Golden cross ....a golden rule...

Stock markets got another bright sign here: both the Nasdaq and the S&P 500 hit a golden cross the week ending 11^th October for the first time in four years due to improvement in real economy although job condition is still gloomy but stocks touching year high due to the optimism of Federal reserve action.

A golden cross is an important technical indicator to ote the sentiments on the street when the .50-day moving average for an index crosses above the 200-day moving average.

The pattern occurs when prices over the shorter term are moving higher at a faster rate than prices over the longer-term. The Dow jone Industrial hits this benchmark on 1^st of October.It's also a bullish sign for the future, as per the charts history.

Historically, the market has performed better following these patterns than if we look at any random one, three or six-month period.Specifically, the average six-month return of the S&P 500 Index following a golden cross was 3.9 percent from 1929 through 2010, while the S&P 500's average six-month return any other time was 3.1 percent, according to Bespoke's research. The research also shows the six-month average return following the golden cross is positive 63 percent of the time.

If we look at the S&P 500 data since 1972, the S&P 500 outperformed its average for the year as well, rising 11.9 percent on average in the year after a golden cross, versus 7.9 percent on average.

For the Nasdaq the six-month results have been positive 83 percent of time following the golden cross since the index began in 1971, with the Nasdaq averaging 8.7 percent in the six months after a golden cross, versus the typical average gain of 4.2 percent as per historical behavior.

If we look at the S&P 500 data since 1972, the S&P 500 outperformed its average for the year as well, rising 11.9 percentage point on an average in the year post the golden cross, versus 7.9 percent on an average.

The reverse of the golden cross is the death cross, which got real attention in july when index were close to it .It is treated as a bearish signal for the market. Since then, the S&P 500 has risen more than 15 percent, it's not unusual for the market to go up following a death cross.

Stock markets got another bright sign here: both the Nasdaq and the S&P 500 hit a golden cross the week ending 11^th October for the first time in four years due to improvement in real economy although job condition is still gloomy but stocks touching year high due to the optimism of Federal reserve action.
A golden cross is an important technical indicator to ote the sentiments on the street when the 50-day moving average for an index crosses above the 200-day moving average.

The pattern occurs when prices over the shorter term are moving higher at a faster rate than prices over the longer-term. The Dow jone Industrial hits this benchmark on 1^st of October.It's also a bullish sign for the future, as per the charts history.

Historically, the market has performed better following these patterns than if we look at any random one, three or six-month period.Specifically, the average six-month return of the S&P 500 Index following a golden cross was 3.9 percent from 1929 through 2010, while the S&P 500's average six-month return any other time was 3.1 percent, according to Bespoke's research. The research also shows the six-month average return following the golden cross is positive 63 percent of the time.

If we look at the S&P 500 data since 1972, the S&P 500 outperformed its average for the year as well, rising 11.9 percent on average in the year after a golden cross, versus 7.9 percent on average.

For the Nasdaq the six-month results have been positive 83 percent of time following the golden cross since the index began in 1971, with the Nasdaq averaging 8.7 percent in the six months after a golden cross, versus the typical average gain of 4.2 percent as per historical behavior.

If we look at the S&P 500 data since 1972, the S&P 500 outperformed its average for the year as well, rising 11.9 percentage point on an average in the year post the golden cross, versus 7.9 percent on an average.

The reverse of the golden cross is the death cross, which got real attention in july when index were close to it .It is treated as a bearish signal for the market. Since then, the S&P 500 has risen more than 15 percent, it's not unusual for the market to go up following a death cross.

Bull Market: waiting for the moment of truth.

The recent gung-ho in the Indian stock market reached its peak when Sensex again touched the 20,000 mark. Overseas investors are showing a penchant towards Indian market and pumping money consistently they have infused a record $17.88 billion this amounts Rs 21, 58 crore so far this year so the Stock prices are fuming high and valuation is looking stretched at this point of time .This event has resulted as caution call from all the market pundits because market is looking over heated. Albeit the topic seems quiet clichéd whenever we talk of real economy VS stock market. But it is inevitable to talk about the implications and impact over and again.

Let’s discuss the two facets market vs. the economy. FIIs wave of money has pushed the market towards celebrating figures but for the past few months there has been consistent investment from their sides. Then why such a push this month? Few facts reveal that Indian mutual fund industry and FIIs has been in a betting position in opposite directions.

