Insurance industry sees rise in profitabilityLife insurance, which has seen slowdown in new business premium collection, has also fared better in terms of profitability

The insurance industry, that has been reeling under the impact of macro-economic situations and low penetration, has a reason to cheer. The insurance companies have seen a higher profit margin for financial year 2012-13, as compared to the previous fiscal.

Life insurance industry, in particular, which has seen a slowdown in new business premium collection, has also fared better in terms of profitability.

The largest player in the private life insurance industry ICICI Prudential Life Insurance, the life insurance arm of ICICI Bank posted a 8.09% rise in profit after tax for the full year ended March 2013. The private life insurer posted net profit of Rs 1,496 crore compared to Rs 1,384 crore for full year ended March 2012.

In terms of premiums, ICICI Life’s annualised premium equivalent (APE) increased by 13% to Rs 3,532 crore in FY2013 from Rs 3,118 crore in FY2012. The assets under management at March 31, 2013 were Rs  74,164 crore (US$ 13.7 billion).

The general insurance arm of ICICI Bank has also performed better than financial year 2011-12.

The gross premium income of ICICI Lombard increased by 19.8% to Rs 6,420 crore in FY13 from Rs 5,358 crore in FY12. ICICI Lombard General Insurance posted a net profit of Rs 306 crore for year ended March 2013 compared to a loss of Rs 416 crore for FY2012.

The commercial third party motor pool was dismantled from April 2012 and a declined risk pool was put in place. This has led to reduction in losses for general insurers, who had made high provisioning for this segment. With an increase in premiums, it is expected that this loss will be brought down further.

SBI Life Insurance posted profit of Rs 622 crore for financial year 2012-13, an increase of 12% over the previous fiscal. Atanu Sen, MD & CEO, SBI Life Insurance had said that despite the continued tough environment, they were able to change the business mix and sustain a profitable growth primarily due to their brand strength, multi distribution model and high productivity of our retail channels.

Bancassurance has been a major driver of growth for the insurance companies. Insurers, backed by bank partners have seen not just higher premiums, but also an increase in profit margins. IDBI Federal Life Insurance, which achieved break-even in its fifth year operation in FY2012-13 has about 74% of its premium coming from its bank channel.

Another leading life insurer HDFC Life has seen a 66.5% growth in net profit and posted net profit of Rs 451 crore in financial year 2012-13. The company recorded 16% positive growth in new business premium income (Individual business) and 11% growth in total premium income.

However, profitability has not just been restricted to insurers with bank partners. Bajaj Allianz General Insurance, for example, saw a 138.6% growth in net profit in FY13 over previous fiscal. Further, Max Life Insurance reported a net profit of Rs 423.4 crore for the financial year 2012-13.

Rajesh Sud, CEO & Managing Director, Max Life Insurance had said, "Our continued focus on fundamentals and efforts to differentiate in the market place based on our advice based sales, diversified distribution architecture and comprehensive product portfolio helped us achieve a profitable growth in a tough year for the industry."

Public general insurers have also seen a significant rise in profitability, apart from a double digit increase in annual premium growth. New India Assurance posted profit after tax (PAT) of Rs 843.6 crore for financial year 2012-13, compared to net profit of Rs 179.3 crore posted in FY12.  The company collected total premiums of Rs 10,038 crore in India, recording a growth rate of 18%.

Similarly, private general insurer HDFC ERGO General Insurance posted net profit of Rs 154.49 crore for the year ended March 31, 2013 as compared to a net loss of Rs 39.69 crore posted in the previous fiscal.

While the general insurance industry expects the growth momentum to continue, life insurers expect some challenges in this fiscal too. Max Life's Sud explained that while they would see growth in the first half of the current financial year, in the second half insurers including them would have to manage the regulatory changes.

Adding to this view, Amitabh Chaudhry, MD & CEO, HDFC Life had said, “This year will continue to be a tough year for the industry. We have delivered against the set targets, but we would not look to build the top-line at any cost."

As per the monthly data from Insurance Regulatory and Development Authority (Irda), life insurers collected total premiums of Rs 4965.37 crore for April, seeing a 0.57% rise over same period last year. General insurers, on the other hand, saw a 22.01% rise in premium collection for April 2013. General insurance companies collected premiums of Rs 7890.40 crore for the period, as against Rs 6467 crore in April 2013.

First issue of inflation indexed bonds oversubscribed

Government's first issue of the 10-year inflation indexed bonds, which aims at discouraging gold investments, was today oversubscribed by more than four times, though only bids worth Rs 1,000 crore were accepted.

As per the RBI, which auctioned the '10 Years Inflation Indexed Government Stock, 2023', there were 167 competitive bids worth Rs 4,616 crore of which only 26 amounting to Rs 985.94 crore were accepted.

Also all the eight non-competitive bids by retail and mid-segment investors totalling Rs 14.06 crore were accepted, it said, adding the cut off-yield for the auction was fixed at 1.44 per cent.

It was the first tranche of the Inflation Indexed Bonds (IIBs) which was designed to give an investment option to investors with a view to guarding their savings against inflation and dissuading them from buying gold. The IIBs will be issued on last Tuesday of every month.

The IIBs would form part of the government's borrowing programme for the first half of the current fiscal.

Last month, the government had announced plans to issue IIBs with 10 years maturity worth Rs 12,000-15,000 crore during the current fiscal.

While the first series of the bonds was open for all class of investors, the second series issue beginning October will be reserved exclusively for retail investors.

Both the government as well as the RBI are concerned over the rising gold imports which is putting pressure on Current Account Deficit (CAD). It had widened to historic high of 6.7 per cent in third quarter of 2012-13.

Ask customers not to buy gold, but invest in financial assets: FM to banks

P Chidambaram has asked banks to advise their customers not to buy gold but to invest in financial assets that will encourage economic growth, arguing that surging imports of the yellow metal are unsustainable.

