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After opening the day on a flat note, the Indian indices witnessed choppy trades and have continued to trade near the dotted line. Sectoral indices are trading on a mixed note with stocks from the realty and IT sector witnessing maximum selling pressure. Auto stocks are, however, trading in the green.
The BSE Sensex is trading down 6 points (down 0.02%) and the NSE Nifty is trading down 5 points (down 0.1%). Both - the BSE Mid Cap index and the BSE Small Cap index - are trading flat. The rupee is trading at 67.17 to the US$.
Global markets are trading on a mixed note. Most of the volatility in global markets is seen on the back of Janet Yellen's Friday speech. US Fed Chair Janet Yellen voiced optimism about the US economy.
Yellen said that with firm labour market in the US and with Fed's outlook for economic activity and inflation, the case for an interest rate hike has strengthened in recent months. Also, Fed policymaker Stanley Fischer sounded keen on raising interest rates by the end of this year.
A large group of Federal Reserve policymakers also defended their views on raising the rate. They said that raising interest rates gradually would allow them to stimulate the economy for longer. However, at the same time, an overheating economy could end in recession on the back of a rate hike.
Market participants are trying to make sense of what Yellen meant in her speech. As per a leading financial daily, Fed watchers are now pricing in a 33% chance of a September rate hike, up from 9% earlier in the month.
We've written about the effects of low interest rates and central bank policies many times before. Bill Bonner, for instance, recently explained what it takes to survive in an era of low interest rates. And a recent article from Vivek Kaul's Diary - God, Government, and YOU - offers two theories and explains how they influence policies of central bankers and economists.
Also, Asad Dossani from Daily Profit Hunter believes that the market and the Fed place undue importance on just twenty-five basis points (0.25%). And all of this in turn leads to a loss of central bank credibility. He has explained this issue in his article, Twenty-Five Basis Points.
In another news update from the domestic markets, Indian Ratings and Research (Ind-Ra), has raised its growth forecast for India's gross domestic product (GDP) in the financial year 2017 to 7.8%. This is a small rise from the previous forecast of 7.7%. The upward revision has been prompted by the progress of monsoon and the sowing of Kharif crop so far.
Also, Economic Affairs Secretary Shaktikanta Das recently said that India is expected to clock a GDP growth of nearly 8% this fiscal. This, he said, will be on the back of good monsoon rains and structural reforms undertaken by the government.
One must note that last year India achieved 7.6% growth on the back of poor monsoon.
While the above projections spark optimism for the Indian economy, not all is rosy in the garden. Many concerns still persist and pose a threat to the Indian economy. Vivek Kaul has spotted a trend he thinks has the potential to derail India's long-term growth story. He's of the view that there are many macro trends that could directly impact the economy and in turn you. These are the big issues like the government's handling of oil prices, India's disastrous jobs situation, the current state of India's real estate bubble, rising bad loans at the PSUs...and a lot more!
In fact, as you read this, Vivek has just come out with a full note that details all...including how this trend could impact you.
Click here to know more.
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