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Tuesday, 13 March 2018 07:49

Inland LC Discounting

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Inland/Local LC Discounting :

Inland Letter of Credit (ILC) is issued to meet out the credit requirement for domestic trade. Usance ILC is opened where payments are done after a fixed Usance Tenor. Seller of the goods availing finance by tendering the bills along with the ILC to a banker before the proceeds is realized is called ILC discounting.

Pan capital plays a key role in discounting and handling Inland LC by identifying a third Bank (Financing Bank) providing competitive interest rate from leading PSU and Pvt Banks.

 
ILC Process Flow
1
 
Tuesday, 13 March 2018 07:05

Suppliers Credit

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Suppliers Credit

Supplier’s credit is mostly used when the seller demands payment at sight. Supplier’s Credit allows the buyers to deal with seller on sight basis term which allows them to negotiate for better discounts to acquire goods at better prices. At the same time, it’s beneficial for the seller too, as they get the payment immediately after shipment of goods (Upon acceptance by Buyer’s Bank to make the payment)

Typically, it is used for CAPEX imports where banks would restrict clients to use only fund based limits(Term Loans) which is far expensive than Supplier’s credit. By availing Supplier’s credit, Buyer gets access to cheaper source of funds(LIBOR Based).

 

Call 9228070610 or mail your SC queries to This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Suppliers Credit Process Flowsupplierscreditchart

 

 

Benefits of Suppliers Credit:

For Importer

  • Availability of cheaper funds for import of raw materials and capital goods
  • Ease short-term fund pressure as able to get credit
  • Ability to negotiate better price with suppliers
  • Able to meet the Suppliers requirement of payment at sight

For Supplier

  • Realize at-sight payment
  • Avoid the risk of importer’s credit by making settlement with LC
Tuesday, 27 February 2018 12:30

Suppliers Credit

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Suppliers Credit

Today better than expected PMIs from Europe and unemployment rate of GBP (yesterday) has kept USD under pressure. We have seen sharp decline in DXY. Unemployment claim and home sales of US are yet to come today.

Today Euro gain 117 pips against Greenback on account of improving German, French and Euro zone Manufacturing & Service PMI. Today DXY open at 81.28and decline by 51 pips at 80.85. Sterling has also gained approximately 35 pips to 1.6595.

Unemployment claim is expected slightly higher than last reading 326K last week. However it is still in lower range of dataset. Flash PMI for US is expected to be 55.2 which is higher than last reading 54.4. Existing home sales is also expected to improve slightly at 4.94 million. This dataset if comes as per expectation may support USD.

These days markets are in waiting mode, it will get direction once tapering process is clear. Looking at data it seems that it may not take place in next meeting. We are also witnessing decrease in inflation in case of Europe, if continue it may keep EUR under check.

We expect to see range bound movement till next FED meeting. Today data may not initiate any change of trend but small correction within given trend.

 

Thursday, 02 April 2015 17:59

Will Rupee Open Below 61.50 on 15th JAN?

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Today Rupee opened at 61.6050, made high 61.65 and low 61.42. Rupee closed below opening level by 9 paisa at 61.51. Today, India Consumer Price Index data of December was read 9.87% prior 11.24% Food prices rose 12.16% last month slowing from 14.72% (previous reading nov13).the Positive data may support Rupee to open below 61.50  on 15th Jan.

But, we have WPI data on 14th Jan which is expected at 6.99% prior 7.52%. Any negative data may harm Rupee upward rally. However, we expect positive WPI data, as good rainfall is expected to bring vegetable prices down. CPI has shown similar trend for the previous month.

Over and above this, we have FOMC member Plosser and Fisher speech, which are important as market wants to know FOMC guidance on tapering program post less than expected NFP. We also have retail sales, core retail sales and import prices which are expected better than previous reading. If come so it may support USD for time being only.

 

Thursday, 02 April 2015 17:56

Why Yen Gained Against Dollar Today?

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Today Yen open at 103.97, made the high of 104.14 and low of 103.26.Yen gained against Greenback today by 66 pips as Investors had discounted changes in Fed Tapering program on 16th Jan. Yesterday, Yen gained against Greenback by approx. 95 pips on account of U.S Payroll fallen at 74K which previously was 241K. However, U.S unemployment rate read 6.7% which previously was 7%, which is near target level. Today there is Bank holiday in Japan.