A day after the government made purchase of gold more expensive, Chidambaram on Thursday said while addressing the AGM of the Indian Banks' Association, "Banks have a role to play in dampening the enthusiasm for gold. I would urge all banks to please advise their branches that they should not encourage their customers to invest in or buy gold."

Gold is just another metal, albeit one that shine a little more than copper or glass, the finance minister sought to reason amid widening fiscal deficit on account of the growing imports of gold.

On Wednesday, the government had raised import duty on gold to 8% from 6%, the second such hike within six months.

Expressing concern over the rising Current Account Deficit, Chidambaram said at the IBA meet, "The gold imports have been a major contributor to the CAD. With the sharp drop in gold prices, millions were happy. I am afraid I was not among the millions. I told the (RBI) Governor that the drop in gold prices internationally is a bad news for India. Our fears came true."

Imports of gold surged in April and May following the fall in prices in the international market.

In April, India imported 142 tonne gold while in May the figure rose to 162 tonne, the finance minister said. The monthly average last year was 70 tonne, he said, while in the first two months of the current fiscal, imports have surged to 152 tonne a month on average. "How do we sustain? How can we finance these gold imports?" Chidambaram asked.

MARKET COMMENTS, Saturday, June 8th, 2013

June E-mini S&Ps (ESM13 -0.06%) this morning are down -1.75 points (-0.11%) ahead of the monthly U.S. payrolls report. The S&P 500 index on Thursday posted a 1-month low but recovered and closed higher. U.S. stocks fell early on European stock market weakness after ECB President Draghi dashed hopes of further ECB stimulus when he said that additional policy measures, including negative deposit rates, are being kept “on the shelf.” Stocks recovered, however, on speculation that Friday’s U.S. May non-farm payrolls will be weak enough to cause the Fed to defer QE3 tapering. Closes: S&P 500 +0.85%, Dow Jones +0.53%, Nasdaq 100 +0.45%.
September 10-year T-notes (ZNU13 +0.13%) this morning are up +4.5 ticks. Sep 10-year T-note futures prices on Thursday closed higher. T-note prices saw some early strength on safe-haven demand with the sell-off in the S&P 500 to a 1-month low and on expectations for a weak payroll report on Friday, but T-note prices fell back from their best levels when stocks recovered and closed higher. Closes: TYU3 +7.5, FVU3 +2.50.

The dollar index (DXY00 -0.26%) this morning is down -0.188 (-0.23%). EUR/USD (^EURUSD) is up +0.0007 (+0.05%) and USD/JPY (^USDJPY) is down -1.58 (-1.63%) at a 2-month low. The dollar index on Thursday plunged to a 3-1/2 month low and EUR/USD surged to a 3-1/2 month high after ECB President Draghi said the Eurozone economy should recover this year and that additional policy measures, including negative deposit rates, are being kept “on the shelf.” Stop-loss selling took USD/JPY to a 1-1/2 month low. Closes: Dollar index -1.012 (-1.23%), EUR/USD +0.01529 (+1.17%), USD/JPY -2.09 (-2.10%).
July WTI crude oil (CLN13 +0.46%) this morning is up +54 cents a barrel (+0.57%) and July gasoline (RBN13 +0.33%) is up +0.0076 (+0.27%). July crude oil and gasoline Thursday closed higher with July crude at a 1-week high after the dollar index tumbled to a 3-1/2 month low and after ECB President Draghi said he expects Eurozone economic growth to stabilize. Gasoline prices found support from Wednesday’s EIA data that showed weekly gasoline supplies fell -366,000 barrels to a 6-week low of 218.8 million bbl in PADD 1, which includes New York harbor, the delivery point for the Nymex gasoline contract. Closes: CLN3 +1.02 (+1.09%), RBN3 +0.0279 (+0.99%).

OVERNIGHT MARKETS AND NEWS, Saturday, June 8th, 2013

June E-mini S&Ps (ESM13 -0.06%) this morning are down -0.11% and European stocks are lower by -0.27% as global markets await this morning's U.S. May payrolls report. Asian stocks closed lower: Japan -0.21%, Hong Kong -1.21%, China -1.73%, Taiwan -0.01%, Australia -0.91%, Singapore -0.28%, South Korea -2.07%, India -0.46%. European stocks failed to garner much support from an unexpected increase in German Apr industrial output or from a larger-than-expected increase in German Apr exports. Commodity prices are mostly higher. July WTI crude oil (CLN13 +0.46%) is up +0.57%, July gasoline (RBN13 +0.33%) is up +0.27%, July natural gas (NGN13 +0.42%) is up +0.26%, Aug gold (GCQ13 -0.42%) is down -0.32% and July copper (HGN13 -0.14%) is up +0.06%. Agriculture prices are higher. The dollar index (DXY00 -0.26%) is down -0.23%. EUR/USD (^EURUSD) is up +0.05%. USD/JPY (^USDJPY) is down -1.63% at a 2-month low as the yen surged after Japanese Finance Minister Taro said he had no immediate intention to weaken the currency. September 10-year T-note futures prices (ZNU13 +0.13%) are up +4.5 ticks.
USD/JPY tumbled to a 2-month low as the yen strengthened after Japanese Finance Minister Taro Aso said "We are carefully watching but we don't have any immediate intention of taking any action, such as intervention," to weaken the yen.
ECB Council member Nowotny hinted the ECB may refrain from pursuing additional stimulus measures should the Eurozone economy recover this year when he said "If there's an economic improvement in the second half, we'll have to see whether additional tools become necessary."
German Apr industrial production unexpectedly rose +1.8% m/m, the most in 13-months and better than expectations of unchanged m/m, while Apr industrial output climbed +1.0% y/y, better than expectations of a -0.7% y/y decline.
The German Apr trade balance was 18.1 billion euros, wider than expectations of 17.0 billion euros. Apr exports rose +1.9% m/m, stronger than expectations of +0.1% m/m and Apr imports climbed +2.3% m/m, stronger than expectations of +0.5% m/m.
The Japan Apr coincident index CI rose to 94.8 from 93.8 in Mar, slightly weaker than expectations of 94.9, while the Apr leading index CI jumped to a 5-1/2 year high of 99.3 from a revised 98.0 in Mar, stronger than expectations of 98.8.

