How the markets fared in 2009?

2009 will go down in history as one of the best for Indian equity markets, after 1993 and 1999—this year, they have emerged among the top-four performing markets in the world.

It was the calm after the storm, and a much-needed one at that. After the carnage witnessed in 2008, 2009 saw the global equity markets calming down and the Indian markets made the most of this, becoming one of the top four performers in the world.

Foreign institutional investors played their part. They pumped in nearly USD 17 billion over the year. Of this, nearly USD 7 billion came from QIPs, USD 3.3 billion came from IPOs, and over USD 3 billion came from ADRs and GDRs.

Helping the India markets along were sectors like metals, automobiles, and technology.

Girish Paranjpe, ED and Joint CEO, Wipro, said, “We have demonstrated that we are a very resilient sector and we are able to manage demand fluctuations and manage margins very well. That should be a matter of great satisfaction for investors in this sector.”

The tech index rose 130%, and the auto index rose 200%, but both these performance were eclipsed by the metals index, which surged 230% over the year.

Jindal Steel & Power led the way, gaining nearly 380% followed by Sterlite, which rose 225%, SAIL which rose 205%, Hindalco, which rose 200%, and Tata Steel which gained 180%.

And 2010 should be a good year as well.

Naveen Jindal, Executive VC and MD, JSPL, said, “There is going to be huge demand for steel as per capita steel consumption is still quite low in India—its almost 14th of Chinese steel consumption. Steel prices are depressed as of now but I feel we are concentrating more on reducing our cost of production also but it is a temporary phase.”

The banking sector also bounced back smartly from 2008's drubbing. Most banking stocks gained around 100% each in 2009 but walking away with the honours are IndusInd Bank with a 270% rise, Central Bank, up 240%, and Yes Bank, with a 233% rise.

Yes Bank says this has been on the back of a strong business performance.

Rana Kapoor, Founder, MD and CEO, Yes Bank, said, “We have been deriving approximately 48-50% from non interest income sources which are fairly well diversified across treasury, across advisory, transactional banking and branch banking.”

However, not all sectors had a ball. Some heavyweights like HUL, Idea, and DLF posted just modest gains. The telecom sector took the worst beating, as tariff wars kept investors away.

Over the year, Reliance Communications fell 20%, and Bharti Airtel was down 10%.

Akhil Gupta, MD, Bharti Enterprises, said, “On telecom, surely the price wars have some pressure on the tariffs but what we mean is that they must be sustainable tariffs for everybody to grow in this business.”

CEOs are confident that 2010 will be a good year, after all, they have survived the upheavals in late-2008, and the uncertainty of 2009. But analysts are not so gung-ho. They say that while 2009 has given strong returns to the brave, 2010 may not see a sustained bull run, as markets consolidate.

Silver’s smart run to continue in 2010

Till now, market analysts have been going ga-ga over the rise and rise of gold prices but silver has been shining better than gold in 2009 and this trend is set to continue in 2010 also.

Driven by demand from auto sector for silver-zinc batteries which are used in ‘smart automobiles’ and an array of portable electronic devices, the silver’s shining story will continue in the coming year also.

Silver ready (.999 fineness) prices are hovering around Rs 27,850 per kg in the Mumbai bullion market.

Demand for silver in the coming year is expected to rebound to normal levels in 2010 as the emergence of key new markets for silver would help to boost prices further.

Also, re-stocking of inventories for more of silver’s traditional uses will be a powerful demand driver in the near-term.

Silver prices are mainly driven by the fact that traditional industrial end-users of silver, such as the global electronics industry have in recent weeks begun to replenish severely depleted inventories.

During the financial crisis, silver inventories had run down sharply and it may take approximately six-months to fully rebuild the inventories to normal levels, Singh said.

An important factor to understand in the case of silver is that demand from the industrial sector tends to be quite inelastic. This means that buyers have few options and have to pay at prevailing prices.

Finally, India loses top gold buyer status

Finally, it is almost certain that India will lose its numero uno status as world’s biggest gold consumer to China.

Since many years India has been ruling the world as the top consumer of the yellow metal but this year and increased surge in demand from China and a fall in gold jewellery sales in India due to high prices have caused India losing the top slot.

China’s rapidly growing economy and investment demand could see it add gold to the long list of commodities where it is the world’s largest buyer.

The story this year is mostly about falling demand in India — down by more than half in the first nine months of this year through September.

Gold’s record-breaking run, which has lifted prices 28 per cent this year in rupee terms, saw Indians cashing in on jewelry and gold bars, while the weakest monsoon in nearly 40 years hurt incomes in the rural sector that is the bedrock of consumer purchases.
In contrast, China’s demand was up 8 per cent in the same period. China could be buying gold as they are not sure what the value of their currency would be against the dollar. But gold is not intrinsic to them as it is to Indians.

Metals consulting firm GFMS projects that China’s gold demand will total 432 tonnes this year, and that India’s will total 422 tonnes.

A severe monsoon and record prices were behind the drop in Indian consumption this year, while loose liquidity in China has driven a buying spree across a range of resources.

India’s growth rate is catching up with that of China, and appears to be entering the early stages of the high-growth era that China saw from 1992 to 1993, giving consumers more purchasing power.

The extent of the fall in purchases could be building pent-up demand that might lead to a big correction.

Analysts in India said the drastic fall in demand must not be taken to mean India’s appetite for gold fell to the same extent.

A lot of consumers recycled old jewelry to buy new jewellery, the analysts said, while others sold gold bars to profit from high gold prices.

India’s total demand may have fallen by only 5 per cent to 10 per cent, when taking into account the recycled gold.

When Indians get used to new price levels, their traditional affection for gold might revive consumption, as there is a huge latent demand in India that could explode if prices make a significant correction.

In the long run, China might still overtake India. Economic and social indicators point to its greater affluence and spending capacity.

In the last decade, India’s gold imports remained capped under 800 tonnes despite a rising population and per capita income.

In rural markets, Indians are buying luxury goods such as automobiles and televisions, while the picture is different in rural China.

China is stepping up efforts to extend consumption in rural areas, including the newly wealthy people who are trying to own top brand gold for social status purposes.

Eight techniques to go by for ETF investments

Nearly a year after the worst financial crisis emerged, which caused exchange traded funds (ETFs), stocks and the overall financial markets to crumble, many investors are rethinking old strategies and are eager to get back to portfolio construction.

According to Jonathan Burton for MarketWatch, when it comes to portfolio construction, the following lessons shall be learned (a few of our own ideas have been thrown in for good measure, too):

-Diversification isn’t dead. Burton states that true diversification comes from allocating assets to different classes, like stocks and bonds, and not allocating assets between just stocks.

-Asset allocation works and a mix of stocks, bonds, cash and alternative investments affects total return more than the individual investments you choose.

-Market-timing doesn’t work, while periodic rebalancing reduces risks and helps one prepare for the unexpected.
-Save as much as you can and don’t overextend yourself.

-Buy and hold no longer works the way it should – we suggest watching the trend lines.
-Educate yourself about what your portfolio holds, what is going on in the world and how this can affect the returns on your portfolio. This is becoming increasingly important as the economy becomes a global one.

-Have a stop-loss. Don’t ride something to the bottom hoping that it will come back.
-Have patience. We all make mistakes. Use those errors as opportunities to do better next time

A contrarian view on gold rally

Few investments elicit as much emotion, irrationality, and frenzied buying, as does gold. Unlike investments in interest-bearing securities and common stocks, an investor invests in gold because he hopes that companies or governments will fail. Even oil, an asset prone to the volatility similar to that of gold, conforms to more supply-demand-like dynamics. Oil provides the fuel necessary for consumer-oriented societies. During prosperous times, demand—and the price—for oil will increase. During slack periods, demand—and the price—for oil will decline: under normal conditions, anyway. Gold's industrial demand, on the other hand, accounts for only a small percentage of its market value. A gigantic increase in jewelry buying would be required to rally gold prices, absent investment demand.

Still, gold pushers always insist that it's a good time to buy gold. Why? is the big question. I am in the business of buying and selling gold. As a professional coin dealer it comes with the territory. Thus, you would think I should be ecstatic when the rising price of gold makes the headlines every day. But I'm not. In fact, I am probably one of the most reluctant gold traders in the country—unless the gold is in the form of a rare coin struck at the Carson City Mint, that is. The reason for my reluctance to trade in gold bullion (Krugerrands, Maple Leafs, American Eagles, etc.) is I hate to see people buy things like it out of fear. And that's what so many people are doing these days.

Yet, gold's price rise this year has not come as a result of herds of physical buyers exhausting stockpiles of the yellow metal. It has been due to the weakness of the U. S. dollar and not gold's strength. In many ways, gold's landing in the limelight is reminiscent of the scenario we faced in late 1979 and early 1980. Jimmy Carter, a Democratic president, met with scornful disapproval, and the currency market constantly clobbered the dollar. Oh yeah, the U. S. faced military conflict in the Middle East, thanks to the Iran hostage crisis—what else is new?

