==>> Gold, Sugar & IIP

Sugar: There has been higher than production in the current year. The International prices have also dropped down sharply. Indian sugar production is estimated at16.8mn ton, which was earlier estimated at 15mn tons. Production more than estimated & continuous price decline in the International markets will surely trigger panic selling in the Indian market. Brazilian Sugar production is higher than expected. Sugar Imports are high in India. According to me Govt should continue to import sugar to curb the unnecessary price hike which was done by the middle men which starting stocking the sugar. Sugar stocks have underperformed the markets by over 20% over the past 2-3 months. I see further down side in the stocks. In the spot market Sugar price should come down to 25-28 levels.

IIP: Last time also indicated correctly, about the rate hike. This time also it seems so that the markets are discounting the increase of rate hike. According to me the rate hike will be there very soon. IIP numbers getting to track. Inflation is getting out of control on back of high oil & food prices. Very soon the hike in the rate of Interest will be there.

China: Markets men talking about the China banks getting in control. According to them there should be cap on the lending in China. Inflation in China is also at its 16mth high. China GDP grew at 10.7% last qtr. Banks extended 700bn yuan (103bn) of new loans in Feb, according to Central Bank Data. According to me the Chinese Govt are doing the right things to support the growth by higher loans in 2009 than in 2009. I know the banks are lending too much but they country can handle even more than this. China’s banks on average hold nearly 16% of their capital in reserves as compared to 10% in US. Bad loans in China are very less as compared to US. Savings in China is almost 35%of the country’s income. Chinese govt are focusing more on constructing infrastructure that generates more income in the hands of the rural people. That again leads to savings. On back of Chinese stimulus package, manufacturing sector is also growing at a very high speed. China is now ranked 1^st for the Automobile hub. China’s foreign exchange reserves surged to nearly $2.5 trillion. China’s exports have been on the upward move. China GDP grew by almost 9% in 2009. According to me the Chinese govt will continue to boom.

Gold & Silver: Gold had been proved to be the best investment. The demand for the gold have just exploded. Central banks, private investors have lined up just to buy gold. Exploration cost of the gold have sky rocketed in the years. Gold production in the last 10 years has drastically dropped down. But the Demand for the same have been on the upward move in the last 10 years with the price increase and this will continue to happen in the near future also…..
China is the main holder of Gold today. In the past it was illegal for the Chinese people to own gold, just like it was illegal for the Americans between 1933 and 1974. But after that was made legal, the gold prices surged near 733% in just 4 yrs. Just Imagine the price after 4 years where the Chinese govt are running commercials on television urging them to buy more of gold…. During the 1970s to 80s the gold soared nearly 2300%. But the run we have seen in the last 2 years is just 300% so far. We are still far from the top as compared to the last rally. The drop in the dollar is balanced by gold going up by certain %.

Silver will too see a sharp rise in the price because of its multiple usage. It is almost used in everything from cell phones to Ipod to solar panels, telescopes even I mirrors. It is used it to seed clouds and make it rain. Silver demand is very high. Supply of the silver will too shrink in the near future, only then we will the prices sky rocketing.

Oil prices have been soared quite well in the past few weeks. Unemployment numbers in the US still continue to grow.

FII have been buyers for the last 4 days. They are net buyers to the tune of Rs.4000cr. DII’s remained sellers for nearly Rs.1300Cr.

Indian markets since the last week has seen a lackluster trading sessions. Nifty for the week closed with marginal gains. Since the budget FII have almost pumped Rs11Kcr but still the markets are witnessing a headless movement. For the 7^th consecutive trading session was Indices closing on the flattish note. Even after the good IIP data for the month of Jan 2010, could not pull the markets up. Nifty is facing stiff resistance at 5150-5185 levels, but finding good support at 5050 levels. Breakout either side will see sharp movement. People are waiting over the sidelines for the markets to breakout.

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