Monthly Market Outlook for June 2013

News from around the globe
Economic indicators in key developed economies surprised positively.
News out of US indicated improvements in the housing sector and employment conditions.
In Europe, the central bank reassured that lose monetary policy will continue as long as necessary. Growth is still proving to be elusive for the Euro zone economy largely on account of the Budget austerity measures.

Key highlights of the Indian economy

The central bank (RBI) cut the benchmark Repo rate by 25 bps to 7.25%. The Cash Reserve Ratio (CRR) was left unchanged at 4.00%.(Source: CSO)
Domestic growth remained disappointing. Annual Gross Domestic Product (GDP) growth for FY2013 was at a 10-year low of 5% in FY2013 vs. 6.2% in FY2012.
WPI (Wholesale Price Index) inflation decelerates below 5% in April. The deceleration in headline inflation was mainly due to a high base effect, deceleration in food prices and lower global commodity prices. (Source: CEIC)
Exports rose 1.6% from a year earlier to US$24.16 billion, up for the fourth straight month while imports rose 10.9% to US$41.95 billion. This resulted in a trade deficit of $17.8 billion in April’13, up 72% from that of March’13. (Data Source: CGA, Budget Document, Morgan Stanley Research)
Indian Rupee INR depreciated a significant 5% over the month. India’s foreign currency reserve reduced marginally to US$261 bn over the month. (Data Source: Reuters)
Foreign Institutional Investors (FIIs) were buyers and Domestic Institutional Investors (DIIs) sellers over the month. (Data Source: JP Morgan Research)
Domestic equity benchmarks - CNX Nifty and S&P BSE Sensex – gained 0.94% and 1.31% respectively in May tracking positive global and domestic cues.

Triggers.

Markets will likely be impacted by two important events over the next one year period.

The first one, national elections in India, is a local event.
The second one, how FED in US handles the interest rates and quantitative easing, may have global consequences.
A good monsoon season will also be beneficial.
Three consecutive months having average trade deficit of US 10-14 bn per month can also be a trigger to watch out for.

Outlook.

From a long term perspective of investing in equities, the only parameter that is missing today in India is a pick- up in growth. Remaining three parameters (Fiscal Deficit, CAD and Inflation) are appearing to be on the right path. Growth is expected to eventually pick up. How soon it does is not clear at this point in time. Maybe this year or the following one, but it is expected to pick-up.
While the level on Sensex may appear to be high, metrics are very different than those seen in 2007. On the valuation front, the market aggregates in our view do not reflect anything. The dichotomy of divergence in valuation of stocks remains.
Recommendation.
On account of political uncertainty and pre-election period the equity markets may remain volatile. We continue with our neutral stance on equities. From an asset allocation perspective, retail investors remain under-invested in equities. In our view, we are in a situation where people should still consider investing in equities.   

GOLD TARGET: 1290, Saturday,June 8th, 2013

A Labour Department report showed payrolls rose 175,000 last month after a revised 149,000 increase in April, and the jobless rate climbed from a four-year low.

Equities: The JUN13 ermine SP 500 has rocketed back up from below 1600 to 1637.25, up 15 points from yesterday’s close. Our two key levels continue to be 1630 and 1653. Now the market is above 1630, and could approach 1653. We believe the market may have established a short term range of 1597 and 1685. Buyers did indeed come out very strong when the market dipped to levels below 1600, showing us that the sentiment regarding equities is still very bullish. We believe if this market dips below 1620, it will be short-lived.

Bonds: The bond market and Eurodollar futures are down today, with the JUN US10yr note trading down 15.5 points, and the MAR16 Eurodollar futures trading down 6.5 points. We repeat our key target for the MAR16 Eurodollar futures is at 9842. With a strong jobs number, we believe this target will be approached soon.

Currencies: The currencies had a wild day yesterday, with the major non-US currencies rallying hard against the US dollar. Today it is a different story, with the Aussie down 1.45% and the Euro down .31%.  The Yen has been extraordinarily volatile as of late, dropping almost 200 ticks from yesterday’s high. The Yen could fall farther, possibly to a key support level right below 101.

Commodities: Crude oil continues its consistent strength in today’s session, trading up $.91 to $95.68. Key grain markets, such as corn, wheat, and soybeans, are all down slightly. We focus on Gold. We believe gold will approach 2013 lows, and possibly break below $1300. Our key targets are first $1340, and then $1290. Gold is down $32 today to $1383.