Strangely though, inflation and interest rates were at opposite ends of the spectrum from where they are at in 2009. In comparing the two time periods—separated by 30 years—gold's day in the sun in 1979-1980 made more sense: inflation fears were justified.

In 2009, however, fear of inflation is just that: fear. For inflation has not ignited yet. With the Fed's printing presses working overtime, inflation might come roaring back in the future: but first we must see all the tricks the U. S. government has up its sleeve. In the meantime, arsonists such as Dr. Marc Faber, David Einhorn, John Paulson, Paul Tudor Jones, Peter Schiff, and Glenn Beck, have been pouring vats of gasoline on the tinder that surrounds the fragile, recovering world economies.

Einhorn and Paulson shrewdly made their fortunes by taking advantage of the economic turmoil brought on by financial institution's irresponsible investments in subprime mortgages. Now, they want to parlay their winnings by betting that inflation will rise again with a vengeance and deliver the knock-out blow to the United States. Their hedge funds, and others like them, have bought paper contracts that represent over 800 tonnes of gold. These new gold bugs have been very public about the positions they have taken. Their vocalness has fuelled the fire that has sent gold prices soaring.

If they are right, these hedge fund managers will add billions more dollars to their already bulging bank accounts. Gold's only purpose at the present seems to be as a medium to determine if these high-level investors will pad their portfolios, or if the U. S. government and the Fed can pull off a hail-Mary play to keep our country from slipping into the abyss.

Today, gold is the "hot tip" everyone is hearing about. Everywhere you turn, someone is encouraging you to get in on this "sure thing" When Obama fails to impress or someone in his administration—or at the Fed—says something that sounds stupid, the fear reignites, causing more people to jump on the gold bandwagon.

But if the past is any indication of the future, gold's overblown reputation for gauging the government's performance during tumultuous times will be exposed for the false panacea it is. Gold's glitter will not deliver us from evil. In the short-term, it might make men like Einhorn and Paulson wealthier, and it might give people who are disappointed with the United States something to rally around. But in the long run, gold will prove to be a disappointment.

It might not be wise for me to oppose the stand taken by such successful investors as David Einhorn and John Paulson, but I predict that gold will soon fall to its pre-October 2009 level of $950 to $1,000. By then, Einhorn and Paulson will have probably already cashed out and taken their profits. I won't feel sorry for them either way. But I will feel sorry for the Average Joes and Josephines out there who bought into this current wave of euphoria.

(Courtesy: ExpertClick.com)

Why Dubai is caught in a debt trap

What is the essence of the Dubai request for debt payment delay (a technical default)?

1. Will an implied Dubai Federal Guarantee of the debt of state owned corporations be honored in Dubai and elsewhere?

2. How many more financial problems are there out there hidden in plain view in the West as well as the Middle East?

3. Will the Middle East see to the bailouts of its own problems or is there a stampede of camel trains into the desert, devoid of cell phones and Mercedes?

4. Will this event cause other developing market country debt to default in a domino effect?

In terms of gold this event is further proof that paper and promises are NOT the stuff money is made of anymore.

Those that will come out of the woodwork to call a top in the gold price have little experience in what a top looks like in gold. Let me assure you the action of today contained zero evidence of a top.

The USA has become a giant FDIC and will have to finance in strange ways (QE) to meet its obligation prior to June of 2011.

Other than transitory technical factors there is nothing whatsoever positive in a collapse anywhere for the US dollar. When the snow falls here on the east coast of the USA the dollar will come under more pressure and fall much further.

The major immediate financial problem, hidden in plain view, is that 2009 financial entity earnings are CASHLESS. They are more than 75% due to the permission of FASB (Financial Audit Standard Board) who sold their souls to the financial sector to again mark up toxic paper to values self determine by the financial institution. The profits of their trading is toxic paper mark up accounting.

The inviting conclusion is the over the top greed in plain view by financial institutions is their own knowledge of the cashless nature of their earning and the fact that the junk is marked up now as much as one can do without either starting a riot or doing time. Therefore the earning prosperity is behind them, nothing is fixed and that makes this year the last opportunity for a long time to cash in for themselves.

Dubai has reminded us that there has been NO cure to the systemic financial problems of the West and those like Dubai that not only tried to mimic the West, but overdo them in a garish manner.

You can be sure that the US Fed and the ECB are chasing the sheiks into the desert today like Lawrence of Arabia in an attempt to get them to pay up and support their own problem. That means more international QE, as the Fed is not in the mood to tank a $12 trillion dollar bailout operation over an $80 to $110 billion dollar failure of a stupid and garish real estate project in Dubai. This concept would contain the domino effect, putting it off until later in 2011.

Conclusion:

The dollar will not reverse out of the bear market it is in, nor will gold top here and now. In fact the bear market in the US dollar and the bull market in gold is not only alive and well but in terms of price, young.

Enjoy your weekend and stop looking at the markets!

India's vegetable oil imports surge 37% in 2008-09

Import of vegetable oil during oil year 2008-09 (Nov.’08 to Oct.’09) jumped by 37% to 86.6 lakh tons from 63.1 lakh tons for the same period of last year. Import of Vegetable Oils during October 2009 is reported at 667,276 tons compared to 826,848 tons for Oct.’08 i.e. down by 19%, according to Solvent Extractors Association of India (SEAI).

The overall import of vegetable oil including vanaspati has increased by 23.5 lakh tons (37%) during the oil year over the previous year. The main reasons for sharp increased in imports of vegetable oil and its impacts are:

a) Increase in per capita consumption of edible oils with rise in Income.
b) High price elasticity – lower price has boosted the demand and consumption of low priced oils like palmolein.
c) Zero import duty on crude edible oil and very nominal duty on refined palmolein have favoured the import over domestic oils at the expenses of Indian oilseed producers and crushers.
d) Govt. schemes like mid-day meals, subsidized oil and unemployment scheme also boosted the demand.
e) Depreciation of dollor v/s. rupee by 5% has made import more cheaper.
f) Disparity in domestic seed crushing leading to poor capacity utilization and accumulation of stock.
g) The profit margin of oilseed processors have deteriorated severely in new season and many plants are operating at much lower capacity to minimize the losses.

Quarterly Review:
It is surprising that even during peak domestic crushing season (Nov – April) import has not reduced and average import per quarter is nearly 20.0 lakh tons, SEAI said.

Import of Edible Oil:-
The total import of edible oil during November 2008 to October 2009 is reported at 81.83 lakh tons compared to 56.08 lakh tons last year and 47.15 lakh tons in 2006-07.

The import of edible oils is up by 46% compared to previous year. Import of Crude Palm Oil has increased to 51.87 lakh tons from 40.44 lakh tons and RBD Palmolein jumped to 12.40 lakh tons from 7.31 lakh tons in previous year. Import of palm products including CPO and RBD Palmolein has increased to 65.35 lakh tons from 48.09 lakh tons last year i.e. up 36%. Soybean oil import has increased to 9.90 lakh tons from 7.59 lakh tons. Sunflower oil import jumped to 5.90 lakh tons from 27,000 tons . Rapeseed oil import reported at 46,000 tons after a gap of 5 years.

Import of Refined & Crude Oil Ratio:-
Import of refined oils (RBD Palmolein) has sharply increased from just 126,000 tons in 2006-07 to 12.4 lakh tons during 2008-09, thanks to lower duty coupled with reduction in international prices, pushed the import of refined oils. Refined oil represents about 15% of the total edible oil import which was just 3% in 2006-07.

Import of Palm & Soft Oil Ratio:-
In view of nil import duty on CPO and 7.5% on RBD Palmolein (effective duty is only 4 to 5%), palm oil products import during November 2008 to October 2009 has further increased to 65.35 lakh tons compared to 48.09 lakh tons last year. The import of soft oils also increased to 16.48 lakh tons from 7.99 lakh tons in previous year.

Import of Non-edible Oils:
Import of Non-edible oils during November 2008 to October 2009 is reported at 459,599 tons compared to 647,685 tons during the same period last year i.e. down by 29%, due to higher import & domestic refining of CPO, leading to better availability of P.F.A.D. & C.P.S.

India’s gold obsession wows world

India’s golden move as far as International Monetary Fund’s (IMF) gold buying has won the country accolades from across the globe. Several countries and analysts have praised the move and opined that the Manmohan Singh-led government has displayed its strength before the world that India is a country to reckon with by bagging the 200 tonnes of IMF gold earlier this month.

The move by India caused a stir in the bullion market and the gold prices soared to $1130 per ounce in the markets on Monday.

And many analysts have expressed their views that the yellow metal will cross $2,000 per ounce in the coming months.

There is another story behind the India’s move. In 1991, India’s socialist government had secretly shipped 67 tonnes of gold to the Bank of England under a deal with the IMF to avert a balance-of-payments crisis. At that time the country was criticized for the move and the government faced a lot of embarrassment in the global media.

But the same media is praising the country for its recent move to buy the 200 tonne IMF gold.

The surprise move by the Reserve Bank of India pushed the government’s gold holdings to the 10th largest in the world from the 14th.

