Markets and Macro We’ll talk about What the “Macro” picture means Impact on markets Specifics that apply to India Questions: Raise your hand
Quiz Why was the Nifty locked in Upper Circuit, and closed over 20% up, on May 18, 2009?
Quiz #2 Why did the Nifty open at lower circuit and then recover intraday on Oct 17, 2007?
Quiz #3 Why did the market crash to lower circuit in May 2004?
Quiz #4 21 years ago, Within 2 minutes of hearing the word “Regrettably”, US stock markets fell, Bond yields rose, and oil went up $3 per barrel. Why?
What? Elections War RBI regulationsNews about macroeconomics, geopolitical issues, market infrastructure impact markets, sometimes dramatically.
Macro: Not Directly Related News that isn’t related to a stock or sector Political Economic Global Natural Disasters
Market Impact No Left Perception Party in govt Good thing No P- Fear Notes, FIIs Bad thing will run away War raises oil Bad thing Prediction prices (Good for oil) Euro will Stupidity dissolve Bad thing today
Indian Markets GDP Growth Data Released every quarter IMF Makes “estimates” now and then Data Revised Like Crazy Inflation WPI and CPI Every Month
Various Macro Elements PMI IIP Deficits Bank Credit Money Liquidity Growth Supply
Market Macro Market Wide Index VIX Liquidity Indicators Exports And FII Flows Imports
Delays Macro Data usually has a huge lag Data appears months after it actually happens Reactions to news is usually immediate Despite potential future revisions One time events like an Election result are exceptions
Variable Impact Macro impacts different markets differently RBI raises Dollar Banks Auto/IRS Exporters rates RateGreece Exits Exporters Global Liquidity Broad Euro to Europe Markets Issue Market
Can Be Painful Michael Burry Traded against Subprime Mortgages from 2005 Lost money for over two years! Made a packet since that Soros Held a massive trade against the British Pound Could have been wiped out by the leverage Niederhoffer was Long Term Capital was Amaranth was