1. When Sensex jumped from 14,000 to 15,000, FII sold shares (net sales) worth 2372.10 crore while Indian mutual fund companies bought shares worth ` 2891 crore

2. Between 15000 and 16000, FII bought shares worth ` 7307 while Indian mutual funds bought only ` 667 crore.

3. When Sensex moved from 16000 to 18000, FII bought shares worth ` 24,372.3 crore while mutual fund companies sold (net sales) ` 2182.21 crore

4. Between 18000 and 19000, FII bought `7378.2 worth shares while mutual funds sold (net sales) ` 966.2 crore worth of shares

5. Finally, when Sensex jumped from 19000 to 20 000, FII sold (net sales) ` 1281.1 worth of shares while Indian mutual funds bought shares worth ` 1515 crore.

It’s obvious from the above data that Indian MF industry was actually expecting a correction but to their sheer surprise FIIs positive outlook towards Indian market has made them change their exposure strategies. Now they are heftily investing into market to remove the performance hurdles and encash the domestic market opportunities. Hence MF and FIIs together has soared the market .In tandem with market there is a strong appreciation of the rupee as well.

Now let’s have a look on the real economic picture of India. Earlier the current account deficit of Indian was 2% of GDP but it has rose 50 % higher i.e., 3% of GDP. Strong rupee implies good import but discourages export .which results in wider trade deficit. Larger current account deficit can be problematic when foreign investments shrinks and inflows collapse due to some reason. Not only that, foreign market crisis can trigger many other problems of foreign inflows which are always vulnerable.

Although RBI has intervened to curb the liquidity in the market through LAF and increased repo rate n reverse repo rate. It will keep a check by using such monetary policies tools.

Still this bull word creates a situation of quandary for retail investors whether to invest or play caution. Anyways traders will make hay till the sun shines. Till then all eyes waiting for the real moment of truth.

Madhulika vats

Bull Market: waiting for the moment of truth.

The recent gung-ho in the Indian stock market reached its peak when Sensex again touched the 20,000 mark. Overseas investors are showing a penchant towards Indian market and pumping money consistently they have infused a record $17.88 billion this amounts Rs 21, 58 crore so far this year so the Stock prices are fuming high and valuation is looking stretched at this point of time .This event has resulted as caution call from all the market pundits because market is looking over heated. Albeit the topic seems quiet clichéd whenever we talk of real economy VS stock market. But it is inevitable to talk about the implications and impact over and again.

Let’s discuss the two facets market vs. the economy. FIIs wave of money has pushed the market towards celebrating figures but for the past few months there has been consistent investment from their sides. Then why such a push this month? Few facts reveal that Indian mutual fund industry and FIIs has been in a betting position in opposite directions.

1. When Sensex jumped from 14,000 to 15,000, FII sold shares (net sales) worth 2372.10 crore while Indian mutual fund companies bought shares worth ` 2891 crore

2. Between 15000 and 16000, FII bought shares worth ` 7307 while Indian mutual funds bought only ` 667 crore.

3. When Sensex moved from 16000 to 18000, FII bought shares worth ` 24,372.3 crore while mutual fund companies sold (net sales) ` 2182.21 crore

4. Between 18000 and 19000, FII bought `7378.2 worth shares while mutual funds sold (net sales) ` 966.2 crore worth of shares

5. Finally, when Sensex jumped from 19000 to 20 000, FII sold (net sales) ` 1281.1 worth of shares while Indian mutual funds bought shares worth ` 1515 crore.

It’s obvious from the above data that Indian MF industry was actually expecting a correction but to their sheer surprise FIIs positive outlook towards Indian market has made them change their exposure strategies. Now they are heftily investing into market to remove the performance hurdles and encash the domestic market opportunities. Hence MF and FIIs together has soared the market .In tandem with market there is a strong appreciation of the rupee as well.

Now let’s have a look on the real economic picture of India. Earlier the current account deficit of Indian was 2% of GDP but it has rose 50 % higher i.e., 3% of GDP. Strong rupee implies good import but discourages export .which results in wider trade deficit. Larger current account deficit can be problematic when foreign investments shrinks and inflows collapse due to some reason. Not only that, foreign market crisis can trigger many other problems of foreign inflows which are always vulnerable.

Although RBI has intervened to curb the liquidity in the market through LAF and increased repo rate n reverse repo rate. It will keep a check by using such monetary policies tools.

