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Commentary

MarketVision Chronicle #2 is out: FII, Onion Prices and more…

Read the MarketVision Jan 15 Chronicle with FII data, Onion Prices and more…

(For registered users only – Registration is FREE, click here)

This has been a week of data and more data, and then some data. Our newsletter gives you a quick summary, further reading and more interestingly, a chart of onion prices since 1994.

Going Downhill

The markets have crashed more than 8% in two weeks. And there are a significant number of reasons why.
Rate hikes: The market is expecting a rate hike, it seems. Some seem to think the hike will be as much as 75 basis points. (one basis point = 0.01%) Typically rate hikes tend to depress equity prices. But do they?
In the last year alone, RBI has raised the repo rate 1.5% – or 150 basis points, in six increments from 4.75% to 6.25%. That hasn’t done much for inflation, and seems to only be a big positive for equity – markets rose from the 5400 levels to new highs of 6300, and since then have crashed to the 5700 levels thrice. The last time we went UP to 6.25% was in 2005, and in March 2007 the repo rate was actually 7.75% – and that was a phenomenal year for equity. Even a 75 bps rate increase from here will only take the Repo rate to 7%. We aren’t really in danger territory are we?

Onion Prices

Everyone’s been going nuts about how much onion prices have moved in the last ten years.
Onion Price Chart
Technical note: The index changed bases from 94-95 to 04-05, in August 2010. Data after August has been readjusted to the old index to demonstrate continuity.

Results

Three stock results were noteworthy this week. HDFC Grew EPS 30.46% with a strong quarter. Sintex showed a 55% increase in EPS, and Infosys disappointed with a 6%EPS increase.

Do post in your comments!