IMF Forecast For 2010: India GDP Upgraded

International Monetary Fund (IMF) has now corroborated what I have been maintaining for quite some time. IMF has upgraded India's GDP forecast of year 2010 from 8.8% to 9.4%. And on the other hand, IMF has indicated that US poses the greatest threat to global recovery. In fact as per IMF it is India and China and some other Asian economies which are supposed to lift the growth prospects in the world and therefore it has raised the world GDP prospects for 2010 from 4.2% to 4.5%. However it has lowered its growth estimates for Euro zone, Canada, US, Japan, and emerging economies.

If we consider expected growth rate of different economies of the world, India ranks second behind China. According to IMF, while India's GDP is expected to grow at the rate of 9.4%, China's GDP is fore estimated to grow at 10.5% for year 2010. This is wonderful news for Indian economy, and should lift the global investors' confidence and investment sentiments towards India.

I had already fore casted in my post dated 17 Jan 2010 titled " Stimulus Induced Growth - Is It global Recovery On Steroids" that US will witness a double dip depression while Indian markets will correct but rebound aggressively to surpass their all time highs in a year's time. Now IMF forecast mirrors my sentiments. With India you can also see other emerging economies to do well, provided they are not heavily dependent on exports to US.

Moving away from growth rates, do keep a look out for textile counters for long trades in Indian markets today ie 9th July 2010. This is because the textile sector will benefit from the announcement from China that yuan will be allowed to appreciate more aggressively.

Stock Futures - Gap Up Ticks Difficult To Trade

Before Indian stock markets opened today on 8th July 2010, there were strong bullish market sentiments from across the Atlantic Ocean. US markets had closed strongly in positive territory. Bounce in US markets was generated by investor expectations of good corporate earnings. After a long time Dow Jones closed above the 10000 mark with a gain of 274.66 points.
Overnight good tidings in US markets had a salubrious effect on the Asian markets, which were trading in green when Indian markets opened today. As was expected, Indian markets opened strongly in the green and kept surging northwards. It is such situations there is dilemma while entering trade in stocks futures. "Will the stock correct to cover intra-day gap or not?" is a question predominant in mind. Today was one such day.

Be that as it may, I am furnishing details of three stock futures trades which were squared off today as per my recommendations at http://www.stockezy.com/ . Of these three trades, two were long trades and one was a short trade. The point to note here is that even in a strong bullish market you can  earn profit by shorting specific stock futures :-

1. Balrampur Chini July Futures : Bought at 84.75 and covered at 85.5. Lot size = 4000. Long trade.
   Investment = Rs 67000/-.
   Profit = 0.75x4000= Rs 3000/-.
2. Bajaj Hind July Futures : Bought at 117 and covered at 118. Lot size = 2000. Long trade.
   Investment = Rs 47000/-.
   Profit = 1x2000= Rs 2000/-.
3. KS Oils July Futures : Sold at 58 and covered at 57.25. Lot size = 4000. Short trade.
   Investment = Rs 46000/-.
   Profit = 0.75x4000= Rs 3000/-.

Total profit on 08 July 2010 = Rs 8000/- (3000+2000+3000).

Trading Stock Futures - Profitable Even On A Down Day

I have been harping on this power of leverage that Stock Futures enjoy. This power has been evident in Indian markets even today. From the time the Indian markets opened today on 7th July 2010, there has been immense selling pressure. In the first half, Indian markets took cue from weak Asian markets and then got fully hugged by Bears after European markets opened weak in the second half. There was just no escaping the relentless selling by Bears. Nifty gave up all its gains it made yesterday.

In such a scenario, if you were a retail investor there was no room to hide, trading in cash segment. Like it or not, retail investors are perenial Bulls and cannot imagine going short. And in cash segment, today was just not the day for going long. But its a different story if you are trading in Stock Futures. Power of leverage will help you to make reasonable money on the long side by exploiting the intraday volatility. Let me illustrate the point by highlighting the following trades which were squared off today as per my recommendations at http://www.stockezy.com/ :-

1. Bharti Airtel July Futures :
   Bought at 273.5 and covered at 278.5. Lot size = 1000.
   Investment = Rs 54000/-.
   Profit = 5x1000= Rs 5000/-.
   Remarks : This lot was bought today morning and squared off intraday with reasonable profit of Rs 5000/- for investment of Rs 54000/-. If one had bought the scrip in cash, it would  have been difficult to exit with profit of just Rs 5/- per share. For making Rs 5000/- profit in cash segment, one would have had to invest Rs 2,73,500/- in this scrip.
2. Cummins India July Futures :
   Bought at 596 and covered at 602. Lot size = 500.
   Investment = Rs 59000/-.
   Profit = 6x500= Rs 3000/-.
   Remarks : Here it would have been even more difficult to exit with a profit of just Rs 6/- per share, if one had traded the scrip in cash segemnt. To achieve a profit of Rs 3000/- you would have had to invest Rs 5,96,000/- in cash segment.