Still this bull word creates a situation of quandary for retail investors whether to invest or play caution. Anyways traders will make hay till the sun shines. Till then all eyes waiting for the real moment of truth.

Madhulika vats

WEF Report...

World Economic Forum report said that India will face huge skills gaps in some job categories due to low employability over the next 20 years and also warned of a looming global labour crisis. The report said that increasing mobility among countries will be a key part of the solution.

Despite high unemployment, the global economy has entered a decade of unparalleled talent scarcity, the report added. If left unaddressed, it will put a brake on economic growth in both developed and developing countries, the report said.

The WEF report -- 'Stimulating Economies through Fostering Talent Mobility' made in collaboration with The Boston Consulting Group -- demonstrates the magnitude of an impending global labour crisis by analysing talent shortages across 22 countries and 12 industry sectors and argues that talent mobility can stimulate economies in both developed and developing countries.

WEF also reported that the workforces of India and Brazil will grow by more than 200 million people over the next two decades by 2030, the developed world will need millions of new employees to sustain economic growth, the report said. Of these, the United States will need 26 million employees, and western Europe will need 46 million employees.

"Today's high unemployment rates mask longer-term talent shortages that may affect both developing and developed countries for decades," said Piers Cumberlege, senior director, partnership, at the World Economic Forum.

The global population of 60 years and older will exceed that of 15-years-old or younger for the first time in history by 2050. But, the talent crisis will start much sooner. Barring technological breakthroughs, the United States, for example, will need to add 26 million workers to its talent pool by 2030 to sustain the average economic growth of the two past decades, the report reiterated.

In most developing countries -- not affected by demographic shifts -- strong economic growth and the limited employability of the workforce will lead to large skills gaps in some job categories Industries will be particularly challenged by the shortages of highly skilled talent. "In today's global and fast-changing business environment, access to highly skilled people -- not just top talent, but also people who possess essential expertise -- is crucial to succeed and grow," noted Hans-Paul Burkner, global chief executive officer and president of The Boston Consulting Group, Germany.

Some industries, such as business services, IT and construction, are likely to experience significant skills gaps, regardless of geography. At the same time, certain countries, such as Japan, Russia and Germany, will face shortages of highly skilled employees in many industries. Increasing the mobility among countries will be a key part of the solution, the report argued. "The message here is that migration not only works -- it is the only solution," said Angel Gurr a, secretary-general of the Organization for Economic Co-operation and Development, Paris.

Contrary to conventional wisdom, greater mobility can benefit not only nations that receive talent, but also sending countries, especially large ones such as India.

In addition to fuelling their countries of origin with remittance funds, many expatriates eventually decide to return home armed with skills and business acumen developed abroad. Receiving countries benefit from the contribution of highly skilled migrant workers to their economies.

The report calls on governments, companies, educational institutions and international organizations to collaborate systematically to address talent shortages and increase talent mobility.

Countries need to prepare for demographic shifts and a fast-changing labour market environment by defining adequate education and migration policies.

The report recommends several ways:

• Assess current and anticipate future skills shortages through strategic skills planning. Governments and industry associations should analyse capacity and productivity risks for each job type, such as mechanical engineers, and develop policies to mitigate anticipated shortfalls.
• Develop skills recognition mechanisms for native-born and migrant workers. Governments should invest in workforce development and ensure migrants are properly employed given their skills and work experiences.
• Design inclusive and comprehensive migration policies from students to experienced workers. Governments should ensure the proper integration of migrants, provide them with employment and language support and facilitate the portability of pension and social benefits.
• Integrate migration into development strategies of sending countries. Hosting and sending countries must collaborate to design policies that encourage talent circulation and ensure the transfer of migrants' skills.

Companies meanwhile, need to improve their talent management strategies as many businesses within five to ten years will face sizable talent shortages. These improvements include:

• Develop global talent management processes. Companies should make talent planning and management a priority and invest in global leadership development and management training.
• Assess current and anticipate future skills shortages through strategic skills planning. Companies should determine their need for workers in critical job categories by analyzing their strategy and productivity. They then need to compare this demand to the supply of internal and external candidates.
• Design and promote talent mobility programmes. Companies should develop attractive talent mobility programmes such as rotations or cross-company programmes to be more flexible and retain talented employees.
• Expand the talent pool for recruitment and grow talent internally, in a spirit of "talent well sourcing". Global companies need to recruit from broader talent pools by considering second- and third-tier universities, for example, and creating specific training programmes to ensure top capabilities are acquired.