Posts Tagged ‘Foreign direct investment


Currency Options USDINR: December series

November series for USDINR options expired on 29th November as expected. In last week of November, Rupee made a dash towards 56. I don’t have a large position on either side in this series.

Given stalemate on US fiscal cliff situation, INR remains vulnerable to any global risk off trade in December last week. On the other side, Government of India (GoI) has become proactive on reforms front. If GoI is able to pass increase in FDI limit in insurance & pension, Banking act in last week of winter session of parliament, then Rupee should find support and even rally. Last week, GoI passed Land acquisition bill, Cabinet committee on Investment board (watered down version of National Investment Board) under PM. SP & BSP, who had supported GoI on FDI vote in retail (direct and indirect), are at loggerheads in Parliament on reservation in promotion for SC/ST. Government will find it tough to pass anything in Parliament on account of this logjam. On 18th December, I don’t expect RBI to cut interest rates. There might be 25 bps cut in CRR, but not in repo rate.

Last week of December should be a good time to build some position for January series. I don’t expect Rupee to breach its previous low of 57.37 in December & January.


Currency options USDINR: October series

September series for USDINR currency options expired yesterday. In my previous post, I had mentioned that I don’t expect Rupee to breach 56 in September series. All my sold OTM call options expired worthless.

But the biggest surprise of last series was UPA2 government awakening from slumber and its action on diesel price rise, FDI in retail and aviation. Frankly, I have been surprised positively  by bold measures announced by Congress led government. But one thing is pretty clear now, for short term (next 3 months), government action has removed tail risk of India’s sovereign credit rating downgrade. Sentiments have become positive and Rupee has moved sharply from 55+ levels to 53.5 in last 2 weeks. Indian Rupee being high beta EM currency has benefited from QE3. As usual some analysts have come out with ridiculous levels on rupee appreciation. Targets around 48-50 are being talked about. Same analysts had given Rupee targets of 60+ on downside when it was 56-57. It’s a clear case of overshooting on both downside and upside.

Today, the government will announce its borrowing plan for H2 (October-March) of this year. It will be an important cue in terms of Rupee pace of appreciation. In case market is disappointed then Rupee will find it tough to cross 53 on upside. On downside also, I think 55-55.50 should hold out in October series. Broad range for Rupee this series should be 52-55 unless some black swan event happens in Euro-zone. I think breach of 51.5-52 level would be difficult in this series. I have sold a lot of OTM calls for October series.


Why I would vote for congress in next general election..

State of affairs at congress government can be summed by the PM Manmohan Singh’s recent meeting with the press. Instead of talking about future or any new policy initiatives, which have completely stopped, he was defending himself and the government from various corruption charges. As the head of the most corrupt central government as yet, he never knows anything, and everything happens behind him. He was a good economist and policy maker but now looks like a product beyond its best before date.

Recently, there was Deepak Parekh’s interview in TOI, It seems a lot of business groups are frustrated at delays in getting approvals for their projects. Instead of working on land acquisition bill, the government is busy on working with minority quota. As if, current reservation quota is not enough, they are keen on introducing one more quota within quota for minorities. Everybody wants our forests to be protected but not if it stalls development and growth. After 6 years delay, India’s largest FDI as yet by POSCO was given environmental clearance. I wonder if it would help India’s image as an investment destination.

After several months of delay, the Government found time to decide on the fate of Cairn-Vedanta deal. Being a politically sensitive matter in India, delay in petroleum products hike is understandable. Not sure how long this adhoc policy on petroleum products can continue. I hope UID project helps in directing subsidy to the target segment in a more effective manner. How can you provide subsidy to actor sunil shetty doing hayyy…hayyy…in his movies and driving his gas guzzler hummer on Mumbai roads (My friend Vinod Tirupati imitates him better). I don’t know what’s the extent of black money stashed abroad, but instead of bringing tax evaders to justice, government is busy fighting with Supreme court on SIT issue. Sad part is that, we don’t have alternative either. BJP is busy with infighting, Communists are struggling with ideological crisis. I think congress knows this very well, otherwise they would have done something. There is a widespread frustration and discontent among general public.

Congress government has introduced F-word on stock exchanges. F-word or FPO has been instrumental in wealth destruction of a  lot of PSU’s. Still government can’t understand that FPO is not an efficient method of divesting stake in Public sector units. As an option trader, predominantly option writer I love this government’s inaction. They allow me to play on my friend, time value. I am thinking about becoming a congress member and campaigning for them in 2014. I request all of you to vote for congress government in every election.

May 2018
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