Deepak Shenoy
MACRO AND MARKETS
capitalmind.in
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 regulations
News 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
Perception
No Left
Party in govt
Good thing
Fear
No PNotes, FIIs
will run away
Bad thing
Prediction
War raises oil
prices
Bad thing
(Good for oil)
Stupidity
Euro will
dissolve
today
Bad thing
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
Liquidity
Bank Credit
Growth
Money
Supply
Market Macro
Index VIX
Market Wide
Indicators
Exports And
Imports
Liquidity
FII Flows
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
rates
Banks
Auto/IRS
Dollar
Rate
Exporters
Greece Exits
Euro
Exporters
to Europe
Global
Markets
Liquidity
Issue
Broad
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
Global Markets
Inflation
VIX
Trend Days
T-Bill Yields
Stocks Above DMAs
Steel Production
Nifty Including Dividends
Nifty P/E
Known Issues
 Bad Data
 Revisions
 Interference by Governments
 Bailouts
 QE
 Black Swans Very Likely
 Luck is underattributed
Questions
 Read: capitalmind.in
 Mail me: deepakshenoy@gmail.com
 Twitter: @deepakshenoy