According to an interview appeared in Canadian Press, Himadri Bhattacharya, executive vice-president at Tata Capital in Mumbai, said, “to the outside world, it signals a show of strength and display of quiet confidence.

The former RBI official doesn’t believe the gold purchase, worth $6.7 billion, was the outcome of any strategic thinking or vision on the part of the authorities.

“It just happened,” Bhattacharya told Canadian Press. The country’s insatiable appetite for gold has made it the largest retail market for the metal, consuming more than 700 tonnes in 2008 alone.

While there are no authentic estimates on how much gold is in the country, Bhattacharya told Canadian Press gold held by Indian households and other private groups would be close to 25,000 tonnes.

In India, gold is the most favoured gift for any occasion. It gives apparent financial security outside an economic system controlled by private interests and centralized, government authority.

Banks, governments and currencies may come and go, but gold will still be gold.

Clever marketing by the WGC and numerous retail schemes enticing consumers have played a major part in boosting the demand for gold in India in recent years.

Also feeding the situation are new jewelry stores that have sprung up in cities small and big across India, said the Canadian Press report.

Experts have also noticed a subtle change in buyer attitudes. It’s not just jewelry anymore. Consumers are going for bullion.

Till a few years ago, the gold ornaments bought by Indian families on the occasion of family marriages and festivals were for both adornment and investment purposes.

The distinction between adornment demand and investment demand was blurred. Now, India is a well-defined and well-entrenched market for retail investment products - gold coins and gold ETFs (exchange-traded funds).

Buffett Raises Berkshire’s Wal-Mart Stake, Adds Exxon, Nestle

Warren Buffett’sBerkshire Hathaway Inc. took stakes in Exxon Mobil Corp. and Nestle SA, betting on the world’s biggest oil and food companies.

Berkshire held about 1.28 million Exxon shares and 3.4 million American depositary receipts of Nestle at the end of the third quarter, the Omaha, Nebraska-based company said in a regulatory filing yesterday. The stake in Irving, Texas-based Exxon would be worth about $95 million, based on yesterday’s stock price, while the Nestle holding would be valued at $161.5 million. Berkshire also raised its stake in Wal-Mart Stores Inc., the largest retailer.

“Berkshire is increasingly looking for companies that are world-leading brands,” said Tom Russo, partner at Gardner Russo & Gardner, which holds shares in Berkshire and Vevey, Switzerland-based Nestle.

Buffett is drawing down Berkshire’s cash hoard to invest in some of the world’s biggest firms as credit markets improve. The $2.23 billion spent on stocks in the three months ended Sept. 30 is the most in a year and allowed Berkshire to add a stake in insurer Travelers Cos. and increase its holding of Wells Fargo & Co. Buffett agreed this month to take over Burlington Northern Santa Fe Corp., the No. 1 U.S. railroad, for $26 billion.

“They are all very unique and strong franchises,” said Mohnish Pabrai, founder of Irvine, California- based Pabrai Investment Funds, which owns shares in Berkshire and San Francisco-based Wells Fargo. “The equity bets are tending to be ones which can be held for a very long period of time.”

Stocks Rally

Berkshire, whose U.S. stock portfolio was valued at $56.5 billion at the end of the third quarter, is benefiting from the biggest rally in the Dow Jones Industrial Average since 1933. The addition of Exxon and New York-based Travelers gives Berkshire equity stakes in 11 of the Dow’s 30 companies.

The 113-year-old Dow has surged 59 percent since March 9, the steepest run-up over the same number of days since 1933, according to data compiled by Bloomberg. Travelers, which was added to the Dow this year, has gained 58 percent over that period, while Exxon is up 15 percent to give the firm a market value of about $353 billion.

“Exxon has probably the lowest cost structure in the industry, which I know is attractive to Buffett,” said Philip Weiss, a senior analyst at Argus Research Corp. “No matter where oil prices go, Exxon always fares better.”

Stock picks by Buffett, the second-richest American, are watched by mutual funds and individuals looking for clues about his investment strategy. Berkshire’s biggest stockholding is an investment in Coca-Cola Co. worth about $10.7 billion. The firm’s holding in Walmart rose 90 percent in the third quarter and is valued at about $2 billion.

Long-Term Advantage

“Buffett buying more indicates that Walmart has a long- term competitive business advantage,” David Katz, who oversees $1.2 billion, including Walmart shares, at Matrix Asset Advisors in New York, said by telephone. “This fits exactly into what Warren Buffett likes: growth businesses where you’re not paying a lot.”

Walmart, based in Bentonville, Arkansas, increased profit 3.2 percent in the quarter that ended Oct. 31 by reducing inventories 4.1 percent and boosting revenue 1.1 percent to $99.4 billion. It is accelerating efforts to curb expenses amid falling food prices and the worst U.S. unemployment rate in 26 years, Chief Executive Officer Mike Duke told analysts Nov. 12.

“A terrible market or a terrible economy is your friend,” Buffett said at a forum in New York last week, when asked whether the stock market rally was unwarranted, given the recession. “It’s a terrible mistake to look at what’s going on in the economy today and decide whether to buy or sell stocks.”

Wells Fargo

Berkshire, already the largest shareholder in Wells Fargo, increased holdings of the bank by 3.6 percent to 313.4 million shares in the third quarter. The biggest-U.S. home lender has more than tripled from lows in March. Buffett has said he told students that month that if he had to put all his net worth into one stock, Wells Fargo “would be the stock.”

Berkshire continued to cut its holdings in No. 2 U.S. oil refiner ConocoPhillips, trimming its stake about 11 percent in the three months ended Sept. 30. A decline in the value of the stake contributed to Berkshire’s worst quarterly loss in at least two decades in the first three months of 2009. Buffett called the investment a “major mistake” after building the shares with oil prices near their peak last year.

Berkshire showed no stake in Eaton Corp., the Cleveland- based maker of circuit breakers and fuel pumps. Buffett’s company held 2 million shares three months earlier. The firm cut holdings of NRG Energy Inc., the second-largest power producer in Texas, by 17 percent to 6 million.

WellPoint, SunTrust

Berkshire reduced its stake in WellPoint Inc., the largest U.S. health insurer by membership, by 3 percent to 3.39 million shares. The stake in Atlanta-based SunTrust Banks Inc. was cut by 3.9 percent in the three months to 3.07 million shares.

Berkshire disclosed a stake of 3.63 million shares in trash hauler Republic Services Inc.Will Flower, a spokesman for Phoenix-based Republic, said the investment was “a good fit” with Berkshire’s strategy. Exxon spokesman Rob Young, Wal-Mart’s John Simley, Travelers spokesman Shane Boyd and Eaton’s Hilary Spittle declined to comment.

The filing omits information about some transactions because Buffett is permitted to keep them confidential for now. The U.S. Securities and Exchange Commission sometimes allows companies to withhold data from the public to limit copycat investing while a firm is building or cutting a position.

Berkshire disclosed that it had a stake in Exxon as of June 30, a holding not announced in the second-quarter report. Buffett’s reported portfolio doesn’t list stocks he’s not required to disclose, including non-U.S. holdings.

Scrap gold sales zoom in India over IMF gold deal

Bullion traders in India are afraid of gold price these days. The big news of India buying 200 tonnes of gold from the International Monetary Fund (IMF) sent the yellow prices to dizzy heighs this week. Gold traders say the record jump in prices has sent the bullion market across the country to silence.

“There is no buying happening at these high gold prices. Customers are coming to jewellery shops to sell old gold, not to buy new gold ornaments and gold coins. Everyone feels that this is a market to sell, not to buy,” says Sanjeev Srivastava, a gold trader in Mumbai’s Zaveri Bazaar.

According to Srivastava, scrap gold sales are zooming in India thanks to the record price rise in yellow metals. "At least 10 tonnes of scrap gold must have been sold in the Mumbai bullion market this week. People are cashing in on the bull market in gold," he said.

But Srivastava, who used to supply at least two tones of gold to various jewellery shops across India, says jewellery chains are holding on to the old stocks as there is hardly any buying happening. “Only parents whose daughters’ marriage are fast approaching are the ones who are buying gold these days. Gold investors are keeping away from the bullion market as the prices are very high,” he sadded.

Gold prices touched a record 16,677 rupees per ten grams this week in Mumbai markets. On Friday, strong rupee and dull buying pulled down gold prices a little bit to 16,567 per ten grams.

Karan Khan, another bullion dealer said that gold buying will pick up during the wedding season in India which is expected to last till December end. “By that time, I feel gold prices might fall from the record prices that we are seeing these days,” Khan told Commodity Online.

On Friday, the Indian rupee strengthened to its highest in more than a week as currency traders sold dollars on gains in the local sharemarket and watched the US dollar movements.

Gold prices in the Indian bullion market have been going up this week on the big news that the International Monetary Fund (IMF) has sold 200 tonnes of gold to the Reserve Bank of India (RBI) for $US6.7 billion.