Stocks jump after US jobs report beats forecasts, Saturday,June 8th, 2013

NEW YORK— Steady growth in hiring last month sent the stock market sharply higher Friday.
The 175,000 jobs added by U.S. employers last month was just what investors wanted. The number suggested that the economy is growing, but not so strongly that the Federal Reserve will pull back from its economic stimulus soon.
"This was, in our view, very much a 'Goldilocks' number," said Phil Orlando, chief equity strategist at Federated Investors. "There is zero chance that the Federal Reserve is going to start tapering monetary policy," at its next two-day policy meeting starting June 18
The central bank is buying $85 billion of bonds every month to keep interest rates low and encourage borrowing, spending and investing in riskier assets like stocks.
Stocks rose strongly Friday morning, then eased slightly in the early afternoon. The gains accelerated in the final hour of trading.
The Dow Jones Industrial average had its best day in five months. It rose 207 points, or 1.4 percent, to close at 15,248.12. That gain was surpassed this year only by its 2.4 percent rise Jan. 2.
Boeing led the index higher with a gain of $2.73, or 2.7 percent, to $102.49. Industrial conglomerate 3M gained $2.44, or 2.2 percent, to $111.11. Twenty-six of the 30 stocks in the Dow rose.
The Standard & Poor's 500 index rose 20.82 points, or 1.3 percent, to 1,643.38. The Nasdaq composite rose 45.16 points, or 1.3 percent, to 3,469.22.
Nine of the 10 industry groups in the S&P 500 index rose, led by consumer discretionary stocks, which stand to benefit more than other sectors if the economy picks up. Industrial companies and banks also posted strong gains.
The only S&P 500 industry group that fell was telecommunications, a so-called defensive sector that investors favor when they are seeking safety and high dividends.
Financial markets have turned volatile over the past two weeks as traders parse comments from Fed officials for hints about when the central bank will cut back on its support. When it happens, the wind-down will help nudge interest rates higher.
For investors who expect the Fed to stay the course, "these types of slow economic growth reports speak to that," said Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management. "It keeps interest rates at record lows and it keeps the equity markets humming."
The S&P 500 index is down 1.6 percent since reaching a record high on May 21. The next day, Fed Chairman Ben Bernanke said the Fed could ease up on its economic stimulus program in one of its next few meetings.
In government bond trading, the yield on the 10-year Treasury note rose to 2.18 percent from 2.08 percent late Thursday as investors moved out of safer assets.
The Labor Department's monthly survey of employment is one of the most important gauges of the U.S. economy and receives close scrutiny from investors. It can frequently cause big moves in financial markets, especially if the report shows that employment is stronger or weaker than economists were expecting.
On May 3, the government reported not only a strong pickup in hiring in April but it also revised sharply upward its estimates for job growth in February and March. That sent the Dow Jones industrial average past 15,000 for the first time, while the S&P 500 index broke through 1,600.
In the weeks following that report, bond yields rose from 1.63 percent as high as 2.20 percent May 31. That meant investors thought the economy was strengthening, dampening the appeal of low-risk assets like bonds. It also meant investors believed the Fed would act sooner than previously thought to curtail its bond-buying program.
Investors are still keeping an eye on interest rates because of the impact that they have on the economy. For example, higher borrowing costs will push up mortgage rates and curb demand for housing. The recovery in the housing market has also boosted stock prices this year.
"Interest rates have really gone up in quite dramatically from a month ago," said Paul Hogan, the manager of the FAM Equity-Income Fund. "If they continue to rise, the market will be a little more bit choppy."
The improving economy has also helped support the dollar this year. The U.S. currency rose against the euro and the yen Friday.
The price of gold fell $32.80, or 2.3 percent, to $1,383 an ounce. Gold has fallen sharply this year as a rising stock market and a strengthening dollar have diminished its appeal as an alternative investment.
In other commodities trading, the price of oil rose $1.27, or 1.3 percent, to $96.03 a barrel.
Among other stocks making big moves:
— Gap rose $1.11, or 2.7 percent, to $42.09. The San Francisco-based clothing store chain reported late Thursday that its sales jumped 7 percent in May, more than expected, helped by strong results at its namesake Gap and Old Navy stores.
— TiVo plunged $2.61, or 19 percent, to $11.10 after the company settled patent disputes with several technology companies including Cisco and Motorola Mobility but received far less than what most investors inspected. TiVo has posted annual losses in nearly all of the past 10 years.
— Thor Industries rose $4.92, or 11.9 percent, to $46.16 after the company reported a 6 percent increase in income. The results beat market expectations on stronger sales of RVs and a lower tax rate.

MARKET COMMENTS, Friday, June 7th, 2013

June E-mini S&Ps (ESM13 -0.06%) this morning are down -1.75 points (-0.11%) ahead of the monthly U.S. payrolls report. The S&P 500 index on Thursday posted a 1-month low but recovered and closed higher. U.S. stocks fell early on European stock market weakness after ECB President Draghi dashed hopes of further ECB stimulus when he said that additional policy measures, including negative deposit rates, are being kept “on the shelf.” Stocks recovered, however, on speculation that Friday’s U.S. May non-farm payrolls will be weak enough to cause the Fed to defer QE3 tapering. Closes: S&P 500 +0.85%, Dow Jones +0.53%, Nasdaq 100 +0.45%.
September 10-year T-notes (ZNU13 +0.13%) this morning are up +4.5 ticks. Sep 10-year T-note futures prices on Thursday closed higher. T-note prices saw some early strength on safe-haven demand with the sell-off in the S&P 500 to a 1-month low and on expectations for a weak payroll report on Friday, but T-note prices fell back from their best levels when stocks recovered and closed higher. Closes: TYU3 +7.5, FVU3 +2.50.

The dollar index (DXY00 -0.26%) this morning is down -0.188 (-0.23%). EUR/USD (^EURUSD) is up +0.0007 (+0.05%) and USD/JPY (^USDJPY) is down -1.58 (-1.63%) at a 2-month low. The dollar index on Thursday plunged to a 3-1/2 month low and EUR/USD surged to a 3-1/2 month high after ECB President Draghi said the Eurozone economy should recover this year and that additional policy measures, including negative deposit rates, are being kept “on the shelf.” Stop-loss selling took USD/JPY to a 1-1/2 month low. Closes: Dollar index -1.012 (-1.23%), EUR/USD +0.01529 (+1.17%), USD/JPY -2.09 (-2.10%).
July WTI crude oil (CLN13 +0.46%) this morning is up +54 cents a barrel (+0.57%) and July gasoline (RBN13 +0.33%) is up +0.0076 (+0.27%). July crude oil and gasoline Thursday closed higher with July crude at a 1-week high after the dollar index tumbled to a 3-1/2 month low and after ECB President Draghi said he expects Eurozone economic growth to stabilize. Gasoline prices found support from Wednesday’s EIA data that showed weekly gasoline supplies fell -366,000 barrels to a 6-week low of 218.8 million bbl in PADD 1, which includes New York harbor, the delivery point for the Nymex gasoline contract. Closes: CLN3 +1.02 (+1.09%), RBN3 +0.0279 (+0.99%).

