2. Markets and Macro
We’ll talk about
What the “Macro” picture means
Impact on markets
Specifics that apply to India
Questions: Raise your hand
3. Quiz
Why was the Nifty locked in Upper
Circuit, and closed over 20% up, on May
18, 2009?
4. Quiz #2
Why did the Nifty open at lower circuit and
then recover intraday on Oct 17, 2007?
5. Quiz #3
Why did the market crash to lower circuit in
May 2004?
6. 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?
7. What?
Elections
War
RBI regulations
News about macroeconomics, geopolitical
issues, market infrastructure impact
markets, sometimes dramatically.
8. Macro: Not Directly Related
News that isn’t related to a stock or sector
Political
Economic
Global
Natural Disasters
9. 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
10. Indian Markets
GDP Growth
Data Released every quarter
IMF Makes “estimates” now and then
Data Revised Like Crazy
Inflation
WPI and CPI
Every Month
12. Market Macro
Market Wide
Index VIX Liquidity
Indicators
Exports And
FII Flows
Imports
13. 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
14. Variable Impact
Macro impacts different markets differently
RBI raises Dollar
Banks Auto/IRS Exporters
rates Rate
Greece Exits Exporters Global Liquidity Broad
Euro to Europe Markets Issue Market
15. 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