IMF Lifts China Growth Estimate to 6.7% in Second Rise This Year

The International Monetary Fund raised its growth estimate for China for the second time this year while also cautioning that deep reforms are still needed to break away from debt-fueled expansion.

The world’s second-largest economy will expand by 6.7 percent in 2017, the Washington-based fund said in its annual report on Article IV consultations published Wednesday. That’s up from a 6.6 percent estimate in the economic outlook released in April and 6.5 percent forecast in January.

It’s unusual for the IMF to update forecasts outside of its scheduled global economic outlook series, though officials have signaled that a strong first quarter hadn’t fully been reflected in earlier releases. IMF First Deputy Managing Director David Lipton said in a statement Wednesday that China should use its current momentum to push reforms through.

"While some near-term risks have receded, reform progress needs to accelerate to secure medium-term stability and address the risk that the current trajectory of the economy could eventually lead to a sharp adjustment," Lipton said in Beijing after meetings with top policy makers. "It is critical to start now while growth is strong and buffers sufficient to ease the transition."

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Govt extends farmers' sop: Short-term crop loans at 7% interest to continue

Farmers will continue to get short-term loan of up to Rs 3 lakh at a subsidised interest rate of 7 per cent, and prompt repayers will get it at 4 per cent as the government on Wednesday extended the subsidy to banks for 2017-18.

The Interest Subvention Scheme for 2017-18 has been approved in the Cabinet meeting, headed by Prime Minister Narendra Modi, on Wednesday.

"The Cabinet has approved the total expenditure of Rs 20,339 crore in the current financial year as interest subsidy on short-term crop loans," a senior government official said.

The short-term crop loan of up to Rs 3 lakh will continue to be made available to the prompt payee farmers at 4 per cent interest rate only, the official said.

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Fed Raises Rates, Maintains Forecast for One More Hike

Federal Reserve officials forged ahead with an interest-rate increase and additional plans to tighten monetary policy despite growing concerns over weak inflation.

The Fed’s actions and words struck a careful balance between showing resolve to continue tightening in response to falling unemployment while acknowledging the persistence of unexpectedly low inflation this year.

Policy makers agreed to raise their benchmark lending rate for the third time in six months, maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5 trillion balance sheet this year. In a press conference after the decision was announced, Fed Chair Janet Yellen said the unwinding plan could be put into effect “relatively soon” if the economy evolves as the central bank expects.

“Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely,” the Federal Open Market Committee said in a statement Wednesday following a two-day meeting in Washington. “The committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.”

Policy makers also issued forecasts showing another three quarter-point rate increases in 2018, similar to the previous projections in March.

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Updates on Bullion, Base Metals and Energy Levels 14th June 17

Gold futures ended lower on Tuesday as the Federal Reserve was widely expected to wrap up its two-day meeting Wednesday with an increase to interest rates, which typically act as a headwind to prices for the yellow metal.

Crude oil futures traded marginally lower on MCX as investors and speculators exited their positions in the energy commodity after build in US crude stocks and also OPEC reported a surge in its output despite its pledge to cut back. An ongoing rise in US production driven by shale drillers, which has pushed US output up by 10 percent over the last year to 9.3 million bpd, not far off top exporter Saudi Arabia, too added pressure on crude oil prices.

Copper futures traded down on MCX as investors exited their positions in the industrial metal ahead of the outcome of a US Fed’s policy meeting later in the day, which could provide further clues over the timing of interest rate hikes this year. Further, the central bank is widely expected to raise interest rates at its two-day meeting. Meanwhile, the focus will be on any fresh hints on the pace of further tightening in the months to come and next year, and any further details on its plans for trimming its balance sheet.

Technical Level

Gold 

Support at 28800 and Resistance 29050---29200

Trade in a range with levels only and wait for confirmation.

Silver

Support at 38600 and Resistance at 39200

Trend looks weak and could touch its support level of 38600. Break and sustain below 38600 will take it to 38450---38200 mark else could touch its resistance level of 39200 mark.

Fresh buying can be initiated above 39200 mark.

Crude 

Support at 2910 and Resistance at 3015

Trading in range either side breakout with volumes will decide further.

Natural Gas

Below 191.50 panic remain continue till 187—185 and then to 183 mark.

Hurdle intact at 193.50

Copper 

Close below 367 will take it 363---360 and then to 356 mark 

Hurdle at 372

Economic Data

06:00 P.M CPI m/m:  Previous 0.2%, Forecast 0.2%, Actual –??

Impact – Increase in CPI m/m - will have negative impact bullion and positive impact on base metals and dollar index vice – versa.

06:00 P.M Core CPI m/m:  Previous 0.1%, Forecast 0.2%, Actual –??

Impact – Increase in Core CPI m/m - will have negative impact bullion and positive impact on base metals and dollar index vice – versa.

    

06:00 P.M Core Retail Sales m/m:  Previous 0.3%, Forecast 0.2%, Actual –??