OVERNIGHT U.S. STOCK MOVERS, Friday, June 7th, 2013

Oppenheimer keeps an "Outperform" rating on Microsoft (MSFT +0.52%) and raises its price target on the stock to $39 from $34.
Iron Mountain (IRM +0.91%) was downgraded to "Hold" from "Buy" at Stifel.
JPMorgan (JPM +0.89%) was downgraded to "Neutral" from "Outperform" at Macquarie.
Abercrombie & Fitch (ANF +0.59%) was upgraded to "Buy" from "Neutral" at BofA/Merrill.
Dun & Bradstreet (DNB +1.48%) was upgraded to "Neutral" from "Underweight" at JPMorgan.
Standard & Poor's Ratings Services said it revised the outlook on its long-term ratings on Brazil to negative from stable.
The U.S. Department of Justice has settled two lawsuits against PG&E (PCG +2.27%) and its contractors who will pay $50.5 million for wildfires that scorched 18,000 acres of national forest.
Take-Two (TTWO +0.63%) initiated with a Buy at Stifel with a price target of $21.
Thor Industries (THO +0.32%) reported Q3 EPS of 97 cents, stronger than consensus of 88 cents.
Quiksilver (ZQK +4.50%) reported an unexpected Q2 EPS loss of -12 cents, much weaker than consensus of a 4 cent gain.
Myriad Genetics (MYGN +1.94%) initiated with a "Buy" at Cantor with a price target of $40.
Cooper Companies (COO +1.92%) reported Q2 EPS ex-items of $1.50, stronger than consensus of $1.38, and raised guidance on fiscal 2013 EPS to $6.15-$6.25 from $5.95-$6.10, stronger than consensus of $6.05.
Vail Resorts (MTN -1.29%) reported Q3 EPS of $2.66, weaker than consensus of $2.74.
Gap (GPS +1.81%) climbed over 3% in after-hours traading after it reported May sales of $1.22 billion and that May Same-Store-Sales rose 7%, much better than consensus of a +3.7% increase.

U.S. STOCK PREVIEW, Friday, June 7th, 2013

The market consensus for today’s May payroll report is for an increase of +168,000, which would be very close to the April report of +165,000. Today’s May unemployment rate is expected to be unchanged from April’s 4-1/3 year low of 7.5%. There are no earnings reports today from any of the Russell 1000 companies. Conferences today include: Argus North American Crude Transportation Summit: New Pathways to the Market on Thu-Fri, Fortune Global Forum 2013 on Thu-Fri, Sandler O'Neill & Partners Global Exchange and Brokerage Conference on Thu-Fri.

OVERNIGHT MARKETS AND NEWS, Friday, June 7th, 2013

June E-mini S&Ps (ESM13 -0.06%) this morning are down -0.11% and European stocks are lower by -0.27% as global markets await this morning's U.S. May payrolls report. Asian stocks closed lower: Japan -0.21%, Hong Kong -1.21%, China -1.73%, Taiwan -0.01%, Australia -0.91%, Singapore -0.28%, South Korea -2.07%, India -0.46%. European stocks failed to garner much support from an unexpected increase in German Apr industrial output or from a larger-than-expected increase in German Apr exports. Commodity prices are mostly higher. July WTI crude oil (CLN13 +0.46%) is up +0.57%, July gasoline (RBN13 +0.33%) is up +0.27%, July natural gas (NGN13 +0.42%) is up +0.26%, Aug gold (GCQ13 -0.42%) is down -0.32% and July copper (HGN13 -0.14%) is up +0.06%. Agriculture prices are higher. The dollar index (DXY00 -0.26%) is down -0.23%. EUR/USD (^EURUSD) is up +0.05%. USD/JPY (^USDJPY) is down -1.63% at a 2-month low as the yen surged after Japanese Finance Minister Taro said he had no immediate intention to weaken the currency. September 10-year T-note futures prices (ZNU13 +0.13%) are up +4.5 ticks.
USD/JPY tumbled to a 2-month low as the yen strengthened after Japanese Finance Minister Taro Aso said "We are carefully watching but we don't have any immediate intention of taking any action, such as intervention," to weaken the yen.
ECB Council member Nowotny hinted the ECB may refrain from pursuing additional stimulus measures should the Eurozone economy recover this year when he said "If there's an economic improvement in the second half, we'll have to see whether additional tools become necessary."
German Apr industrial production unexpectedly rose +1.8% m/m, the most in 13-months and better than expectations of unchanged m/m, while Apr industrial output climbed +1.0% y/y, better than expectations of a -0.7% y/y decline.
The German Apr trade balance was 18.1 billion euros, wider than expectations of 17.0 billion euros. Apr exports rose +1.9% m/m, stronger than expectations of +0.1% m/m and Apr imports climbed +2.3% m/m, stronger than expectations of +0.5% m/m.
The Japan Apr coincident index CI rose to 94.8 from 93.8 in Mar, slightly weaker than expectations of 94.9, while the Apr leading index CI jumped to a 5-1/2 year high of 99.3 from a revised 98.0 in Mar, stronger than expectations of 98.8.

Nifty June Futures - Important Levels for Friday, 7.06.2013.

TREND DECIDING LEVELS :   Today, the Important Trend Deciding Levels on  Lower side is    5925-5910.  Below this, next important level is  5985-5870.   (This levels, Either Acts as a support while Nifty is moving in downward direction orActs as a down side Break out/Break down Trigger level which fuels further downward movement from here).

Today,  the Important Trend Deciding Levels on  Higher Side is 5945-5965.  Above this, next important level is  5985-6010.   (This levels,  Either Acts as a hurdle while Nifty is moving in upward direction or Acts as a Upside Break out Trigger level which fuels further upward movement from here).
Stock Tips For  Friday,  7.06.2013.
Reliance :    :   Sell This Stock Near  794-797.  Stop Loss  800.  Targets  792, 789, 786, 782, 778.    (Break-Out Levels:  Buy Above 800 and Above 805.   Sell Below 792 and Below 789.

News: Date:07th June, 2013

The Reserve Bank of India extended restrictions on loans against security of gold coins per customer to all co-operative banks on Friday in its continuing efforts to temper demand for the yellow metal.
In a notification to all state and central co-operative banks, the RBI said loans against the security of gold coin would be up to 50 grams per customer.
In May the RBI imposed restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs and mutual funds.