According to Bloomberg, this month Yen rose 1.95% against Dollar, compared to 17 major counterparts which may support Mr. Abe plan to increase sales tax in April 2014. We have FOMC meeting on 28-29 Jan, in which they may discuss about Interest rate. Last month, BOJ increased easing by 60-70 trillion Yen and doubled monthly bond purchase in April to more than 7 trillion yen to end Deflation.

However, Marketer must watch BOJ press conference and Monetary meeting on 22nd Jan.

 

Thursday, 02 April 2015 17:54

US Economic Events

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This time we are expecting more sales in retail products mainly on holiday selling. It is generally observed that core retail sales increases in the month of Christmas. We are expecting Core retail sales near to 0.4% for last month.

Retail Sales is expected to fall on dropped vehicle sales. Total vehicle sales fell to 15.4 million from earlier 16.4m that was highest since the sales of March 1, 2007. We are expecting retail sales near to 0.1% for last month.

Producer Price Index is likely to advance on increased energy commodity prices. S&P GSCI Index for energy commodities gained near to 15 points in last month. Agricultural commodity prices were marginally down during last month as S&P GSCI Index for agricultural commodities dropped around 9 points. Overall the PPI is expected to remain near to 0.4%.

Consumer Price Index is expected to remain unchanged at 0.2%.Slight increase in manufacturing prices from 52.5 to 53.5 is not likely to bring major change in CPI as trade deficit has narrowed by $5.9 billion on increased export of goods and services by $1.5 billion and $0.3 respectively.

Unemployment Claims may drop further on improving economy. Manufacturing and Service industry has added more jobs that will reduce the unemployment and fall numbers of people filing for claims. In manufacturing industry employment index improved by 0.4 percentage points while in service industry the employment index improved by 3.3 percentage points from November to December. We are expecting claims to drop by 5k to 7k.

Manufacturing Index for Philadelphia Federal Reserve District may advance to 8.2 as exports increased by $1.7 billion. Overall Manufacturing PMI has expanded to 57.0 i.e. 0.2percentage point more than previous, mainly on growing new orders by 0.6 percentage points, employment by 0.4 percentage points.

Building Permits in last two months boosted up to 1.03m and 1.01m respectively. Falling job cuts for last two months, large number of job openings and improving earnings may keep real estate in demand. Now, consumers are more confident on spending as their earnings are becoming valuable with strengthening USD. This month we are expecting building permits to remain near to 1.01m.

Consumer Sentiment is expected to improve at 83.2. Fed stimulus cut stronger the USD made stock market rally in December end shows increased risk appetite of investors and their belief in the economy.

 

Thursday, 02 April 2015 17:52

US Economic Events

Written by

Producer Price Index is likely to advance on increased energy commodity prices. S&P GSCI Index for energy commodities gained near to 15 points in last month. Agricultural commodity prices were marginally down during last month as S&P GSCI Index for agricultural commodities dropped around 9 points. Overall the PPI is expected to remain near to 0.4%.

Consumer Price Index is expected to remain unchanged at 0.2%.Slight increase in manufacturing prices from 52.5 to 53.5 is not likely to bring major change in CPI as trade deficit has narrowed by $5.9 billion on increased export of goods and services by $1.5 billion and $0.3 respectively.

Unemployment Claims may drop further on improving economy. Manufacturing and Service industry has added more jobs that will reduce the unemployment and fall numbers of people filing for claims. In manufacturing industry employment index improved by 0.4 percentage points while in service industry the employment index improved by 3.3 percentage points from November to December. We are expecting claims to drop by 5k to 7k.

Manufacturing Index for Philadelphia Federal Reserve District may advance to 8.2 as exports increased by $1.7 billion. Overall Manufacturing PMI has expanded to 57.0 i.e. 0.2percentage point more than previous, mainly on growing new orders by 0.6 percentage points, employment by 0.4 percentage points.

Building Permits in last two months boosted up to 1.03m and 1.01m respectively. Falling job cuts for last two months, large number of job openings and improving earnings may keep real estate in demand. Now, consumers are more confident on spending as their earnings are becoming valuable with strengthening USD. This month we are expecting building permits to remain near to 1.01m.

Consumer Sentiment is expected to improve at 83.2. Fed stimulus cut stronger the USD made stock market rally in December end shows increased risk appetite of investors and their belief in the economy.

 

Thursday, 02 April 2015 17:48

Trading

Written by

Option Strategies:

SYNTHETIC LONG CALL:

TREND

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

BUY

USDINR

FUT

61.75

-

-

BUY

P.E.

