What is Happening with Europe’s Economy?
Europe is currently going through a financial crisis, professional dubbed as the European Sovereign Debt Crisis (ESDC) and popularly known as the Eurozone crisis. This crisis has made it almost impossible for some countries in Europe to re-finance their government debt without external assistance. Greece, Spain, Portugal, Ireland and Italy have huge debt-GDP ratios and unsustainable huge fiscal deficits.
The European Union has been taking measures against this crisis since 2010. In May that year, the EU finance minister approved a rescue package worth €750 billion, which was increased to €1 trillion recently. The financial stability of the entire continent is obviously affecting intraday trading and making people require stock market tips in order to know which shares to buy.
As of March, Europe’s unemployment rate reached a record high at 10.9%. UK Prime Minister David Cameron has warned the people that they are not even halfway through the debt crisis. Manufacturing activity is also slowing sharply across the continent. Europe’s financial crisis impacts the global economy on a large scale. For one, the value of the Euro is in constant limbo until they find their stability. Secondly, Europe is a major trade partner with China and the US, thereby creating a direct impact on two of the world’s most prominent economies.
The institutions that know how and why to prevent the Eurozone from falling apart need to spring into action before it is too late. Experts agree that even under the best of circumstances, the crisis is not going to recover until 2013 at best.
Rupee vs. Dollar: Still a Tug of War
The rupee has not been performing very well against the dollar over the past six months. The value of the rupee plays and important role in the technical analysis of stocks and helps traders decide what shares to buy and which ones to sell. As of this month (May), the value of the rupee is Rs. 53.51.To compare, this time last year it was at about 44 rupees to the US Dollar, a signifcant increase that some have lost sight of. Traders are closely looking for any RBI moves to stem gains.
This tug of war has been going on for over four months and has played a key role in stock advice. The value of the rupee has been fluctuating for a while now and has fallen noticeably in the last six months. In April 2012, the rupee touched a three month low when the Dollar was valued at Rs. 51.70 against it. However, a late recovery in local stocks aided the currency to recoup some losses.
As of December 2011, the Dollar was valued at Rs. 54.30. The fall has been a steady trend, noticed over a span of time - a 22% downside from July to December 2011. Expertshad predicted a continuation in the downward spiral, which has now been seen.
What’s next? Traders are hoping to see the rupee regain its value against the dollar, but as always, there are no guarantees. It’s likely that this persistent game of tug of war between the rupee and the dollar will continue for a while before some sort of balance in achieved.
How Does the 2012 Budget Affect Me?
As we all know, Finance Minister Mukherjee recently passed the 2012 budget, and there has been a steady outcry ever since. The budget influences every Indian citizen in some way or the other, so let’s take a look at some ways in which the budget can affect you. It will also help you gaugestock market activity so that you ultimately know what shares to buy and what shares to sell.
Change in tax slabs:
There will be no tax for income upto Rs.2 lakh, as against the previous 1.8lakh. The 20% tax slab has been extended up to 10 lakhs. This marginal shift will be beneficial to some.
EPF (Provident Fund) interest cut from 9.5% to 8.5%:
This change affects crores of people. It means that the money that is saved on behalf of your organization (Provident Fund) will now generate interest at 8.5% instead of 9.5%
Income tax exemption for health checkups up to Rs. 5,000 under Section 80D:
According to this, you can claim a deduction of upto Rs. 5,000 spent on health checkups under Section 80D of the Income Tax Act. You can also claim upto Rs. 15,000 for money spent on health insurance under this same Section.
Securities Transaction Tax (STT) reduced from 0.125% to 0.1%:
This reduction, applicable on cash delivery transactions, has not been received with much pomp, as it would benefit only those investors who contribute about 4-5% of the total market turnover.
Service Tax increased from 10% to 12%:
This raise in service tax is proposed to raise Rs 18,660 crore in additional revenue. All services except those in the negative list have been taxed.
For Medical Insurance, senior citizen age reduced from 65 years to 60 years:
Along with this change, the Government has also created a ‘very senior citizen’ category (post 80 years), which will be eligible for higher exemption.
Tax Benefit on Infrastructure bonds removed:
This affects small investors to a great extent. Under Section 80CCG, an individual cannot seek a deduction from the amount invested into the bonds issued by infrastructure companies.
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