Flows in Equity Market Date:07th June, 2013

Amidst high volatility, Benchmark Indices fell ~2% from the day’s high to close in the red. Post this weeks’ fall, the Nifty has given away all the gains from last month, going back to a 6 week low. Currently hovering at the crucial 50/100 DMA (Daily Moving Averages) levels. The INR close at 57 for the first time. Tech stocks led by TCS were the only saviours on a day where all other sectors were sold off. The volumes were muted, in-line with this week’s totals.

Money Market Today :
Today, Call & CBLO rates were in range of 7.70% to 7.20% and 8.00% to 7.20% respectively.
Yield on 10 year benchmark G-Sec 7.16% GS 2023 were in the range of 7.40% and 7.44%.
Money Market Outlook :
The liquidity situation remained tight.

The interview of Mr. Deepak Chatterjee, MD & CEO, SBI Mutual Fund..

The interview, “SBI MF edges back from the brink”, showcases the fund house’s good performance in its equity & debt schemes and growth of 31.75% in AUM while the industry assets grew only 16.6% for the period 2010-11 to 2012-13. The story also mentions the fund house taking the inorganic route to growth… “it has acquired the India business of Japan’s Daiwa Mutual Fund”.

Weekly Changes

Following are the changes in the period from 31^st May to 7^th June, 2013

PFA the coverage of SBI Blue chip Fund that appeared in The Economic Times, a leading business daily

SBI Blue Chip fund has emerged as one of the top performing schemes in large and mid cap category of equity funds. The analysis lists the top holdings and top 5 sectors of the fund. The fund has delivered a 5 year return of 6.56% CAGR compared with a category average of 5.91%.

Investment Strategy 2013

2013 has started on a challenging note for retail investors with huge volatility across asset classes and confusing signals on direction of asset classes.

 The best performing asset class CY 2013 YTD, have been Debt Funds- both Gilt and Income Funds. Debt Funds have rallied this calendar year, with the new 10 year G-Sec hitting a 3 ½ year low. The debt funds performance were positively impacted by 75 bps rate cuts from RBI this calendar year and the sharp fall in WPI Inflation, (which is at a 41 month low). We remain positive on debt markets, as we feel RBI may take further monetary actions for reviving growth.

 Indian Equities have traded in a range throughout this calendar year, but with heighted volatility. The Sensex did hit a 30 month high in May, only to retreat back to flat returns YTD, on concerns of depreciating Rupee. The Rupee has fallen to an eleven month low against the dollar. FII flows have been very strong this calendar year; however they have been negated by strong outflows from DIIs. We see Sentiments, Fundamentals and Liquidity to be much better in 2013 compared to last year, which can propel the Indian Equity Markets. We feel investors with 3-5 years’ time horizon are likely to be richly rewarded.

 2013 has started on a difficult note for commodities substantially under performing most other asset classes. Commodities in general remain the asset class most linked to global growth momentum, with the under performance a direct result of the disappointing growth number across countries this year. Among precious metals, Gold had seen a 17% correction YTD and if the trend continues we shall witness the first year of negative returns from Gold, in more than a decade. We remain more positive on equities compared to gold.

 We have a positive view for China equity markets in 2013 from macro, earnings growth, liquidity and valuation perspectives. The market looks attractive, considering the undemanding valuations it is trading at. We feel markets at these valuations are discounting all the negative news and investors with 3-5 years time horizon is likely to be rewarded.

 Through this newsletter we share our outlook on the economy followed by equity, debt and international asset classes. Click on the respective tabs for more details.

Stocks on the Move,June 6th, 2013

Retail same-store sales bounced back from in May as warmer weather and discounts drove traffic.  Costco (COST)  continued its winning streak with a 5% increase in same-store sales while  L Brands (LTD) saw a better-than-expected 4% rise in same-store sales at Victoria’s Secret. The data is incomplete, as many large retailers have discontinued the practice of releases monthly sales data.  Shares of  Visa (V) were up less than 1% after the firm reiterated its current-year forecast of 20% earnings per share growth. The firm expects growth to slow down next year. Visa also reported that payment volumes grew 12% in both April and May in the United States.

Foreign Markets,June 6th, 2013

European shares fell sharply in late trading after Draghi’s press conference. In late trading, the Paris CAC was down 1.0% whole the FTSE 100 and Germany’s DAX were each down 1.2%. Asian markets were also lower on the day. The Nikkei 225, Hang Seng and Shanghai Composite were down 0.9%, 1.0% and 1.3% respectively. 

U.S. Market ,June 6th, 2013

Stocks were mostly lower this morning in choppy trade after economic data and comments from ECB head Mario Draghi. Initial unemployment claims fell 11,000 to 346,000 last week. Economist had expected claims to fall to 345,000. The less volatile four-week moving average rose by 4,500 to 352,000 in the week. Separately, Challenger, Gray & Christmas said that planned job cuts fell 4.5% in May from April levels, the third-straight monthly decline. The jobs data comes ahead of Friday’s closely watched payroll report. As expected, the European Central Bank left its key interest rate unchanged today. The bank also downgraded its eurozone GDP forecast for 2013 to -0.6% from -0.5% in March. ECB head Draghi said in a press conference that the bank had discussed the possibility of negative interest rates on bank deposits and that the bank stands “ready to act” if need be. At midday the S&P 500, Nasdaq and Dow were down 0.1%, 0.2% and 0.3% respectively.