In April this year, IMF decided to sell 403.3 tons of gold as part of a plan to shore up its finances and lend at reduced rates to low- income countries. In the last few months, there have been reports that China and India could be the suitors to purchase the IMF gold. India has jumped into the fray by buying almost half of the IMF gold at about $1,045 an ounce.

Dubai-based bullion analyst Mark Robison says everyone expected China to buy the IMF gold in the first phase. “It is a surprise that India has jumped in the first place to purchase the IMF gold. India is the largest marketplace for gold in the world. I think by buying IMF gold, India has shown increased interest in diversifying out of US assets as the dollar loses value against other currencies,” Robison told Commodity Online.

China is the world’s biggest gold producer. In April, China increased reserves of gold by 76 percent to 1,054 tons since 2003.

In fact, IMF has kick-started the gold selling plan by selling the first tranche of the yellow metal to India, the largest consumer of gold in the world. The gold sales were conducted daily over a two-week period from Oct. 19-30, to "give some protection to short-term fluctuations in the market".

The sale is part of an agreement struck in September among IMF member countries to sell 403.3 tonnes of the fund's gold stocks to diversify its sources of income and to increase low-cost lending to poor countries.

Commodity Trends:Gold shines so does gold guinea

The National Multi-Commodity Exchange has launched gold guinea contract that enables retail players to take part in the futures contracts. The contracts will be for a minimum of 8 gm. NMCE has signed an agreement with the Muthoot Group o facilitate the futures trade in the guinea contract system.

The much awaited minimum support price for wheat turned out to be a dampener as markets were expecting Rs 1180 to Rs 1200 per quintal for the current year’s crop which has halted the rally in wheat futres.The Rs 1,100 rate, approved by the Cabinet Committee on Economic Affairs (CCEA), represents a Rs 20 rise over the MSP of Rs 1,180 a quintal for the 2008-09 crop.

Meanwhile, annual food price inflation inched up to 13.39% in the week ended October 24 from 12.8% in the week before. Weakest monsoon rains in last seven years and floods in parts of the country have hurt farm output and pushed up the food prices. : India’s economic growth in the ongoing fiscal could fall to 5.5% in the ‘worst-case scenario’ of a sharp decline in agriculture sector performance, the Planning Commission has projected. This is much lower than the 6.3% growth in the national income estimated by the Plan panel on the worst case assumption that agriculture growth will fall by 2.5%.

Gold
The Dollar Index had weakened sharply and at the same time gold prices have gained phenomenally. Prices of gold are expected to rise further and this has initiated the move by the RBI to diversify the foreign-exchange holdings. A weaker dollar could diminish the value of India’s foreign exchange reserves and hence this could lead to further accumulation of gold by the RBI. This move will help India’s central bank to hedge its downside risk on the foreign exchange reserves front. India’s gold holdings have dropped from over 20% in 1994 to just 4%. We feel that the RBI could move forward to accumulating more reserves as gold is expected to shine for the years to come. Also, gold is traditionally considered as a safe-haven investment.
This development could be positive for the gold market and the yellow metal could test new highs in the coming months. What can further add to the upside in Gold prices is the move by Russian and Chinese central banks to purchase the yellow metal. Technically after Gold prices crossed the high of $1,033/oz which was first made in March 2008, prices have continued trading higher. The metal is in a secular bull trend and the dollar index is in a secular bear trend. This further indicates that a weaker dollar could continue to support an upside in gold prices as it makes the metal look attractive for holders of other currencies. Investment demand for Gold is also expected to rise on the back of higher ETF and HNI demand. This rise in investment demand will help to compensate for the decline in consumer demand for jewelry and fabrication on the back of high Gold prices. We expect gold prices to remain firm in the near-term as the trend remains up. We expect MCX December gold prices to trade in the range of Rs 16,150 – Rs 17,105 per 10 gram in the coming week.

Copper
On a year-to-date basis, Copper prices have risen more than 100% and are currently trading at $6,595. Copper prices are cushioned by supply worries despite rising inventories. Though the bulls are heavily reliant on the weaker dollar for a rally further, the red metal has support in terms of labour disputes. We expect copper prices to trade with a positive bias but a sharp upside will be capped on the back of weak unemployment rate from the US. Support factor: Talks to end the strike at Chile’s Spence copper mine have failed and risks for a strike at Peru’s Antamina mine are rising as wage negotiations have come to a standstill. Hence, copper prices could trade higher next week. Workers at BHP's Spence mine in Chile have been on strike since October 13 with still no resolution in sight. Peru's Compania Minera Antamina is hopeful that a deal can be reached. However contract proposals are under revision before wage negotiations continue next week. We expect MCX November Copper prices to trade in the range of Rs 304 – Rs 317 per kg in the coming week.

Crude Oil
Oil prices touched a high of $81.06/bbl this week as a decline in inventories coupled with optimism that fuel demand will increase helped support upside. The US Energy Department weekly inventory report showed this week that oil inventories declined, thereby giving hopes of a rebound in demand. In the coming week, oil prices will take cues from the US economic data, dollar movement and crude oil inventories. The bulls will entirely depend on the movement in the dollar in the coming week. We do not expect the dollar to trade with sharp weakness in the coming week as technically, the index has weakened sharply and hopes of a pullback of stimulus measures by the US Federal Reserve in the coming year may also protect a sharp downside in the currency. Oil prices will continue to face resistance above $80/bbl levels in the coming week. We expect November crude oil prices to trade in the range of Rs 3640 – Rs 3900 in the coming week.

Soybean
Soybean (NCDEX December contract) futures opened the week at 2273 levels then witnessed a sharp rally towards 2347 levels and managed to close with a gain of 3% in the last week as compared to previous week. Prices surged on account of lower production estimates and better export figure of oil-meals in the month of October also provided support to bulls in the market. As per the 47th All India Convention of Kharif oilseeds by Central Organization for Oil Industry & Trade (COOIT) held at Indore on 1st November 2009, Domestic soybean production estimates declined to 85 lakh tonnes for this year from 89 lakh tonnes last year.

Domestic Kharif Oilseeds crop is estimated at 136.5 lakh tonnes for the year 2009-10 against 150.30 lakh tonnes last year (2008-09). Overall oilseeds yield has reduced to 780 kgs during current kharif crop from 815 kgs/ha last year. Higher export figures of oil-meals in the month of October also added bullish market sentiments. As per the Solvent Extractors' Association, India's oil-meal exports during October doubled to 3.10 lakh metric tons from 1.53 lakh metric tons a year earlier. However, oil-meal exports in the first seven months of the fiscal year (April to October) declined to 15 lakh tonnes from 27 lakh tonnes a year earlier. India exports oil-meal mainly to the South East Asian countries. NCDEX December Contract shall find strong support at 2270/2230 and resistance at 2400/2450.

Chana
Chana futures gained almost 7% in the last 2 weeks on the concerns of lower acreage under Chana in Rajasthan and firm prices of Kharif Pulses. Farmers in Rajasthan have so far completed sowing of Chana on 2.2 lakh hectares, down 39 percent during the same period last year. Rajasthan is the second largest Chana producing state in India and contributes almost 15% of the total acreage under Chana. The prices of Kharif Pulses are ruling high due to lower output estimates. According to the first advance estimates, Kharif Pulses output is expected to decline to 44.2 lakh tonnes against 47.8 lakh tonnes produced last year.

The government hiked the Minimum Support Price (MSP) of Chana by Rs 30 per quintal at Rs. 1760 per qtl as sowing for the Rabi season has begun. Chana prices are likely to remain firm in the short term (2 weeks) and could recover further by Rs. 100 per qtl on good demand for cheaper substitute and on lower acreage under Chana. However, in the medium term, no major upside is expected in the Chana prices as India is having huge stocks of Chana from the last year’s bumper harvest. NCDEX December Contract shall find strong support at 2660/2590 and resistance at 2770/2800.

Pepper
The bull-phase for pepper isn’t over as prices rose 7% this week although pepper futures have fallen on profit taking and selling pressure towards weekend on availability of cheaper pepper reported from other major origins. The November contract at National Commodity and Derivatives Exchange lost Rs 275 to close at Rs 14798 while December contract lost Rs 274 to trade at Rs 14990 on Friday. The November contract had traded at Rs 15300 plus levels and December close to Rs 15600 levels this week but has fallen on reports of cheaper prices for Brazil, Vietnam and Indonesian origins. Indian origin is being quoted at $3,350 per tonne while Brazil is being quoted at $3000 thus capping the bull run in pepper spot and futures. On Friday, Spot pepper fell by over 13 rupees and ended at 14,991.8 rupees per 100 kg in Kochi, a major trading hub in Kerala. The prices were ruling at 15100 levels at the beginning of the week.

Next week, there could be a reversal of trend with prices climbing back to Rs 15100 levels as global stock and demand continues to be mismatched. Major Europe, US consumers need 15,000 tonnes monthly while total availability as of now is 45000 tonnes. Supply situation is expected to ease only by February when Vietnam harvest begins.

