With an eye on the adverse fallout of rising oil prices, the Reserve Bank of India (RBI) on Monday said the government's subsidy bill for petroleum products and fertilisers might cross the projections for 2011-12 and put fiscal consolidation plans under strain.
Equity benchmark indices Sensex and Nifty settled lower for the sixth straight session on Monday due to heavy selling in bellwether stocks including HDFC Bank and Reliance Industries amid mixed trends in the global markets and outflow of foreign funds. Falling for the sixth consecutive session, the BSE Sensex tumbled 638.45 points or 0.78 per cent to settle at 81,050. During the day, it plummeted 962.39 points or 1.17 per cent to 80,726.06. The NSE Nifty slumped 218.85 points or 0.87 per cent to end at 24,795.75.
Arab Gulf economies are set to benefit from large government spending programmes and high oil prices in the second half of the year, despite concerns over political turmoil in the Middle East and Europe's sovereign debt crisis, a senior bank official has said.
Palm oil prices are rising to record levels these days because China and India are stepping up purchases.
Demand has fallen significantly in the US, which accounts for around 30 per cent of crude oil consumption and meets 60 per cent of its demand through imports.
As far as US growth is concerned, he says that the first half of next year is expected to be better than the second half of this year.\n\n
Macroeconomic data announcements, global trends and trading activity of foreign investors would be the major driving factors for the equity markets this week, according to analysts.
Volumes remain a concern because people still do not have confidence in the market.
Bank shares were the top gainer in early trades with Bank of Baroda up over 4%.
Replying to questions on losses to Air India, civil aviation minister Praful Patel said the rally in international crude oil prices that touched $147 a barrel in July 2008, hit Indian carriers by Rs 10,000 crore (Rs 100 billion) in jet fuel bill. Air India loses are a result of high jet fuel prices and fall in air traffic following global economic slowdown, he said. "There are (also) systematic issues which need to be corrected."
Projecting that global oil prices would stabilise at around $30-35 and help ease pressures on consumers, Reliance Industries Chairman Mukesh Ambani on Wednesday sought deregulation of natural gas, terming it as an alternate fuel in the medium term.
There has been a dramatic decline in oil prices from the high of $147 a barrel in July, to less than a third of that today. However, it is too early to say if this is a fundamental change in the direction of oil prices, resulting from the announced cuts in production by the oil-exporting countries, or a blip in a falling market. The government seems to be assuming (or hoping that it is) the latter and is rushing ahead with its price cut plan.
According to a RBS report, 'the impact on India's current account deficit should be significant, cumulatively amounting to 1.9 per cent of GDP' provided for the full year FY14 prices for both oil and gold remain at current levels and aggregate volume gold demand remains stable.
Global financial markets are wrong in hoping that the worst is over in geopolitical crises such as the Iran-Israel conflict and the Russia-Ukraine war, wrote Christopher Wood, global head of equity strategy at Jefferies, in a recent note to investors called 'GREED & fear'. While most investors and the media are focused on United States (US) Federal Reserve policy and the "endless chatter" of Fed governors, Wood believes the news flow in the financial sphere "pales into complete insignificance" compared with the "tectonic shifts" going on in geopolitics.
Oil prices rose following Biden's suggestion that United States and Israeli officials were considering a possible Israeli strike on Iranian oil facilities, as reported by the Washington Post.
Expressing concern over the impact of rising crude oil prices on Indian economy, Prime Minister Manmohan Singh on Monday said it can have adverse consequences for the economy. "We cannot allow the subsidy bill to rise any further," Singh said and appealed to all the political parties to adopt a wider consensus on the pricing issue.
When oil prices collapse from $110 to $45, economic agents in India experience a large income windfall.
The country's fiscal deficit, as a percentage of GDP, would be wiped out if the crude oil price, as measured with the Indian basket, touch $80 per barrel.
CAD, which is the difference between outflow and inflow of foreign currency, touched a historic high of 6.7 per cent in the third quarter.
Quarterly earnings from corporates, global trends, and trading activity of foreign investors will guide market sentiment this week, analysts said, adding that benchmark indices may face volatile trends. "The upcoming release of Q2 results will be closely watched, providing insights into corporate performance. "Meanwhile, the escalating tensions between Israel and Iran introduce a significant geopolitical risk, potentially leading to increased oil prices and market volatility.
Oil prices dipped on Wednesday as the market prepared for a gradual increase of Iranian exports into an already oversupplied market from 2016.
The Indian industry wants the government adopt a multi-pronged approach to de-risk the country's oil needs by conserving energy, promoting alternative sources and building strategic reserves, a Federation of Indian Chamber of Commerce and Industry su
After a strong run in the midcap and smallcap indices, which surged 46 per cent and 43 per cent, respectively, on the National Stock Exchange (NSE) during Samvat 2080, analysts suggest that the rally in these segments may pause to catch its breath in Samvat 2081.
From the Sensex basket, Larsen & Toubro, Bajaj Finance, Axis Bank, State Bank of India, UltraTech Cement, Wipro, ICICI Bank, Infosys, HCL Technologies and Asian Paints were the major gainers. NTPC, JSW Steel and HDFC Bank were the laggards.
The threat of war in Iraq and fear of terrorism in the United States and Britain pushed oil prices to near two-year highs on Thursday, drove investors into the safety of bonds but battered stocks and the dollar.
It is a testament to some of the policies that were put in place to raise fuel-efficiency standards
'If weak indicators persist, there is a risk that India could slip into a prolonged slowdown similar to the one experienced between 2014 and 2019,' warns Debashis Basu.
India's large foreign exchange reserves can cushion a short-term jump in oil prices, but a long drawn conflict in Iraq could hurt the economy
Economic boom in countries like India and China and unrest in other parts of the globe are some of the important factors.
Indian Oil Corporation (IOC) on Tuesday reported halving of its March quarter net profit largely because of losses in the petrochemical business and shrinking margin after it announced a pre-election fuel price cut despite rising input costs. The net profit of Rs 4,837.69 crore in January-March compared to Rs 10,058.69 crore a year back and Rs 8,063.39 crore in the preceding October-December quarter, according to a stock exchange filing by the company.
Global trends, trading activity of foreign investors and domestic macroeconomic data announcements would dictate terms in the equity market in a holiday-shortened week ahead, analysts said. Equity markets would remain closed on Wednesday for Gandhi Jayanti. "Looking ahead, it will be interesting to monitor Foreign Institutional Investors (FIIs) and their flow into India.
Amidst soaring oil prices posing a threat to the world economy, the United States has said there is "no magic wand" to solve the problem overnight.