Retailers report modest gains for May,06th June, 2013

NEW YORK (AP) — In the latest sign that Americans are feeling better about the overall economy, stores across the country had a pickup in sales in May.
An improving job picture, better housing market and stock market rallies have all led to consumer confidence reaching five-year highs. That has left Americans a bit more likely to reach into their pockets and spend, as monthly revenue reports released by national retailers on Thursday show.
Revenue at stores open at least a year — an industry measure of a store's health — rose 3.2 percent in May compared with the same month a year ago, according to a preliminary tally of 12 retailers by the International Council of Shopping Centers.
The increase continues a gradual sales uptick that began in early spring. The measure rose 3 percent in April.
"It's good, not great," said Michael Niemira, chief economist at the ICSC. "Some underlying improvement in the U.S. economy along with an improving 'wealth effect' from rising stock and home prices is helping to lift the sales pace,"
He expects the gradual increase to continue, predicting revenue to rise 3 to 3.5 percent in June.
While big chains such as Wal-Mart Stores Inc., Target Corp and Macy's Inc. don't report monthly revenue, the stores that do offer economists a snapshot of consumer spending habits. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in U.S. retail industry sales.
Accenture managing director Chris Donnelley said the monthly numbers, combined with previous months', are encouraging as weather became more predictable and shoppers acted on pent-up demand for spring and summer clothing.
"Overall, it's a positive sales trend," he said. The numbers were surprisingly consistent across all sectors, he said, including discount stores, specialty apparels and teen stores.
"Everybody seems to produce good numbers, but nobody had a breakthrough for May," he said.
Among the best performers were Costco Wholesale Corp., which reported revenue in stores open at least one year rose 5 percent, though that fell slightly short of analyst expectations of a 5.5 percent rise. The measure rose 6 percent excluding changes in gas prices and the stronger dollar.
Discount department store operator SteinMart had surprisingly strong results, with the measure up 8.2 percent, far above the 2 percent that was expected. Ladies' casual and career sportswear were also among its best categories for the month.
L Brands Inc., which operates Victoria's Secret and Bath and BodyWorks and was formerly known as Limited Brands, said the figure rose 3 percent, slightly below analyst expectations of a 3.2 percent increase.
In the teen sector, the Buckle Inc.'s revenue at stores open at least a year climbed 4.1 percent in May, as teens snapped up spring and summer clothing. Results topped analyst expectations of a 3.3 percent rise.
The reports came as the Labor Department said Thursday that the number of Americans seeking unemployment benefits fell 11,000 last week to a seasonally adjusted 346,000, a level consistent with steady job growth. Meanwhile, the stock market has been on a rally, rising every month this year and climbing to record levels this spring, although there has been some pullback in June. And housing prices rose 11 percent in March, the sharpest 12-month increase in 7 years.
But despite the positive news about the economy, analysts expect modest but steady gradual growth rather than any significant spending uptick that may have been seen a decade ago.
"We're not seeing higher gains like we saw in the mid-2000s when the real estate market was on the rise," said Ken Perkins, president of research firm Retail Metrics LLC. "So many consumers still have homes underwater and are still playing catch up."

7 Articles ETF Investors Must Read,06th June, 2013

U.S. markets got off to a relatively good start this month, with equities rallying into positive territory during the final minutes of Monday’s trading session. A slew of underwhelming economic reports, however, quickly put the brakes on bullish momentum. The Institute for Supply Managements index of manufacturing activity unexpectedly contracted in May, marking its first decline in six months, while Wednesday’s ADP private sector jobs report grossly missed analysts’ expectations. Investors will be continuing to weigh these disappointing U.S. reports against the likelihood of the Fed scaling back its massive bond-buying program in the near future.
Below, we highlight seven insightful articles circulating around the financial space this week:

1. The slide in U.S. Treasury Bond prices may be signaling a future move by the Fed 
2. Common trading mistakes you may be making, and tips on how to avoid them.
3. Fed’s “stimulus” policies are actually exacerbating the credit crunch, particularly for smaller firms.
4. Considering the Chinese Government’s grip on the Renminbi, consumer equities may be the best bet.
5. U.S. stock correlations to Japanese, emerging markets and Europe equities are on the decline.
6. Will the Fed’s pullback be a repeat of the 1994 scenario?
7. The dark side of one of the most popular strategies: low-volatility investing 

Daily Financial Forecast,06th June, 2013

STOCK INDEX FUTURES
Futures temporarily firmed after the Challenger Grey job cuts report for May showed a 41.2% decline, which compares to the 6% drop in April
Jobless claims in the week ended June 1 declined 11,000 to 346,000, which compares to the estimate of 345,000.
Futures have recently been undermined by the growing belief that the Federal Reserve will reduce the pace of their asset purchases sooner than previously expected.
On the way up for futures, regardless of the economic news, the Fed's accommodation was virtually assured. The bad news was the bullish news because it suggested the Fed would need to continue with their quantitative easing and the good news was bullish because it showed the Fed's quantitative easing was working.
Now the opposite appears to be true. The bad news is the bad news because it shows the accommodation may not be working well enough and the good news is the bad news because it suggests the accommodation has done its job and can be scaled back.
Our analysis suggests the Federal Reserve will scale back their quantitative easing program earlier than the consensus view.
CURRENCY FUTURES
The European Central Bank and the Bank of England held their regularly scheduled policy meetings today. Policies at both central banks were left unchanged with both central banks keeping their benchmark interest rate unchanged at 50 basis points.
April German factory orders declined 2.3% from March, which compares to the estimate of a 1% drop.
Unemployment in France hit 10.8% in the first quarter of 2013, which is a 14 year high.
The Greek jobless rate increased in March to near a record high of 26.8%.
The Australian dollar is lower and is at a 20 month low.
Interest rate differential expectations remain bearish for the Japanese yen and the Australian dollar.
The main trend for the Japanese yen and the Australian dollar is lower, with the Australian dollar likely to be the weaker of the two.
INTEREST RATE MARKET FUTURES
Over the past few days, weakness in equity prices caused flight to quality buying to come into Treasury futures. This has, at least for now, offset the bearish influence of the likely Federal Reserve scale back of their quantitative easing program.
At 11:00 central time Federal Reserve of Philadelphia Bank President Plosser will speak on the economy.
The next Federal Open Market Committee meeting will be held on June 18-19.
Stand aside for now in the credit futures market because of the opposing crosscurrents. 

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options market. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.

