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Macro - Economics: Economic Analysis

Professional Training Academy introduce a part of Macro Economic --- Impact of Interest Rates on Stock Market,Gross Domestic Product (GDP),Index of Industrial production (IIP),IIP Data & Stock Market,Why Rupee Appreciate or Depreciate?

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140 views50 pages

Macro - Economics: Economic Analysis

Professional Training Academy introduce a part of Macro Economic --- Impact of Interest Rates on Stock Market,Gross Domestic Product (GDP),Index of Industrial production (IIP),IIP Data & Stock Market,Why Rupee Appreciate or Depreciate?

Uploaded by

Professional Training Academy
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Macro -economics

Economic Analysis

Macro Economic Environment

GDP

Saving & Investment

Interest Rates

Inflation

Budget

Tax Structure

Balance of Payment

Monsoon & Agriculture

Infrastructure Facilities

Demographic Factors

Monetary Policy

Fiscal Policy

Economic Cycle

Factors in Macro Economics

Interest Rates

GDP

Inflation

Exchange Rates

IIP

Balance of Payment

Interest rates

Interest Rates

Impact of Rising Interest Rates


A Bank has taken a deposit of 100 from public and CRR is 9 and SLR is 25 then available funds to lend from deposits with the bank will be 100-9-25=66 Raising interest rates are required to control excess liquidity in the markets

Terms in Interest Rates


CRR(Cash Reserve Ratio)
Repo Rates Reverse Repo Rates SLR(Statutory Liquid Ratio)

Cash Reserve Ratio


Amount of cash that bank is to kept with RBI To secure solvency of the bank and to drain out the excessive money from the banks. Present Rate is 4%

If RBI decides to increase the percent of this, the available amount with the banks comes down (To reduce liquidity in market)

Repo Rate
Rate at which our bank borrow rupees from RBI Short term measure and to fill gaps between demand and supply of money in a bank Present Rate is 7.75%

Decreased from 8.00% which was continuing since 17/04/2012

Reverse Repo Rate


Rate which is paid by RBI to banks on Deposit of funds with RBI(surplus fund with bank) Present Rate is 6.75%

Decreased from 7.00% which was continuing since 17/04/2012

Statutory Liquidity Ratio (SLR)


Bank needs to maintain in the form of cash, or gold or govt. approved securities (Bonds) before providing credit to its customers

SLR rate is determined and maintained by the RBI in order to control the expansion of bank credit Present rate is 23% Decreased from 24% which was continuing since 18/12/2010

Impact of Interest Rates on Stock Market

Interest Rate in World


TOP ECONOMIES AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 3.00 7.25 6.00 0.75 0.75 0.75 7.75 0.50 0.25 PREVIOUS 3.00 7.25 6.00 0.75 0.75 0.75 8.00 0.50 0.25 HIGHEST 17.50 45.00 10.98 4.75 4.75 4.75 14.50 17.00 20.00 LOWEST 3.00 7.25 5.31 0.75 0.75 0.75 4.25 0.50 0.25

Interest Rates
Details Frequency Low Interest Rate Facts Quarterly 8 to 12 announcement High liquidity positive for Stocks, Currency but negative for bonds Low liquidity negative for stocks , currency but positive for bonds Short term Volatility

High Interest Rate

Below or above the benchmark

Gross Domestic Product (GDP)

Gross Domestic Product (GDP)


Total market value of all final Goods & Services Produced

Within the country in a given period of time

GDP = Consumption + Gross Investment + Government Spending + (Exports Imports)

Debt to GDP in World


TOP ECONOMIES AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 22.90 65.10 25.80 87.30 86.00 80.50 68.05 85.00 101.60 PREVIOUS 20.40 66.20 33.50 85.40 82.30 82.50 69.43 79.40 99.40 HIGHEST 31.70 79.80 33.50 87.30 86.00 82.50 84.30 85.00 121.70 LOWEST 9.70 63.50 1.00 66.20 20.70 55.60 67.62 31.30 31.70

GDP Rate in World


TOP ECONOMIES
AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY

LAST
3.10 1.40 7.90 -0.90 -0.30 0.10

PREVIOUS
3.70 0.90 7.40 -0.60 0.15 0.40

HIGHEST
9.00 10.10 14.20 5.00 4.90 4.70

GDP (USD Billion)


1371 2476 7298 13075 2773 3750

INDIA
ITALY JAPAN UNITED KINGDOM UNITED STATES

4.50
-2.70 0.30 0.30 1.60

5.30
-2.40 0.40 0.20 2.60

10.20
10.30 9.40 10.20 13.40

1847
2194 5867 2431 15094

GDP Rate

GDP Rate in World

GDP
Details
Frequency High GDP

Facts
Quarterly (Revised monthly) Positive for Stocks, Currency strong(Due to foreign investor) but negative for bonds (Also create risk of high inflation) Sector perform as per the growth contributed by each sector Short term Volatility

Component of GDP

Below or above the benchmark

Index of Industrial production (IIP)

Index of Industrial Production (IIP)

A short term indicator Measures industrial growth till the actual result available Used by Ministries, Industrial Associations, Research Institutes & Academicians