Wheat
Wheat futures witnessed two weeks of volatility aided by pre-dominant bullish sentiments as makets awaited the government announcement of minimum support price for wheat and on Tuesday November futures at National Commodity and Derivatives Exchange rose to Rs 1443 per quintal but thereafter profit taking and lower than expected support price hurt market sentiments. Towards weekend, the November contract ended lower at Rs 1425 per quintal. Farmers were expected a support price of Rs 1180-2000 per quintal while the announcement fell far short at Rs 1100 as against prevailing support price of Rs 1080. Delay in release of buffer stock into open market aided bullish sentiments and kept prices from falling. The government paid farmers 1,080 rupees per 100 kg for the 2009 harvest. Some traders said they had expected the support price to be raised to 1,180 rupees and hence are expecting the government to offer a bonus above the support price to boost acreage and procurement.

India aims to raise wheat output by 2 million tonnes this year to 82.58 mn tonnes, India’s Agriculture Minister Sharad Pawar said recently.

The delay in release of 3 million tonnes for a 6-month period beginning October has also supported the recent rally in wheat. As on October 1, India had 28.18 million tonnes of wheat stocks, while the buffer norm was 11 million tonnes. At the beginning of the new marketing year in April 2010, stocks are estimated at 10 million tonnes. Wheat futures will go range-bound on inadequate support price and hopes of rise in rabi output.

Gold: Where is it headed? How will it perform?

Gold prices are ruling above $1000 per ounce and there is no bull stops for the yellow metal even after Diwali in India.

Market analysts are still clueless about the future of the metal as a prediction of gold’s future course is almost impossible at present.

Still most of the analysts favour one thing that the metal will continue its bull run for some more time.

Some analysts said the Asian Financial Crisis in 1997-98 resulted in an accumulation of forex reserves over the last decade. After amassing forex reserves in US treasuries, many Asian economies and export-oriented countries have exhausted their appetite for US debt.

The slow divestment from US treasuries to gold and other precious metals will impact the price of gold. An increasing proportion of forex reserves is being held in gold as countries realise that this could also be a sensible hedge against a slumping US dollar.

Certain other sections of the market said gold, like most other commodities, is a dollar-denominated asset. Any significant movement in the US dollar directly impacts the price of gold.

The commodity bull market cycle will considerably impact the long-term price of gold. Commodity cycles usually last 15-20 years and this one, which started in early 2000s, will peak between 2017 and 2020. Prices of steel, copper, sugar and oil have risen significantly from the early 2000 and will continue to do so steadily for another decade or so.

The supply-demand equation of an asset is what determines its price in the marketplace. Like many other commodities, the supply of gold will always be constant and increase slowly as mines become operational and new technologies to unearth gold are invented.

But the demand for gold can surge if there is a sudden perception of weakness in a currency, the economy or the stock market. New highs in gold prices clearly reflect that demand for gold is rising and will continue to.

The Indian festival season could give a temporary impetus to gold prices and help sustain the bullish run. Although not a driving factor in the long-term price of gold, the appetite of the common man for gold in countries such as India and China does impact the price.

Commodity Trends: Gold rallies, copper in pressure

The National Multi-Commodity Exchange of India (NMCE) has launched 11 new futures contracts in agricultural commodities and gold for January, February and April 2010 delivery. The futures contract in gold, cardamom, copra and guargum will expire in January 2010 delivery, it said. The three contracts, rape mustard seed, rubber and sack, will close in February next year, while the rest four contracts - castor seed, isabgulseed, pepper and one kilo gold contracts - will expire in March 2010, it added.

The Centre has fixed wheat prices between Rs 1,379.7 and Rs 1,728.23 a quintal for sale from the stocks it is holding in the open market. According to a note sent by the Food Ministry to the Food Corporation of India (FCI), tenders will be floated for sale of wheat between October and December in each State/FCI region and depot-wise bids would be invited. Seven days notice will be given to bidders.

Kerala has become the top producer of cashew nuts in the country thanks to the initiative under the National Horticulture Mission. It presently produces 6,100 tonnes (more than 50 per cent of the national output) with a productivity of 685 kg/ha. And additional area of 1,035 hectares under new planting and rejuvenating cocoa plants in 680 hectares is being undertaken under the National Horticulture Mission scheme.

The BSE, NSE, MCX, forex, bullion and commodities markets are observing a holiday on Monday on account of ‘Bhaubeez’. The Bombay Stock Exchange's main index closed at 17,326.01 points in the Moorat trading session on Saturday. The Nifty closed flat at 5,141.80

Gold
Benchmark December Gold futures at MCX rallied this week to Rs 16048 per 10 gms before settling to a modest figure of Rs 15831 at close of trade on Friday. Higher prevailing prices failed to lift retail market sentiments on ‘Dhanteras’ the biggest gold buying festival in the country. Weaker rupee helped gold climb from a fall towards weekend as weaker rupee makes the dollar-quoted asset expensive.

Rupee witnessed up and down movements on choppy trade on Friday as domestic shares failed to provide a clear direction, while dollar demand from importers and mostly lower Asian units also weighed on sentiment. Profit taking at current levels could bring down MCX gold contract to Rs 15600 levels before stabilizing.

In USA, gold futures ended higher on Friday on strong investment buying and worries about financial sector following quarterly loss posted by Bank of America. At Comex, December gold futures rose 90 cents at$1,051.50 an ounce after recording a high of $1072 on Wednesday. Gold rose to new peaks above $1,070 levels per ounce on Wednesday as the greenback continued to slide against a basket of six currencies, although there were worries that the metal may have become overbought.

Analysts pointed out that gold’s recent rise was fuelled by currency worries rather than inflation. Oil rally towards $78 raises inflation concerns that supports gold, Pull back is likely in gold prices as open interest is staying above 500,000 lots in Comex. Meanwhile, silver is looking for direction from gold with spot silver prices at $17.41.

Gold is likely to show weakness on eroding jewelry demand and might decline to $1025 and toward the psychological $1000 mark.

Base Metals
US copper futures traded lower towards weekend on firmer dollar and fears about increasing supply and fall in near term-demand for base metals. Copper is facing pressure from the extended gains in dollar versus the Euro. COMEX copper warehouse stocks went up 135 short tons on Thursday, bringing total levels to 56,852 short tons.

Stronger rupee weighed on sentiments during mid-week at MCX where its November contract showed weakness. However, eventually weaker rupee did not harm the contract as optimism on the global economy and strong demand from China helped sustain prices at Rs 291 levels.

MCX Copper futures are likely to be range-bound at Rs 287-295 next week and face resistance at Rs 297 levels. The October Zinc contract at MCX ended marginally up at 93.90 while lead for October delivery was also marginally up at Rs 101.65.

Energy
Bullish sentiments prevailed in US crude futures market and on Friday it extended gains for the seventh straight session and closed a the highest level in a year, lifted by a late rally. Other in the oil complex including heating oil futures recorded 11-month highs. On Nymex, November crude settled higher at $78.82. The contract gained 9.42 percent the highest since October 2008. Unexpected steep declines in US gasoline and distillate inventories helped support the oil rally. Rising oil prices also lifted US energy shares even as financial sector was down on Bank of America’s reported quarterly losses. October Futures for crude oil at India’s MCX traded at Rs 3610 on close of session last week.

Soybeans
Soybeans recovered towards weekend tracking gains in global markets but was checked by likely rise in arrivals in the next few weeks. The benchmark December palm oil futures on Bursa Malaysia Derivatives Exchange ended at 2,178 ringgit a tonne, up 3.17 percent.Palm oil and soybean are related commodities and their prices often move in tandem. In US, soybean advanced as dollar fell to 14-month lows and crude oil rose to a high above $78 per barrel.

Increased market arrivals could put pressure on prices in the days ahead. Madhya Pradesh and Maharashtra will witness increased arrivals putting downward pressure on prices. Soybeans October Contract at MCX rose marginally to Rs 2082 while November contract rose to 2092

Pepper
India pepper futures ended slightly higher on Friday buoyed by spot demand but gains were limited by the Brazilian crop, analysts said. Markets remained volatile, absence of selling pressure and the speculative activities helped prices to rise marginally.

Pepper futures market on Wednesday witnessed a sharp fall on bull liquidation due to shortage of time for carrying forward before the maturity of the October contract on the 20th. Add to this there were reports of decline in prices in Vietnam and Indonesia. The domestic demand also failed to pick up as expected.

October contract fell by Rs 315 a quintal on NCDEX to close at Rs 13,690. November and December dropped by Rs 276 and Rs 265 respectively to close at Rs 13,867 and Rs 14,040 a quintal.

Spot markets continue to to be dull and will resume in full swing after Diwali holidays from October 23. The Brazilian crop capped gains as it continues to sell at a discount to Indian prices, they added. Spot pepper rose by over 7 rupees and ended at 13,966.35 rupees per 100 kg in Kochi, a major trading hub in Kerala. October contract at National Commodity and Derivatives Exchange rose from Rs 13743 to Rs 13777, a gain of 0.23% while November contract rose to RS 13978 from 13920 on Thursday. a gain of 0.34%. In the near term, the market looks set for a correction but the medium term prospects are still bullish.

