India Economy: Advance tax portends bigger downturn?

Last Friday, IIP for October was released and it was negative; on Monday, the advance tax paid number will be released.  The prognosis is not good.  With profits likely to come under increasing pressure Government finances will suffer...the 100,000 crores thrown away on farmer relief would have come in handy.

According to sources, corporate tax collections are also likely to go down to around 15%.

Corporates are postponing payment of advance tax resulting in a 10 per cent shortfall in collections in December compared to the same month last year. The overall growth in tax collections so far this year have also been slow compared to the targeted 35 per cent growth in tax collection for the fiscal.

Mumbai tax officials pegged total advance tax collection in the circle, as of November, at Rs64,484 crore, up 16 per cent from the year-ago figure of Rs55,620 crore, but way below the 35 per cent target.

RBI projects further deterioration in government Finances

"While expenditure is slated to increase in the coming months, growth of tax revenue is likely to decelerate with the expected moderation in real economic activities following the global financial meltdown," RBI said in its monthly bulletin.

Prepare yourself for continued high market volatility this coming week.  I expect the end of week to be lower than last Friday's close of 2920...I know I am in the minority...but aside from selling exhaustion, there is nothing underpinning this over-valued market.

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India Equities: Managing Risk

Volatility continues in the mid-80's...I put in a price of Rs 70 to cover my Nifty 2600 short calls...it would mean Nifty was below 2500..the market went below 2500 and the trade was executed.

Then the market started up... I gave an order to sell Nifty 2600 calls at Rs. 150. Amazingly, that also was executed.

Absolute madness in markets....I am now long Nifty at (2436 - 62 (profit on calls) )=2374.
And I am short Nov Nifty 2600 calls at Rs 150.

This volatility has to come down...every order into the market seems to be getting executed, on the upside and downside.

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Indian Markets: In Search of...a bottom

Extreme Volatility continues in Indian equity markets..volumes continue to decline..the specter of hedge fund redemptions is hanging over the market. The last 5 days trading have the following day change in Nifty:

November 4, 2008 -5.44%
November 5, 2008 -3.25%
November 6, 2008 +4.71%
November 7, 2008 +3.37%
November 10, 2008 -2.77%
November 11, 2008 -6.55% (as at 3pm)

These six days give an annualized historical volatility of 80%. This is ridiculous volatility; anyone who thinks they know what is going on is fantasizing. The price-action in markets is destroying all small time speculators. Day trading is ending...investment clubs are a thing of the past...the Saas,bahu and Sensex set is back to doing what it would normally do..eat, gossip and get fat.

Technical analysis for day trading...in this market...NOT.

Everyone had an opinion on the markets and expected you to congratulate them on their brilliance...Uninformed opinion has lost its veneer of respectability.

It is back to hard work; proper analysis of companies , industries and the economy. Full blown scenario analysis with a healthy dollop of weighting for fat tails. Managing money and helping people create wealth will be back in the hands of professionals...if not, then there is a lot more pain ahead.

And, there will be a realistic view of expected returns in the future...let us hope.

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