The Stock Tickers
By Rajesh Ganatra S & P 500 Index (USA): 1,314.50 Unfortunately, the Sensex was one of the worst performing markets in Asia during 2011, falling nearly 20%. Since March 2010, the Reserve Bank of India (RBI) has raised interest rates thirteen [13] times to counter severely high inflation, which has been extremely difficult to contain. Meanwhile, the series of rate hikes has taken a severe toll on economic growth and the series of rate hikes hit financial stocks very hard. Industrial growth and capital goods output declined significantly during the second half of 2011 and the Finance Minister, Pranab Mukherjee, indicated that the 9% desired rate of economic growth during the upcoming 2012-2017 "five year plan" will not materialize, instead the economy will struggle to even attain a growth rate of 7%. The Indian Rupee came under substantial pressure as well --- it hit a historical low of 54.30 to the US$ on 12/15/2011 before RBI intervention assisted the currency somewhat - the Rupee recovered significant ground within a few weeks and it was trading at approximately 50.25 Rupees to the US$ on 1/20/2012. The Sensex also recovered some lost ground and traded into the 16,700s by the third week of January 2012 due to optimism about India's long term prospects and hints by the RBI that interest rate reductions may be in the cards if inflation moderates. American Airlines filed for Chapter 11 Bankruptcy recently and the airline is discontinuing its nonstop New Delhi-Chicago service, which has been in operation since November 2005. The airline's last flight to India will take off from Chicago O'Hare on 2/28/2012 and the last flight out of India will leave Delhi on 3/1/2012. Infosys Technologies (NASDAQ-INFY) reported its quarterly results on 1/12/2012 and the financials were in-line with expectations, however, the company offered softer guidance for the quarter ending 3/31/2012 and therefore, the stock shed nearly 9% that day --- it fell from $56.87 down to $51.85. The Karachi KSE-100 lost approximately 8% during CY2011 and settled out at 11,347.66. The index softened during early January 2012 and broke below 11,000, however, the KSE-100 managed to reclaim that key level shortly after breaking below it and subsequently made aggressive strides into the 11,700s. The Pakistani Rupee traded at historical levels against the US$ during early January 2012, reaching PKR 90.70 to the US$. Pakistan received US $386.6 million in foreign investments during July 2011 - December 2011, which represents a decline of 64% over the same previous year period, when the country had garnered $1.06 in foreign investments. During 4Q2011, Pakistan had approximately 111 million mobile phone users, which represents nearly 65% of the population. The country is going to hold auctions for licenses for 3G mobile telecom services on 3/29/12 and there are expected to be approximately 10-15 potential investors that will participate in the initial bidding process. The base price of the license auction shall be in the vicinity of US $210 million and the initial "deposit" to indicate a serious bid would be at a threshold of US $31.5 million. The license terms would range from 8-15 years and existing operators could start offering 3G services immediately upon securing a license, whereas new operators would have to wait until March 2013 to commence 3G services. Some of Pakistan's major mobile operators are Mobilink (which is a unit of Egypt-based Orascom Telecom),Telenor (which is based in Norway), Warid Telecom (a joint venture between Abu Dhabi Group and SingTel Group), Zong (China Mobile Communication Cooperation) and Ufone (which is owned by Emirates Telecommunication Corporation Group, Etisalat). The U.S. Markets had a relatively positive start to 2012 - during mid-January 2012, the Dow was trading in the 12,400s, the NASDAQ Composite was trading in the 2,700s and the S&P 500 was slightly below 1,300. The economy did show some positive job creation towards the end of CY2011 and the unemployment rate did drop down to 8.5% in December 2011, which is a significant improvement from the 9%+ readings that were seen for much of 2009, 2010 and a good part of 2011. However, there are still concerns about the vast number of those who are unemployed, underemployed and "discouraged workers" who have stopped seeking work. If those categories were factored in, the unemployment rate would be much higher. The housing market continues to be weak, and the European situation continues to be in the spotlight: if Europe were to slip back into recession, chances are that it would drag the U.S. back into recession as well. China's GDP growth slipped to a 2 1/2 year low during 4Q2011 and therefore, there are concerns about the strength of the Asian tigers as well. The US Dollar did gain some ground due to the European stresses --- during mid-January 2012, €1 equalled $1.28-$1.29 which is down from $1.32-$1.33 a few months ago. In addition, £1 equalled $1.54-$1.55 which was down from $1.57-$1.58 a few months ago. The US$ was barely even-exchange with the Canadian Dollar and remained below par against the Australian Dollar and the Swiss Franc. Google (NASDAQ-GOOG) reported its 4Q2011 financials on 1/19/2012 and the results were not up to par with analysts' expectations, and the stock dropped 8% the following trading day. 131-year old Eastman Kodak, which used to trade on the Big Board under the symbol "EK", filed for bankruptcy protection on 1/19/2012. The stock had been telegraphing this likelihood in recent months and in bankruptcy, several divisions (including photography) will be sold off and Kodak will focus on the manufacture of high-quality printers with superior ink quality. Crude Oil hovered around $100 per barrel and energy prices have increased recently due to tensions with Iran, which was threatening to block a key shipping route. In addition, increased demand from China and U.S. during the upcoming Spring driving season are expected to put more upward pressures on Crude. During mid-January 2012, Gold was hovring around $1,650 per ounce and Silver was trading around $30.00 per ounce. There are eight [8] meetings of the Federal Reserve Board planned for 2012 and they are scheduled for: 1) January 24-25, 2) March 13, 3) April 24-25, 4) June 19-20, 5) July 31, 6) September 12, 7) October 23-24, 8) December 11. From the comments released by the Fed subsequent to the meetings, it appears that interest rates will be held at the current historical low levels for some time to come, most likely until mid-2013 due to the continued challenging economic conditions. Special Note: This article contains the ideas and thoughts of its author and it does not necessarily imply the viewpoints of "Saathee" magazine, this website or its principals. 
Here are some important quotes as of
Friday, January 20, 2011 at 8:00 a.m. EST:
Mumbai (India) Sensex: 16,739.01
Karachi (Pakistan) KSE-100 Index: 11,774.68
Dow Jones Industrial Average (USA): 12,623.98
NASDAQ Composite (USA): 2,788.33
Currency Exchange Rates:
Indian Rs. 50.25 equals $1.00
Pakistani Rs. 90.25 equals $1.00
Gold Price: Mumbai ---- Rs. 27,430 per 10 grams (equals $1,561.19 per ounce)
New York Mercantile Exchange ---- $1,656.70 per ounce
Silver Price: Mumbai ---- Rs. 53,435 per 1000 grams (equals $30.41 per ounce)
New York Mercantile Exchange ---- $30.64 per ounce
NY Mercantile Exchange --- Crude Oil $100.39 per barrel
United Kingdom --- Brent Crude $110.88 per barrel
(Note --- the Mumbai prices quoted in U.S. dollars were calculated using the appropriate exchange rate and the metric factor of 1 ounce = 28.6 grams. Generally speaking, there can be variances in either direction of the prices of precious metals between India and U.S.A. due to fluctuating market conditions and the impact of exchange rates).
All graphs in this article are courtesy of data procured from Yahoo! Finance and Bloomberg.
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