and Bank of India (BoI) with a stable outlook. 

"Fitch has downgraded the Viability Rating (VR) of SBI and BoB by one-notch to 'bb+' and 'bb', respectively, reflecting their weakened intrinsic risk profile due to the negative effect of persistently poor asset quality and earnings on their capital position. The banks' core capital buffers also appear more vulnerable to moderate shocks," the ratings agency said in a statement. 

As many as 19 of India's 21 state banks reported losses in the last fiscal, cumulatively wiping out almost all of the government's $13 billion capital injections during the year, Fitch said. 

It said the one-notch downgrade of SBI's VR to 'bb+' from 'bbb-' reflects the bank's vulnerable core capitalisation from its prolonged asset quality problems and weak earnings. 

"We believe more fresh capital is needed for growth and to manage heightened balance-sheet stress," Fitch said. 

SBI's non performing loan ratio increased further to 11 per cent and have increased risk for core capitalisation, it added. 

With regard to BoB it said the one-notch downgrade of BoB's VR to 'bb' from 'bb+' reflects increasing pressure on its capital position from extended financial weakness in terms of NPLs and earnings. 

Its NPL ( non-performing loan) ratio jumped to 12.3 per cent. The bank's portfolio of watch-list loans is around 2% and can add to asset-quality pressure if NPL resolution slows, Fitch said. 

Fed raises rates amid stronger inflation, drops crisis-era guidance

WASHINGTON (Reuters) - The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the U.S. central bank’s shift from policies used to battle the 2007-2009 financial crisis and recession.
FILE PHOTO: The Federal Reserve headquarters in Washington, U.S., September 16, 2015. REUTERS/Kevin Lamarque/File Photo
In raising its benchmark overnight lending rate a quarter of a percentage point to a range of between 1.75 percent and 2 percent, the Fed dropped its pledge to keep rates low enough to stimulate the economy “for some time” and signaled it would tolerate above-target inflation at least through 2020.
The Fed has raised rates seven times since late 2015 on the back of the economy’s continuing expansion and solid job growth, rendering the language of its previous policy statements outdated.
Inflation is also snapping into line, with fresh projections from policymakers on Wednesday indicating it would run above the central bank’s 2 percent target, hitting 2.1 percent this year and remaining there through 2020.
Policymakers also projected a slightly faster pace of rate increases in the coming months, with two additional hikes expected by the end of this year, compared to one previously.
They see another three rate increases next year, a pace unchanged from their previous forecast.
“The labor market has continued to strengthen ... economic activity has been rising at a solid rate,” the Fed’s rate-setting committee said in unanimous statement after the end of a two-day meeting.
“Household spending has picked up while business fixed investment has continued to grow strongly,” the Fed said.
Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. EDT (1830 GMT).
The Fed’s short-term policy rate, a benchmark for a host of other borrowing costs, is now roughly equal to the rate of inflation, a breakthrough of sorts in the central bank’s battle in recent years to return monetary policy to a normal footing.
Though rates are now roughly positive on an inflation-adjusted basis, the Fed still described its monetary policy as “accommodative,” with gradual rate increases likely warranted as a sturdy economy enters a 10th straight year of growth.
Estimates of longer-run interest rates were unchanged and seen reaching as high as 3.4 percent in 2020 before dropping to 2.9 percent in the longer run.

FED CONFIDENCE

The Fed now sees gross domestic product growing 2.8 percent this year, slightly higher than previously forecast, and dipping to 2.4 percent next year, unchanged from policymakers’ March projections. The unemployment rate is seen falling to 3.6 percent in 2018, compared to the 3.8 percent forecast in March.
The rate increase was in line with investors’ expectations and showed policymakers’ confidence in the economy’s growth prospects, continued low unemployment and steady inflation. Investors had given just over a 91 percent chance of a rate rise on Wednesday, according to an analysis by CME Group.
The Fed said its policy of further gradual rate increases will be “consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective.”
In a technical move, the central bank also decided to set the interest rate it pays banks on excess reserves - its chief tool for moderating short-term interest rates - at just below the upper level of its target range. The step was needed, the Fed said, to be sure rates stay within the intended boundaries.
The policy statement bypassed discussion about the tensions over the Trump administration’s trade policies, including a decision two weeks ago to impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico.
Individual Fed policymakers have expressed concerns about the economic risks of a broad tit-for-tat tariff retaliation, but have said they would not change their policies or forecasts until those risks are realized.