Chana
India’s Chana futures have showed bullishness last week due to the ongoing festivals and firm prices of kharif pulses which supported chana prices. Improved demand in spot markets especially from North India has helped improve market sentiments. October contract at National Commodity and Derivates Exchange rose to Rs 2,294 while the November contract gained 1.19% at Rs 2,390. In the Delhi spot market, the price rose by 36 rupees to 2,325 rupees per 100 kg. Demand for pulses usually goes up during the country's peak festival season from August to October.Upside gains are being held back due to ample stocks and a likely rise in acreage limited the rise.

Rising aluminium recycling and climate change

Bauxite makes up 8% of the earth’s crust, it is the third most abundant element in nature. The ore from which aluminum is produced is bauxite. More than 130 million tons of bauxite are mined each year. It has been estimated that we have enough aluminum to last us 400 years.

Bauxite has to be processed into pure aluminum oxide (alumina) before it can be converted to aluminum by electrolysis. Four tons of bauxite are required to produce two tons of alumina which in turn produces one ton of aluminum at the primary smelter.

Smelting is one of the most destructive processes to our climate. Fabrication encompasses several industrial processes: rolling, casting and extrusion.

Aluminum is then formed into products. The major outlets for aluminum products are in transport, building and construction, packaging and engineering. The real impact on the environment, its carbon footprint or greenhouse gas emissions, can only be judged from the life cycle perspective. What we're interested in here is the lifecycle of one aluminum can.

Once our can is used, we certainly hope it is recycled. Recycling is a major consideration in continued aluminum use, representing one of its key attributes. More than half of all the aluminum currently produced originates from recycled raw materials, a trend that is on the rise. In view of energy constraints, we have a huge stake in the collection of available aluminum and developing the most efficient scrap treatments and melting processes.

Aluminum can be recycled over and over again without loss of properties. Aluminum recycling benefits present and future generations by conserving energy and other natural resources.

Recycling just one soda can saves enough electricity to run a laptop computer for over 10 hours.

Recycling saves up to 95% of the energy required for primary aluminum production which avoids greenhouse gas emissions used in the process. Increasing demand for aluminum and the long lifetime of many products mean that, for the foreseeable future, the overall amount of primary metal produced from bauxite will continue to be greater than the volume of available recycled metal.

The life cycle of an aluminum can from mining to recycling is 60 days. Think of how many beverage and food cans you use during the next 60 days.

Global aluminum recycling rates are high, approximately 90% for transport and construction applications and about 60% for cans. In 2004, the United States only recycled 45% of cans.

I think we can do better than 45%, after all, it's something we all can do. (Courtesy: PRLog)

The health benefits of wearing silver jewelry!

Silver Jewelry is very nice-looking, but also it’s a very healthy jewelry. Do you know much about how much silver is needed to our bodies? It’s a highly important element for balancing other elements in our body. It keeps our blood vessels elastic. It is really important for bone formation and healing, skin formation and repair.

Silver Jewelry is very good to wear with autumn-colored clothes. Yellow, beige colors signs of soon to come winter, which always brings spring after it. Try also wearing silver beads with black t-shirt or any other dark top.

Since the dawn of civilization people used silver because of its unusual strengths. Wise people engraved prayers on silver stones or silver plates to deliver a strong message to other worlds. Is it believed that silver stimulates energy flow to itself, so when silver jewellry is on body – it helps to accumulate more energy. It also seemed to help with avoiding lethargic tendencies and as a result of wearing it you may feel re-vitalized and stronger. It helps you to concentrate your thoughts.

As you might have already read – silver is absorbed through skin and has pain-relief effect, that’s why silver bracelets are so popular. It’s not an urban legend – this has medical background and some proofs from Eastern countries, where people know many things from past. Knowledge slowly fades away in nowadays if it has no big commercial value, but Eastern countries cherish comprehensive historical facts. So in a talk with a lady from East – there was a confirmation that silver jewellery has strong effect on people suffering from arthritis. Silver (especially magnetic jewelry) is known to increase blood circulation and reduce pain in muscles. Many people suffering from arthritis will not leave home without a bracelet.

Besides silver bracelets you can find some silver beads, strings, and earrings. Most of them are amazingly beautiful and not expensive, since silver isn’t a precious metal. Despite it’s dollar value – it’s very precious to our health.

Wearing silver jewelery you might notice green stains on your skin under the place of contact with silver. Don’t panic. It’s all right, it will come off in a day or two – it’s just silver entering your body. It usually happens in warm days. If you want to avoid it – paint inside a bracelet with a transparent nail polish, but as you might figure out – it prevents health benefits of silver too. These stains aren’t known to do any harm for you. There are recommendations to wear silver jewelry while you are sleeping, which time for our body to rest and to restore, that way you can wash it’s traces in morning.

Silver jewelry, like many other metals is known to tarnish over time. To clean jewelery, made from silver – just put it in a small solution of lemon or limejuice with a dash of salt, it will shine as new. Alternately you can keep it in silver jewelry box, preventing from continual air exposure, which causes silver jewelry to tarnish.

If you are still not convinced that silver bracelets are a great way to help your health – well – go to the nearest pharmacy and continue to buy pilling helping pharmaceutical industry to grow and sell you even more.

After all – it’s not always about how it works – sometimes it’s about how it looks – and 925 silver jewelry is sometimes amazingly beautiful. Try to find some and you’ll be amazed too!

(Courtesy:PRLog)

Commodity Trends: Gold holds steady, metals fall

India’s growth rate is expected to clock 6.4 to 7% in 2009-10 as most Asian economies are expected to rebound from the financial crisis which is positive for both equity and commodity markets. Commodity exchanges in the country have already witnessed their combined turnover rise by 32.92 per cent till September 15 this fiscal over the same period last year, even as bullion trade dipped marginally, the commodity market regulator Forward Markets Commission (FMC) said.
BSE Sensex has climbed above !7000 levels for the first time since May 2008 on hopes of better quarterly earnings, banking, infrastructure stocks.

Poor demand in consuming countries have led to 20% fall in India’s coffee exports while global sugar prices are rising on Nagging worries over the impact on sugar supplies from top producer Brazil due to persistent and excessive rain, combined with expectations of further demand by Mexico, the US and India, have fuelled bullish sentiments in sugar.

According to data released by the Coffee Board, for the crop year ending September 30, 2009, India’s coffee exports stood at 1,81,069 tonnes as against 2,27,779 tonnes in the previous year, a decline of 20.5 per cent.
Export earnings were Rs 1,978 crore for the year, down over 17 per cent compared with the previous year. Unit value remained flat at around Rs 1 lakh per tonne.

Precious Metals
After initial weakness followed by marginal gains gold bounced backed to regain $1000 on Wednesday and managed to stay close to the $1000 mark as dollar retreated over news of deeper than expected US job losses in September. In the global market, gold rose above $1000 on Friday while in India prices dropped by Rs 50 per 10 gms at Rs 15,590. Earlier in the week, crude oil rally and geopolitical tensions supported dollar’s upward moves.

Gold prices are in for weakness as lower oil prices curbs demand for safe haven investments. Easing inflationary pressures does not augur well for gold. December Gold futures rose $3.60 at $1004 an ounce in the comex division of New York Mercantile Exchange. In the near to medium term, inflationary pressures and trends in dollar are major factors affecting bullion prices. The gold-to-oil ratio hs risen to 14.40 towards weekend from 14.17 previously. Spot Gold had risen to $ 1006 per ounce on intra-day trading on Tuesday.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said its holdings stood at 1,095.327 tonnes as of Oct. 1. As of Sept. 30, it was up 1.22 tonnes from the previous business day. MCX December gold had strong support at 15452 and ended with a profit of RS 63 at Rs 15598. However, the trend looks downward while global prices are likely to hover close above $1000 mark next week.

Base Metals
Base metals face downside pressure on the back of bad economic news coupled with Chinese holiday. Copper prices ended the week on a negative note, losing almost 2% the last week. Poor US unemployment figures coupled with a long holiday in China kept the world’s largest copper consumer away. US non-farm payrolls revealed a loss of 263,000 jobs in September, while the market had braced itself for a lesser decline of 179,000 jobs.

The unemployment rate, however, met expectations at 9.8 percent. US carmakers watched sales drop 23.3 percent year-on-year to 721,378 vehicles in September, leaving the market reeling after the cash for clunkers incentives program ended in August. Though we have witnessed a downside in copper prices due to absence of China we feel that prices could rise by the end of next week as investment funds could buy ahead of return of the Chinese players in the market. Trading in the Shanghai markets will commence on 9th October, which is a Friday. Factor that could prevent a sharp upside by the end of next week in base metals could be a stronger dollar which has now found some strength on the back of poor US economic data.