Impact – Increase in Core retail sales - will have negative impact bullion and positive impact on base metals and dollar index vice – versa.

06:00 P.M Retail Sales m/m:  Previous 0.4%, Forecast 0.1%, Actual –??

Impact – Increase in Retail sales - will have negative impact bullion and positive impact on base metals and dollar index vice – versa.

08:00 P.M Crude Oil Inventories:  Previous 3.3M, Forecast -2.3M, Actual –??

Impact – Increase Crude Oil Inventories – will have negative impact on crude oil prices vice versa.

More will update soon!!

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Agro Commodity Update (14-June-2017)

Fundamental Aspect

Soybean futures traded marginally higher for the week due to bargain buying coupled with expectation that the Minimum Support Prices (MSP) for soybean may increase by Rs. 175 per quintal to Rs. 2,950 may added further gain in prices. As per the trader source, arrivals of soybean during last week down by 50% to 21,680 tonnes as compared to 43,859 tonnes in the previous week. Area under the soybean crop across the country for the 2017-18 kharif was at 26,900 ha till last week, up 16.5% on year. Sowing is yet to commence in some key growing states such as Madhya Pradesh, Rajasthan, Andhra Pradesh and Chhattisgarh, as the oilseed is typically sown after the first monsoon showers. As per SOPA, arrivals of soybean in the country rose to 64 lakh tonnes during Oct-May from 46 lt a year ago due to huge production last year.

Turmeric futures are expected to trade in positive note for the day. Expectations of fresh buying from lower levels may support prices to trade higher. Besides the normal monsoon factor, acreage under turmeric is likely to decline this season as prices are currently prevailing very low at spot markets. Farmers are expected to shift cultivation towards sugarcane and other crops for better price realization. However, higher stocks at the production centres due to higher production in current season and higher carryover stocks may limit the gain. As per the trader source, about 6,378 tonnes arrived last week compared to 11,942 tonnes during previous week. On the export front, country exported about 1.11 lakh tonnes in 2016-17 up by 30% compared to last year exports of 85,412 tonnes.

Cardamom futures traded higher as investors build up fresh bets amid rise in physical demand for cardamom in the domestic spot market. Further, insufficient supplies on restricted physical arrivals from the major cardamom producing regions too fuelled the uptrend.

Coriander futures edged higher as participants enlarged their holdings, tracking a firming trend at spot market due to rising domestic as well as export demand. Besides, limited stocks position on fall in supplies from major producing regions also added support to coriander prices’ uptrend. Supply of coriander in the spot market dropped significantly due to slow farmers selling amid lower rates followed by strike in Madhya Pradesh.

Technical Aspect: (July Contract)

Soybean

Support is 2750 and resistance is 2865

Either side decisive break or close will decide the further trend.

Trade with levels only 

Soyaref 

Soyaref has support at 630 and resistance of 638 

 Break and close above 638 will take 645---651+++ mark else could touch its support level of 630 again.

Fresh selling can be initiated below 630.

Trade with levels only.

Dhaniya 

As we expected Bull Run from 4800 has started now. It made a high of 5035 today.

What to expect??? 

Support is 4725 and resistance is 5050.

We will maintain our bullish view on decline till  for the upside target of 5050.

Successfully close above 5050 will take it to 5185 and then 5470+++mark in days to come.

Fresh selling can be seen only below 4725.

Trade with levels only.

Jeera 

Support is 17950 and resistance is at 18600

Close above 18600 will take it to 18950---19300 and then to 19600 mark in days to come else could touch its support level of 17950 again.

Fresh selling can be seen below 17950.

Trade with levels only.

RM Seed 

Our buy call from 3550 to 3636 proven great....

Now what to expect???

Hurdle and target intact 3650. Close above 3650 will take to 3690—3735+++ mark in days to come else could touch its support level of 3550.

Fresh selling can be initiated below 3550 mark

Trade with levels only.

Turmeric

Support at 5520 and Resistance at 5750.

Looks positive and close above 5750 will take it to 5850---5920 else could touch its support level of 5520.

Fresh selling can be seen below 5520.

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Cocudakl

Our buy call from 1690 proven great and made a high of 1774 today.

Now what to expect??

Support 1730 and resistance at 1780.

Break and sustain above 1780 will take it to 1820 and then to 1860+++ mark else could touch its support level of 1730.

Fresh selling can be initiated only below 1730.

Trade with levels only.

Mentha oil (June)

Hurdle at 927 and support at 886. 

Looks positive and buy on every decline till 905 will be consider as a buying opportunity. Close above 927 will take it to 938--- 952+++ mark else could test its support level of 886. 

Fresh selling can be initiated below 886 mark

CPO (June)

Trading in a tight range of 486----500

Either side decisive break or close will decide further

Trade in a range with levels only.

More will update soon!!