Stocks Around the Globe Continue to Dive Today,06th June, 2013

USD

We have seen a lot of bullishness for the greenback in previous trading days. However, the U.S. dollar is in low demand at the moment. This is as there is a lot of positive sentiment in the forex market. What we have seen a lot of as of late in the forex market acts very different from the commodities or even the stock market. The dollar has dived versus the pound and a number of other currencies today.

EUR

The euro was much stronger a few hours ago, but the EUR is still upholding its value to a certain extent. The most impressive gains have been made versus the dollar in the latest round of trading. However, it is important to note that the dollar is so weak anyway. Traders feel that the euro could build on its current gains later.

JPY

The yen has been weaker since the commencement of today’s trading session. There was also a lot of ground versus the Swiss franc and the U.S. dollar. However, there are signs starting to show the U.S. currency make a comeback. Therefore, traders will really need to stay ahead of economic events while they are trading the yen is in the next few hours of trading.
STOCKS:

U.S. stocks took a big beating for the second trading day in a row. U.S. data just has not been good enough. Therefore, financial traders have taken the opportunity to go short on some of the most popular U.S. stocks. However, the news has not been exclusive to U.S. stocks. For example, European stocks have also been affected by the release of much weak economic data as of late.
The Dow Jones slumped during Wednesday’s trading session. Investors were not in the mood to take risks when it came to indexes on Wall Street, as there are just too many risks at the moment. The same is true for equities.
There will be unemployment data from the U.S. later, so make sure you follow this while trading the Dow Jones.

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COMMODITIES:

Crude Oil

Traders have sold the crude oil binary option in the past few hours of trading, as they just do not have the appetite when it comes to energies. This is in spite of the commodity make impressive gains yesterday. In addition, the fact is that prices are lightly overvalued, so investors have this in mind. As a result, you will need to be cautious while trading the crude oil binary option throughout today’s session. Crude may only make a comeback if the U.S. manages to publish positive economic figures.

Market Volatility in US and Asia, Key BOE and ECB Meetings Later,06th June, 2013

Market volatility in US

Now read what forces move the price of gold?
Now read uncertainty continues to cloud equity markets
The ADP private payroll survey data showed that private employers added 135,000 new jobs over the month of April. Expectations had been a rise of 167,000 jobs. May’s added jobs numbers will be out on Friday.
Also the ISM (Institute for Supply Management) releases their figures for May services index showing that their reading had risen to 53.7 from 53.1 in the previous month. While this is a positive gain and beyond the crucial 50 mark it still came below estimates of 54.

Stocks

Asian stocks did not react well to all the disappointing data or to the weak comments of PM Shinzo Abe in Japan, as many of the indices were close to 4 month lows. The Nikkei 225 reached 0.82 per cent lower while the Hang Seng in Hong Kong lost 0.87 per cent and the Shanghai Composite was down 0.11 per cent.
In Europe the stocks inched up ahead of the ECB and BOE’s statements due out later today. In today’s European early session the EURO STOXX 50 was up 0.12 per cent, the French CAC 40 gained 0.17 per cent and the FTSE 100 was up 0.02 per cent.
In the US, the stocks closed predictably lower with the DJIA down 1.43 per cent, the S&P 500 down 1.38 per cent and the NASDA down 1.27 per cent.

Forex

The US rallied from its losing position against the other currencies following the release of the data and was trading mostly up during Asian overnight session. The AUD dropped drastically to almost 20  month lows against the dollar, shedding 0.91 per cent. This came on the released of the Australian trade balance which fell to AUD 300 million in May from AUD310 million in the previous month. Investors had predicted a drop to AUD220 million.
The dollar made gains against the YEN but dropped 0.7 per cent against the EUR.

Commodities

Crude oil was the only commodity to move higher and rose by 0.34 per cent on the data releases. Gold and silver were trading lower, 0.07 per cent and 0.33 per cent respectively.

Today

Lots of data releases today including UK housing and BOE and ECB meetings then jobless numbers from the US. Today should be a volatile day for the markets , watch closely.

EURO CURRENCY EXPLODES AFTER POLICY MEETING,06th June, 2013

A Labor Department report today showed jobless claims decreased by 11,000 to 346,000 in the week ended June 1. The Chicago Board Options Exchange Volatility Index, or VIX, fell 0.7 percent today to 17.37.

Equities: The JUN13 emini SP 500 is trading at approximately unchanged levels at 1608. The daily pivot point for this market is 1615, and the key downside target in our view is 1595. Tomorrow’s US jobs report could have a big effect on this market. If there is a slightly higher than expected number, we think the market may make an initial burst higher, but then come right back down because at this point it seems that better economic numbers means sooner tapering of the stimulus.

Bonds: The bond market is very quiet today, which is somewhat normal on the day before a big monthly jobs report. We would not be surprised to see a large downmove in the bond market if the jobs # comes out much higher than expected.  We also are watching our target of 9842 downside target for the MAR16 Eurodollar interest rate futures. The JUN13 US 10yr note is trading down 2 ticks to 130.16.

Commodities: Gold is up $4 to $1402, and Crude oil is up 1.6% to $95.25. As we have been saying, crude has been seeming to be very resilient, not being able to stay below the $92 level. It is interesting to see this market act so strong, even in the face of a lot of data indicating big supply. Perhaps yesterday’s low supply # shocked the bears and we are seeing some short covering. We are also seeing Natural Gas take a dive today, down $.13 to $3.87. The price decline comes on the back of a report showing  a bigger-than-expected climb in last week’s U.S. supplies.

Currencies: The Euro currency has exploded to the upside after the closely watched ECB meeting, which indicated a potential pick up in the recovery towards the end of this year. The market took this as very Euro-positive news, combined with Latvia joining the Euro. Thus, the euro currency broke through the key 131 level and is now trading up 100 ticks to 131.87. Our key pivot level for this market is 131.15. We are also watching the Aussie dollar retrace all of last night’s losses and climb back to unchanged levels from yesterday’s close. Even though we believe the Aussie is in a down trend, we could see more short covering today and tomorrow.