• Home ::
• Fundamental ::
• Analysis Reports ::
• Market Strategy

• Send
• Print
• Add To

Market Strategy

eb8cecaf-5afe-4ec0-b5c6-e2075b1a6d4d

0

0

US housing on the brink of a collapse

Fri, Nov 3 2006, 09:46 GMT
by ICICI Bank Treasury Research Group

ICICI Bank

• Indicators of the housing market are pointing towards a rapid slowdown, although it is still unclear how much impact that will have on the rest of the economy. Fed will have to act swiftly if recessionary possibilities emerge out of a housing collapse.
  
  
• State of the Indian economy: The FRBM tug of war Sharp differences in opinion on the approach to the Eleventh Five-year plan have originated a major debate between the planning commission and the finance ministry. The main point of contention is the possibility of flexibility in timing in adhering to FRBM targets. Is the finance ministry justified in rejecting the planning commission’s suggestion?
  
  
• USD-INR: Will current tranquility give way to a pandemonium? With both positive and negative factors paying on the Rupee, the domestic unit has remained range-bound in August. However, this tranquility has been broken in the beginning of September. We find that the Rupee depreciates during H2 of each year. But possibility of appreciation if geopolitical risks are low and dollar depreciation gets entrenched.
  
  
• G-Sec: Will the rally persist? The medium term outlook of the bond market will depend on the liquidity outlook, auction results, inflationary expectations and Fed’s monetary policy stance. We maintain our overall bearish stance on the bonds but some short-term respite is clearly underway.
  
  
• Inflation: Primary products inflation back in focus The upward trend in inflation numbers seems to continue as headline inflation came in at 4.8-5% levels. The rise in prices of food & non – food articles has caused this spurt in inflation numbers. Going forward, we expect inflation to moderate slightly from current levels on account of a favorable base effect.
  
  
• Commodity: Is excessive regulation stifling price discovery on the exchanges? The strict regulations imposed by the FMC on wheat and chana markets have created quite a furor among the participants and the volume in wheat contracts have declined visibly. In this light, it becomes imperative to examine the extent to which markets should be bound by regulations.
  
  
• Feature: Is Indian growth still dependent on the whims of monsoon? We explore the role monsoon occupies in determining Indian GDP by examining the link between rainfall and agriculture output, and the latter’s share in Indian GDP. Our anlaysis leads us to conclude that though the importance of monsoon remains undiminished for agriculture, the latter’s role in the growth of Indian GDP is not as prominent as before.

• Download full Market Strategy

Published on  Fri, Nov 3 2006, 09:47 GMT