Today's closed trades in Stocks Futures yielded total profit of Rs 8000/- (5000+3000) against a total investment of Rs 1,13,000/- (54000+59000). That means a return of 7.1% on investment in long trades, on a day totally in the grips of Bears. Hope I have made my point amply clear about power of leverage in stock futures trading.

Stock Futures : Performance Statistics For June 2010

In the month of June 2010, six trades of Stock Futures were executed as per recommendations given by me at http://www.stockezy.com/ All the six trades were 'Buy' ie long trades. Of these six trades, two trades have been rolled over from June series to July series and are still open. These are Aban Offshore and Suzlon Futures. For the rest of the four trades, I am furnishing the details below:-

1. Tata Comm June Futures :
   Bought at 247.5 and covered at 264. Lot size = 525.
   Investment = Rs 26000/-.
   Profit = 16.5x525= Rs 8862/-.
   Return on Investment = 34%
2. HDIL June Futures :
   Bought at 228 and covered at 235.5. Lot size = 774.
   Investment = Rs 36000/-.
   Profit = 7.5x774= Rs 5805/-.
   Return on Investment = 16.1%
3. Punj Lloyd June Futures :
   Bought at 118.4 and covered at 121.5. Lot size = 1500.
   Investment = Rs 36000/-.
   Profit = 3.1x1500= Rs 4650/-.
   Return on Investment = 12.9%
4. Bajaj Hind June Futures :
   Bought at 116 and covered at 118. Lot size = 2000.
   Investment = Rs 46000/-.
   Profit = 2x2000= Rs 4000/-.Return on Investment = 8.7%

Thus total profit in June 2010 from trading stock futures = 8862+5805+4650+4000 = Rs 23317/-
against total investment of Rs 1,44,000/-.

Monthly Return on Investment = 16.2%

Power of Stock Futures On Lean Trading Days

5th of July 2010. It was one of the most tiring days in trade. There was hardly any movement in global indices, and Indian markets were no exception. Primary reason for weak trading volumes today was the fact that traders stayed on the sidelines ahead of  US Independence Day holiday. All markets were looking for direction to trade, be it Asian markets or European markets.

As for Indian markets, there was an added baggage of nation-wide Bundh call by opposition parties. With means of transport getting badly effected, there was hardly any trading volume on the bourses as traders stayed away. For the entire day Nifty traded in a super tight range of 27 points with day high of 5253 and low of 5226. For day traders, how much more boring than this can things get?

However if you were trading Stock Futures, even such a boring day can be rewarding. The reason is simple- the power of leverage, as explained in my last post on 04July2010 titled "Power of Trading Stock Futures : Bajaj Hindustan". To clarify the point , allow me to highlight the following trades which I had recommended to members at http://www.stockezy.com/   :-

1. Tech Mahindra July Futures : One lot was bought at 736 on last trading session, ie 02July2010. Today the scrip reached the recommended target of 760, thereby giving profit of Rs 24/- per share. Since the lot size is 250, total profit = 24x250= Rs 6000/- against an investment of Rs 37000/-. Thus return on investment in two trading sessions = 16.2%.
2. Balrampur Chini July Futures: In last trading session, one lot of Balrampur Chini July Futures was also bought at 84.1 with a target of 84.45. Today in first half hour of trading the scrip achieved its target price, thereby giving a profit of Rs 1.35 per share. The lot size being 4000, this position attained total profit = 1.35x4000= Rs 5400/- against an investment of Rs 67000/-. Thus return on investment in two trading sessions = 8%.

Hence from two positions with total investment of  Rs 104000/- (67000+37000), total profit obtained was Rs 11400/-(6000+5400). This translates to a return of 11%  in two trading sessions. Remember today was a lean trading day, but the power of leverage in Stock Futures can make any trading day rewarding.