OTM

61.75

61.50

0.1575

 

 APPLICATION:

Whenever we conservatively expect bullish trend but to protect the downside risk we hedge long future position by buying OTM put option. The maximum risk in this strategy is limited (to premium paid +difference between future price and OTM strike price). While profit potential is unlimited deducting the amount of premium paid once it crosses above the future buying level.

 SYNTHETIC LONG PUT:

ACTION

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

USDINR

FUT

61.75

-

-

BUY

C.E.

OTM

61.75

62.50

0.2850

 

 APPLICATION:

Whenever market expectations are conservatively bearish and to hedge a short position created in futures to limit upside risk, we buy OTM call option for the same. Maximum risk associated to it is limited (to premium paid + difference between strike price and spot price.). While downside profit potential is limited to spot price becoming nil minus the premium paid.

COVERED CALL:

ACTION

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

BUY

USDINR

FUT

61.75

-

-

SELL

C.E.

OTM

61.75

62.50

0.2850

Â

 APPLICATION:

This is often employed when the expectation from the market are neutral to moderately bullish. In this strategy we expect underlying not exceeding a particular level so accordingly we sell OTM call near the top level. For suppose we expect dollar to remain below 62.40 for the month of march, then we can sell 62.50 call option as shown in the example above. Maximum risk posing the strategy will be value of dollar becoming zero minus the premium received. While max profit will be difference between the strike price and spot price plus premium received

COVERED PUT:

ACTION

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

USDINR

FUT

61.75

-

-

SELL

P.E.

OTM

61.75

61.50

0.15

APPLICATION:

This strategy is employed when we expect market to react moderately bearish and we expect it not going below a particular range. For suppose in this case we expect dollar not to go below 61.50, so we can sell OTM put option of 61.50 with simultaneous selling position in futures @ 61.75. Maximum risk in this strategy will be unlimited pertaining to rise in price of dollar. While profit limitation will be difference between strike price and spot price plus premium received.

CALL BACK SPREAD STRATEGY

TREND

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

CALL

ITM

61.75

61

1.1525

BUY

CALL

OTM

61.75

62.50

0.2525

BUY

CALL

OTM

61.75

62.50

0.2525

 Application: - When trader expects Bullish trend and thinks that the underlying stock will experience significant upside movement in the near term.

Risk: - Limited risk

Reward: - Unlimited

PUT BACK SPREAD STRATEGY

TREND

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

Put

ITM

61.75

62.50

0.62

BUY

Put

OTM

61.75

61

0.0575

BUY

Put

OTM

61.75

61

0.0575

 

 Application: - When trader expects Bearish trend and thinks that the underlying stock will experience significant downside movement in the near term.

Risk: - Limited risk

Reward: - Unlimited

SHORT STRADDLE

TREND

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

Call

ATM

61.75

61.75

0.5025

SELL

Put

ATM

61.75

61.75

0.0875

 

 Application: - When trader expects that the underlying stock will experience little volatility in the near term.

 Risk: - Unlimited risk

 Reward: - Limited

SHORT STRANGLE

TREND

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

Call

OTM

61.75

63

0.1250

SELL

Put

OTM

61.75

61

0.0550


 

Application: - When trader expects that the underlying stock will experience little volatility in the near term.

 Risk: - Unlimited risk

 Reward: - Limited

CONDOR STRATEGY

TREND

OPTION TYPE

CONDITION

SPOT

EXERCISE/STRIKE

PREMIUM

SELL

Call

ITM

61.75

62

0.4525

BUY

Call

ITM

61.75

61

1.1925

SELL

Put

OTM

61.75

62

0.3250

BUY

put

OTM

61.75

61

0.0575

 

 Application: - When trader expects that the underlying stock will experience little volatility in the near term.

 Risk: - Limited risk

 Reward: - Limited

 

Thursday, 02 April 2015 17:46

Today GBP/USD Weak Against Greenback

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Today GBP/USD opened at $1.6403, and made high of $1.6487.Till noon session GBP/USD was traded in the range of 10 pips. GBP/USD decline against Greenback after Manufacturing Production data read 0.0% prior 0.2% and Industrial Production read 0.0% prior 0.3%. GBP/USD declined by 55-60 pips after data release. Manufacturing Production data was flat and Industrial Production declined by 1.1% on October. However, Manufacturing Production was read same as expected in November, 1.2% and in December  0.4%. Industrial Production was read 0.9% above expected level of 0.7% in November, were in December was read 0.4% same as expected.

U.K growth is largely depending on Consumer Spending, which has continued decline by last 3 month. However, some other measure should be added to increase growth as only Consumer spending may no longer remain major driver of growth.

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