Economic data from the US has raised concern that the situation still remains bleak. Overall, the employment scenario is still disturbing and the rally in base metal prices ahead of actual economic improvement may be threatening from the short-term perspective. We hold the view that, the slight improvement that is being witnessed in the economic data across the globe is mainly linked to the stimulus and other financial measures. If economies were left aside without stimulus measures, we could not have witnessed this change in economic figures. Hence, the rally in base metals remains under threat of a correction as demand needs to show strong improvement. Prices have raced ahead of their fundamentals; hence profit-booking at higher levels cannot be ignored. In the coming week, copper prices are expected to find support at 281.35/276.85 and face resistance at 294.50/303.15.

Energy
Crude oil prices gained a whopping 6% in the last week despite inventory data showing a rise. Crude oil supplies gained 2.8 million barrels to 338.4 million. Distillate stockpiles, which include heating oil and diesel, rose 323,000 barrels to 171.1 million. That’s a sixth weekly increase even as refinery output and imports dropped. Gasoline inventories fell 1.7 million barrels to 211.5 million in the week to Sept. 25. Oil prices received support on the back of weakness in the US Dollar Index in the early part of the week. However, the dollar index strengthened by the end of the week as bad economic data from the US lowered demand for higher-yielding and riskier investment assets and raised demand for the low-yielding dollar.

Oil prices touched a high of $71.39/bbl last week but closed below the $70/bbl mark as the dollar showed strength on Thursday and Friday. The decline in oil prices on Friday was after an economic report that showed that the US jobless rate increased to a 26-year high in September, boosting concern that fuel demand will take time to rebound. Economic concerns still persist and prices could face resistance around $70/bbl levels as demand scenario is not expected to improve significantly. In the coming week too, we could witness a rise in oil inventories and that could add pressure on oil prices. If the dollar strengthens on the back of rise in demand for low-yielding currencies then that will also add pressure on the downside. In the coming week, we expect oil prices to find support at 3212/3080 and face resistance at 3445/3540 levels.

Soybean
Soybean (NCDEX November contract) futures moved in a range of 2005-2051.50 levels during the last week. Soybean prices fell slightly lower on account of harvesting pressure of new crop in Maharashtra and Madhya Pradesh during the last week. Lower export demand of domestic soy meal and globally soybean production is estimated higher as compared to last year provided support to bears in the market. However, it recovered slightly on lower sowing acreage this year as compared to last year by Ministry of Agriculture and lower production estimates to 97 lakh tonnes this year from 108 lakh tonnes last year as per the Soybean Processors Association of India (SOPA). Domestic kharif oilseeds area so far been covered on 172.21 lakh hectares against 181.34 lakh hectares during corresponding period a year ago, as on September 24, 2009.The area under soybean is reported down at 95.90 lakh hectares against 96.24 lakh hectares a year ago, groundnut at 44.22 lakh hectares vs 51.95 lakh hectares in the corresponding period last year. In the coming week, prices are expected to trade lower on account of harvesting pressure in major producing states like Maharashtra and Madhya Pradesh. Prices have strong support at 1945/1910 and resistance is seen at 2060/2115 levels.

Chana
Chana prices witnessed a bearish trend in the last one month due to tremendous pressure from the government to curb the rising prices. Also, huge stocks of Chana supported the bearish market sentiments. Futures prices of Chana which surged 2.5% during the initial days of the last week on improved demand ahead of festival season erased the early gains and settled lower during the weekend due to adequate supplies in the markets. During the last week, October Chana contract traded in the range of Rs.2281-2353 per qtl.

Chana production stood at around 7.05 MMT up from the 2007-08 final estimates of 5.75 MMT. Also, it is expected that the acreage under Chana in the coming Rabi season will be more due to higher moisture level. Thus, overall sentiments in Chana remain bearish in the medium to long term. However in the short term, Chana prices will remain firm due to good demand ahead of festival season. Also, higher prices of other Pulses would support the sentiments in the short term. NCDEX Chana November contract is having strong support at 2335/2300 per qtl and resistance is seen at Rs. 2415/2455 per qt.

Black Pepper
Black pepper market was very volatile in the beginning of the week as bear operators were at centre-stage aided by higher crop arrivals from Brazil and Indonesia. On Tuesday October contract declined by Rs 48 on NCDEX to close at Rs 13,995 a quintal. November and December dropped by Rs 50 and Rs 14 respectively to close at Rs 14,160 and Rs 14,301 a quintal.
Pepper futures market on Thursday went up in the forenoon on bullish reports based on the earthquake in Indonesia and buy calls from expert analysts.

It dropped in the afternoon on sell calls to close below Wednesday’s closing. Profit booking at the end of the day also led to fall in prices although firm trend was visible due to robust spot demand, low stocks and reviving exports. India’s pepper is quite competitive as its ASTA Grade at $3000-3050 is cheaper than Vietnamese offering. Spot pepper rose by nearly 5 rupees and ended at 14,193.75 rupees per 100 kg in Kochi, a major trading hub in Kerala.
Fundamentals remain bullish on reviving exports, low stocks and robust spot demand. Decreasing price gap with leading global producers of the spice has led to export interest trickling back to India. Demand for spices usually goes up during August to October, the country's peak festival season.

Rubber
Weak to steady trend was visible in rubber spot markets in the country and this was also reflected in domestic futures at NMCE as the traders look for definite direction before making trades. RSS 4 grade was quoted at Rs 107.50 on extremely dull volumes. Tyre sector demand also looks dull, traders said. The October futures for RSS 4 closed at Rs 108.15 (108.21), November at Rs 109.09 (109.02), December at Rs 110.70 (110.96) and January at Rs 112.50 (112.19) a kg on National Multi Commodity Exchange (NMCE).

Rubber declined as global equity markets dropped and U.S. auto sales slumped in September, eroding optimism that demand may grow for the commodity used in tires and gloves.

At TOCOM, rubber futures turned weak tracking Japanese equity market on unexpected drop in US manufacturing data, increasing jobless claims and declining September auto sales. Martch delivery rubber lost 3.8 yen at 198.6 yen a kg before closing at 200.8 yen although initially the contract had gain as much 2.7% in the week. Fundamentals for rubber continued to be steady to weak as data on automobile sales and economic recovery is not yet positive.

Wheat
Weakness was visible in India wheat futures on hopes of higher output. Agriculture Minister Sharad Pawar recently said that the extended monsoon season augors well for winter-sown crops such as wheat as soil moisture is set to improve.The winter sowing season starts next month. The October futures contract NWTV9 on National Commodity and Derivatives Exchange fell to 1,222.6 rupees per 100 kg on Thursday.On Sept. 1, India had 30.1 million tonnes of wheat stocks, up from 23.2 million tonnes a year earlier. At the beginning of the new marketing year in April 2010, stocks are estimated at 10 million tonnes.

This week, CBOT wheat has rebounded an reports that US farmers are likely to go slow on sowing due to falling prices. CBOT Wheat has dropped 25% this year due to abundant supplies and falling export demand from USA. However, towards weekend, the bounce could not be retained and fell to $4.39 a bushel on large world supplies and spillover pressure form other markets. Canada has also raised it s wheat production dampening market sentiments.

The importance of strategies for ETF investors

When it comes to investing, you have many options when it comes to exchange traded funds (ETFs), stocks, bonds, futures or options, but one thing is certain: a sound strategy is more important than anything else.

During the worst financial crisis in the past 70 years, you may have watched your nest egg dwindle to half of what it was – or even more. Now that financial stability is slowly starting to emerge and millions are trying to pick up the pieces, it’s important to keep in mind that the best financial advice is completely worthless if it is not followed, states Greg Salsbury of Investment News.

Were you one of the ones who lost their cool when the markets were at their worst? If so, read on for some tips about how to do better the next time the markets go topsy-turvy:

You now know this: do not allow emotions to drive investment decisions. Often, people think that their gut feelings will enable them to cash in on the next Google . Fear makes them sell too quickly. Exuberance makes them buy without fully examining the pros and cons.

It is important to stay diversified. This allows investors to reap the rewards of gaining exposure to high performing sectors and industries while not banking on the performance of one or two stocks. A good portfolio has exposure to bonds, domestic equities and foreign equities. ETFs enable investors to gain broad exposure to a growing number of asset classes and sectors.

The third artery to building a good retirement portfolio is education. It is vital to know what your portfolio holds, economic conditions, both macro and micro, which could potentially hinder your holdings, and know what your choices are. After all, you control the destiny of your portfolio.

Have an exit strategy. Don’t hang on, hoping against hope that a position will come back. Instead, a stop loss will help stop the bleeding when a trend winds to a stop. Investors who had a stop loss that had them out between October and March were able to sit out a good chunk of the market’s downturn.

Have an entry strategy, too. There are many out there, including a trend following strategy, which uses the 200-day moving average as a guide. It is easy to use and enables investors to tuck their emotions away. The key to employing a strategy is to use it. Don’t rationalize your way out of it when the signals say you should act.

For a better understanding of the trend following strategy, take a look at our new book on trend following. There’s $4 trillion on the sidelines, but the average investor doesn’t believe we’re in a recovery at this point. Investors don’t typically buy until there’s a full recovery, but if you waited until that point, you would miss a sizable portion of potential gains.

