Current account deficit at USD13.7 bn.; Capital account surplus rises to USD22.3bn.
The current account deficit widened owing to higher trade deficit combined with lower invisibles during Q1 FY11. The capital account surplus increase on the the other hand was mainly due to an increase in short-term credit and rising External Commercial Borrowings (ECB)along with banking capital.
n The trade deficit for Q1FY11 increased 33.4% from last year. The CAD widened to USD 13.7 bn. in Q1FY11 from USD 4.5 bn. in the same period last year.
n A sharp increase in the capital account is mainly due to an increase in ECB’s to USD 2.7bn. in Q1FY11 from a negative USD0.5bn. last year. Banking capital has also increased to a surplus USD 4 bn. from a deficit of USD 3.4 bn. for the same period last year.
n The lower invisibles in the current account was due to a drop of 3.4% in the total invisibles in Q1FY11 from Q1FY10, the main component being a 12.5% drop in official remittances.
n The increase in the capital account has invariably exerted pressure on the exchange rate scenario into the appreciation witnessed so far.
n Technical Comments
Above key moving averages
Nifty have seen sharp spike in last half an hour of trade after a choppy trade with a negative bias since morning and closed last session of September series on a strong note. Moreover, after today’s positive close we are quite sure that the selling pressure in Nifty has finally come to a halt and the uptrend has again resumed. Apart from that, Nifty also closed above the duo of 20- and 50- hourly moving averages, which again tells the winning story of the dominant bulls. So one should stay long to ride the next leg of impulse upto 6250.
BSE Bankex
Today’s positive close for BSE Bankex is telling us that the ongoing selling pressure is just getting evaporated and hence the uptrend will again resume. Moreover, the hourly MACD has also given a bullish confirmation with its positive crossover. Hence the new target for the index is now 14550.
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