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Currency Report 14th June 2017

Indian rupee ended marginally higher against dollar on Tuesday due to sustained selling of the US currency by exporters and banks. Sentiments remained positive, as retail inflation as well as industrial output data served to bolster expectations of a rate cut by the RBI. Data released late on Monday showed consumer inflation easing to 2.18% in May, helped by a drop in food prices - the lowest since India started publishing an economy-wide consumer price index in 2012. Besides, India’s industrial production grew by 3.1 percent in April 2017, as compared to 2.7 percent in the month of March 2017 and against a drop of 1.2 percent in February 2017. The growth was due to good performance of electricity, mining and manufacturing sectors. On the global front, dollar gained against yen ahead of a two-day US Federal Reserve meeting that is likely to provide hints on the central bank’s interest rate policy for the remainder of the year.

USDINR (June)

Support at 64.25 and resistance at 64.60

Trading in range either side breakout with volumes will decide further.

GBP-INR

Hurdle at 82.40 , Break and sustain above 82.40 will take it 82.60—82.80++ mark else could touch its support level of 82.00

Fresh selling can be initiated below 82.00

EURINR

Support at 72.15 and resistance 72.60

Looks weak, close below 72.15 will take it to 72.00---71.80 mark else could touch its resistance levels of 72.60 

Fresh buying can be initiated above 72.60

JPYINR

Support at 58.50 and Resistance at 58.85

Close below 58.50 will take it to 58.30—58.10++ mark in days to come else could touch its resistance level of 58.85 mark again.

Fresh buying can be initiated above 58.85 mark.

More will update soon!!

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Four-year drought in private sector investment: India’s economic establishment has let India Inc down

First they conveniently lost their voice; then they miraculously got it back. But now that the pundits of India’s economic establishment are talking again, all investors hear is discord. The biggest casualty of the war of words between the finance ministry in New Delhi and the central bank in Mumbai is India Inc. Without clarity on where policymakers want the cost of capital to be, reasons for highly indebted companies to restart work on mothballed projects, or dream up new ones, are being drowned by doubts about profitability. The battle of the mandarins has its origin in the Nov. 8 demonetization. The ban on 500- and 1,000-rupee notes removed 86 percent of the currency in circulation from a cash-dependent economy. It also made officials wary of doing or saying anything that would amount to questioning the weird economics of the move.

Gadfly was surprised when, amid an extreme cash crunch in December, the Reserve Bank of India didn’t cut its policy rate by even a quarter percentage point. At the time, though, Arvind Subramanian, the chief economic adviser in New Delhi, described the non-action as a “brilliant call.” Then last week, when the RBI again stood pat, the same official protested loudly, saying the economy had decelerated from last July, and substantial monetary policy easing was warranted because inflation-adjusted interest rates were too high, corporate and bank balance sheets too weak, and the investment impulse too anemic.

While GDP showed evidence of a protracted slowdown in the March quarter, much of what Subramanian now says held true even before that report. For instance, a four-year drought in private-sector investment is visible in corporate data. 

A Gadfly analysis of capital expenditure by India’s top 100 companies by market capitalization shows that it would be a lot worse but for Reliance Industries Ltd.’s spending spree in recent years, including the $30 billion it invested in a new telecom network.

Oddly, the RBI refuses to wake up even now. Inflation could dip below the lower end of the monetary authority’s target range of 2 to 6 percent this month, according to Bloomberg Intelligence economist Abhishek Gupta. Deflate the 10-year government bond yield by 2 percent, and the real risk-free rate works out at 4.5 percent. Who would put up new factories at such a cost?

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Government firm on 1st July GST rollout

The government on Tuesday emphasised that Good and Services Tax will be rolled out from July 1 and preparations are in full swing for its smooth implementation, as it sought to dispel rumours of a possible deferment.

There have been demands from certain sections of the industry for a deferment of GST rollout. West Bengal Finance Minister Amit Mitra too had proposed to postpone GST by a month.

"The Government of India has emphasised that GST is scheduled to roll out on July 1, 2017. The Central Board of Excise and Customs (CBEC) in coordination with the state governments have increased their outreach programmes so as to reach the last trader," a finance ministry statement said.

In a tweet, Revenue Secretary Hasmukh Adhia said: "The rumours about GST implementation being delayed are false. Please do not be misled by it".

The ministry said that preparations are in full swing for a smooth implementation of the landmark reform GST from July.

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These States Are Most At Risk Of Possible Farm Loan Waivers

Public sector banks and rural banks together hold more than 85 percent of the total agricultural debt of India. Their exposure to unsecured loans may be more than 85 percent, said Nomura.

Two-thirds of India’s agricultural debt is concentrated in states where a debt waiver has already been announced or promised, and states that will go to the polls in the next two years, Nomura analysts wrote in a report on Tuesday.

The risk of default on India’s Rs 9.5 lakh crore agricultural debt is rising as debt waivers by two major states triggers demand for similar relief in other states, putting pressure especially on poll-bound states, according to broking firm Nomura.

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