IIP Data & Stock Market

IIP Data & Stock Market

IIP Data & Stock Market

IIP Rate in World


TOP ECONOMIES AUSTRALIA BRAZIL CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 4.33 -3.60 10.30 -2.40 -3.10 -1.10 -0.60 -1.70 2.10 PREVIOUS 2.69 -1.00 10.10 -4.00 -3.20 -3.10 -0.10 -2.40 2.20 HIGHEST 13.72 20.12 29.40 9.80 8.50 15.00 20.00 22.60 62.00 LOWEST -8.00 -17.47 -21.10 -21.40 -19.30 -22.00 -7.20 -11.90 -33.70 FREQUENCY Quarterly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly

Unemployment Rate in World


TOP ECONOMIES AUSTRALIA BRAZIL CANADA CHINA EURO AREA FRANCE GERMANY INDIA UNITED KINGDOM UNITED STATES LAST 5.40 5.40 7.00 4.10 11.90 10.30 5.90 3.80 7.80 7.90 PREVIOUS 5.40 4.60 7.10 4.10 11.80 10.20 5.30 9.40 7.70 7.80 HIGHEST 10.90 13.10 13.10 4.30 11.90 11.20 14.20 9.40 12.00 10.80 LOWEST 4.00 4.60 2.90 3.90 7.20 7.50 0.40 3.80 3.40 2.50

IIP
Details
Frequency High IIP

Facts
Monthly Positive for Stocks, Currency strong, Commodity but negative for bonds (Also create risk of high inflation) Short term Volatility

Below or above the benchmark

Balance of payment

Balance of Payment

Measures the payments that flow between any individual country and all other country
Summarizes all international transaction for that country in a year It includes Export-Import, Financial capitals,deposits,borrowings etc

Balance of Payment
Current Account Capital Account Financial Account
Consists of Goods & Services Account, Primary Income Account & Secondary Income Account

Capital transfers receivables and payable The acquisition and disposal of non produced non financial assets. Involve financial assets & liabilities Take place between residents & nonresidents

Balance of Trade

Imports

Exports

Balance of Trade
TOP ECONOMIES BRAZIL CHINA FRANCE GERMANY LAST -1276.00 291.46 -5349.00 12.00 PREVIOUS -4036.33 316.18 -4289.00 17.00 HIGHEST 5659.37 404.00 2674.00 20.10 LOWEST -4036.33 -319.81 -7021.00 -0.50 UNIT USD Million

USD Hundred Million


EUR Million EUR Billion

INDIA
JAPAN UNITED KINGDOM UNITED STATES

-1086.12
-1629.44 -3201.00 -38539.00

-965.73
-643.29 -3577.00 -48613.00

13.91
1608.68 2946.00 -831.00

-1111.46
-1629.44 -6067.00 -67351.00

INR Billion
Billion JPY GBP Million USD Million

Balance Of Payment
Details
Frequency High deficit on BOP

Facts
Monthly Negative for the currency (Low inflow of foreign currency) Also International commodities are also rising Short term Volatility

Below or above the benchmark

Exchange Rates

Why Rupee Appreciate or Depreciate?

Exchange Rate
Exchange rate means how much one currency is worth in terms of another currency. If we can buy $ 1 with Rs. 46, the exchange rate of the two currencies would be $1 = Rs. 46. Two types of exchange rate: Fixed and Floating In India, we have a Managed Floating Exchange Rate System- Indian government intervenes only if the exchange rate seems to go out of hand by increasing or reducing the money supply as the situation demands.

Factors drive the demand for a currency


Interest Rates Differential rates between two countries
(For ex in India interest rates 7-8% and in US 2-3% this lead to greater capital inflow in India) rupee Appreciate

Inflation Rates- If inflation rate is lower than more good


are exported which lead to currency inflow .then Rupee Appreciate

Export-Import- If export is more than import ,more


currency inflow of other country, which lead to currency appreciation

Trading in currency in Forex Market

INflation

INflation

Inflation Rate in World


COUNTRIES
AUSTRALIA BRAZIL CANADA CHINA EURO AREA FRANCE GERMANY INDIA ITALY JAPAN UNITED KINGDOM UNITED STATES

PREVIOUS
2.20 6.15 0.50 2.00 1.80 1.20 1.55 6.62 1.91 -0.30 2.70 1.60

HIGHEST
2.00 5.84 0.80 2.50 2.00 1.30 1.70 7.18 2.20 -0.10 2.70 1.70

LOWEST
23.90 6821.31 21.60 28.40 5.00 18.80 11.40 34.68 25.64 25.00 8.50 23.70

FREQUENCY
Dec/2012 Jan/2013 Jan/2013 Jan/2013 Feb/2013 Jan/2013 Feb/2013 Jan/2013 Feb/2013 Jan/2013 Jan/2013

Inflation Rate in World

Inflation
Details
Frequency High Inflation

Facts
Monthly Negative for currency , Increase risk interest rate hike which effect stock market ,Bonds are stable commodity are rising Short term Volatility

Below or above the benchmark

Major Obstacles in Indian Economy

Infrastructure Shortage Inflation V/s GDP Fiscal Deficit Unemployment Rate Financial Sector

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