C02 capture: Siemens-E.ON project raises hope

E.ON and Siemens are putting a pilot CO2 capture plant into operation at the E.ON power plant Staudinger in Grosskrotzenburg near Hanau. The two companies are thus pushing further ahead with the development of a process geared toward climate-friendly coal-based power generation.

A lab-proven process is to be employed under real operating conditions at the power plant’s hard-coal-fired Staudinger Unit 5. The pilot plant will be operated with part of the flue gas from Unit 5. E.ON and Siemens intend to run the pilot plant until the end of 2010. The results achieved and the operating performance of the pilot plant will serve as the basis for large-scale demonstration plants, which are scheduled to start operation in the middle of the next decade.

In the future, too, it will not be possible to meet the rapidly growing power demand without using fossil fuels such as coal and natural gas. “The challenge is to attain a significant reduction in the CO2 emissions associated with the combustion of fossil fuels. In this context CO2 capture and storage technologies will be of decisive importance,” said Michael Suess, CEO of the Fossil Power Generation Division of Siemens Energy. “These technologies are available but they have to be tested for deployment in large plants, developed further and brought to market readiness. The pilot plant in the Staudinger power plant will bring us a decisive step forward here,” added Suess.

“As a major contribution toward climate protection E.ON is planning industrial-scale CO2 capture and storage for coal-fired power plants starting in 2020. Operation of this new plant together with Siemens as part of our pilot fleet is an important step in this direction,” said Bernhard Fischer, Member of the Managing Board of E.ON Energie AG and E:ON’s CTO. Fischer added: “With the post-combustion process we are focusing on an highly promising CO2 capture technology, which can be backfitted in existing power plants.”

The project is being sponsored by the German Federal Ministry of Economics under the terms of the COORETEC Initiative. It is part of the federal government’s 5th Energy Research Program “Innovation and New Energy Technologies” and promotes research and development in the field of low-CO2 power plant technologies.

With the post-combustion capture process developed by Siemens more than 90 percent of the CO2 is removed from a power plant’s flue gas using special cleaning agents. One of the advantages of this technology is that it can be combined with the well-known and further developed steam power plant process. In the CCS pilot plant at the Staudinger power plant the cleaning agent’s long-term chemical stability and the efficiency of the process are now being put to the test under real power plant conditions. In parallel, the technology will be further optimized in terms of energy consumption. Our process is characterized among other things by good environmental compatibility, comparatively low energy consumption and only very low loss of the cleaning agent used,” said Suess.

The technology for CO2 capture from the flue gas of power plants is part of the Siemens environmental portfolio with which the company earned revenues of nearly EUR19 billion in fiscal 2008, That is, equivalent to about a quarter of Siemens’ total revenue and makes Siemens the world’s leading provider of eco-friendly technology.

The Siemens Energy Sector is the world’s leading supplier of a complete spectrum of products, services and solutions for the generation, transmission and distribution of power and for the extraction, conversion and transport of oil and gas. In fiscal 2008 (ended September 30), the Energy Sector had revenues of approximately EUR22.6 billion and received new orders totaling approximately EUR33.4 billion and posted a profit of EUR1.4 billion. On September 30, 2008, the Energy Sector had a work force of approximately 83,500.

E.ON is one of the world’s largest investor-owned power and gas companies. Its roughly 93,500 employees generated just under EUR87 billion in sales in 2008.


(Courtesy:Webwire)

New record set in solar module energy conversion

With the heightened investment in R&D in solar energy as a means to reduce carbon footprint and climate change, several new technologies are being developed to make solar energy one step closer to cost effectiveness with conventional energy sources.

The Energy Research Centre of Netherlands has reported 16.45 energy conversion for a full sized solar module, the highest ever recorded so far. Royal DSM N.V., the global Life Sciences and Materials Sciences company headquartered in the Netherlands, said that that its KhepriCoat anti-reflective coating system has contributed immensely to this world record..

The world record of 16.4%, achieved by the Energy Research Centre of the Netherlands (ECN), was verified by global certification and testing organization TÜV. The previous record of 15.5% from 1998 was broken by an impressive 0.9 percentage point.

The new record efficiency of 16.4% means a substantial step in the ongoing quest to bring solar energy closer to "grid parity", the point at which solar energy is equal to or cheaper than conventional electricity. This would make it broadly accessible to both industrial and residential users without state and/or government subsidies. The successful utilization of DSM’s KhepriCoat anti-reflective coating confirms its performance leadership and will contribute to the speed of implementation of anti-reflective coatings in the rapidly growing solar energy market., Royal DSM company said in a press release.

Due to an ever increasing demand for generation of sustainable energy, solar power will play a critically important role in future energy supply. To enable these developments, innovative companies like DSM are constantly working on technology breakthroughs that allow a significant cost reduction in solar systems, the release added.

One such breakthrough has been the development of DSM’s KhepriCoat anti-reflective coating on solar glass, which offers the best performance in terms of light transmission, durability and flexibility. Application of the coating to solar glass sheets has shown an increase in light transmission of around 4%, leading to a transmission rate of approximately 96% for wavelengths in the 400nm - 1200nm range.

Commenting on the new record, Paul Wyers, manager of ECN Solar Energy, said: “The added value of anti-reflective coatings in improving the efficiency of solar modules is significant. We were glad we could make use of the latest technology in this field to set our world record. Our cooperation with DSM helped us achieve a premium conversion efficiency of 16.4% on a full-size solar module, which is a huge leap from the previous record.”

It may be recalled tha tRoyal DSM N.V., the global Life Sciences and Materials Sciences company had recently regained its number one position in the chemical industry sector in the Dow Jones Sustainability World Index. In 2007 and 2008 it ranked amongst the top leaders in the sector.

DSM innovations are helping to address some of the world’s most pressing issues such as climate change, energy consumption and the need for a balanced food and water supply, the company said. Khepricoat is the second commercial product in DSM’s Functional Coatings program, which focuses on applying DSM’s proprietary coating technology platform to various applications. (Courtesy: Webwire)

STT mopup rises 11% to Rs 3,530 cr on bullish market

Buoyed by a resurgence in the stock market, collection of security transaction tax (STT), a tax levied on every transaction on stock exchanges, rose 11% between April 1 and September 25, over the year-ago period, according to figures compiled by the Income Tax (I-T) department.

According to I-T officials, there is a distinct possibility STT collection will continue to grow for the rest of the financial year.

STT generated Rs 3,530 crore as against Rs 3,173 crore collected during the corresponding period last fiscal. During the first two months of the current year collection dipped 24.7% to Rs 795 crore, against the comparable period.

The fall was a continuation of the slowdown in STT collection that began mid last year as the local stock market felt the tremous of a global financial meltdown. By December last year, STT collection was Rs 4,455 crore, about 32% lower than the December 2007 figure.

But things began to look up since July ‘09. Since big bourses like National Stock Exchange (NSE) and Bombay Stock Exchange(BSE) are based in Mumbai, the city alone accounts for over 95 % of the STT collection.

Introduced in 2004-05, STT is paid by the buyer as well as the seller in a security transaction. The objective of the tax was to partly offset the revenue loss arising from the removal of long-term capital gains tax and the reduction of short-term capital gains tax from 30% to 10%.

However, the tax was opposed by brokers and investors. However, the draft tax code which has been recently announced by the government, has proposed the removal of STT and imposition of a tax on capital gains.

Indications are that STT collection, which is proportionate to the trading volumes in the stock market, will continue to grwo. While the figures for the first week of September ‘09 showed only a marginal improvement over the corresponding period last year, the collection has surged within a fortnight.

A higher trade volume has also pushed up the corporate tax collection from brokerages by 20% to Rs 580 crore.

Finally, IMF to sell 403 tonnes of gold

Finally, the International Monetary Fund (IMF) is selling its 403 tonnes of gold after months of speculation over the sale and its presumed impact on markets.

IMF said in a statement the sales would be in a volume strictly limited to 403.3 tonnes, with these sales to be conducted under modalities that safeguard against disruption of the gold market.

The IMF said the decision was a central element of a new income model for the institution that had been approved by the executive board in April 2008.

The Group of 20 developed and developing countries decided at their April summit in London that the money raised by the gold sales should allow the IMF to offer favorable conditions on loans to the poorest countries.

The IMF said the sale of gold will also increase the fund’s resources for lending to low-income countries, a strategy that won board backing in July.

The amount of gold is one-eighth of the current holdings of the Washington-based IMF, one of the world’s biggest holders of the precious metal.

The IMF did not state the value of the gold to be sold but based on the current bullish market price for the metal, it is estimated that the sale would fetch 13 billion dollars.

Under the approved plan, the IMF would offer to sell gold directly to central banks or other official sector holders if there were to be interest from such holders.

The IMF said such transactions would redistribute official gold holdings without changing total official holdings.

Under the fund’s Articles of Agreement, all gold sales must be conducted at market prices, including direct sales to official holders.

Also the gold sales could be conducted on-market in a phased manner over time, and such on­market gold sales will not add to the announced volume of official sales, it said.