Posts tagged EGoM
Equity market update: June 25, 2010
Markets started the week on a positive note with Sensex rising 305 points or 1.7% to close at 17,876.55 on Monday on positive global cues due to China announcing that it will take measures to make yuan float more freely against dollar and other foreign currencies (Click here for MB update).
After that, index moved in a range bound manner for the next three days. However, on Friday, markets were on a correction mode and were negative since the beginning ahead of the Empowered Group of Ministers’ (EGoM) meeting on fuel prices. In the afternoon, after the decision regarding freeing the prices was announced (Click here for MB update), markets moved deeper into red and closed the day at 17,574.5, 155 points down from Thursday’s close.
On a weekly basis, this was a change of 4 points on Sensex.
Derivatives contract for June series expired on Thursday which has been taken as positve for the markets on the basis of roll over of open positions.
Foreign funds have been net investors in the market. So far this month,foreign funds have been net buyers of around $1.7 billion of Indian stocks against being sellers of about $ 2 billion in May. Index has gained 3.7% in the month till now.
Decision to free oil prices has again sprked concerns regarding rate rise, even before the next policy announcement, which might way on the sentiments and pull the index down for next week.
Author:Praveen Bajaj
India to move to market movement based oil prices
The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, have decided in the meeting just now that India oil prices such as petrol and diesel prices will be determined by market.
Details of the same, as to how this exactly will be carried out will be disclosed later and we will update you on the same.
As of now, diesel prices have been hiked by Rs 2/ liter but eventually they will be market linked.Petrol prices will be hiked by Rs 3.50/liter the same time, LPG prices have been hiked by Rs 35/cylinder and Kerosene prices by Rs 3/litre. New prices will be effective by mid-night today.
Before the meeting it was speculated that EGoM may either decide to raise the prices or may go ahead with Petroleum Minister Murli Deora’s suggestion of oil price decontrol.
The move has been taken to reduce the oil subsidy burden on the Govt. The government has provided only Rs 3,108 crore towards petroleum subsidy in the current year against an estimated fuel subsidy bill for 2010-11 of nearly Rs 90,000 crore at an average crude oil import price—popularly called Indian basket—of $80 a barrel. If the prices of petroleum products were not revised, the huge subsidy bill could easily eat up the bounty the government received from the 3G and broadband auction.
This move of EGoM is likely to affect inflation adversely. Inflation is already at a high level (To read our May inflation update, click here). WPI inflation for the month of May breached the 10% mark coming at 10.16%. Though food articles are largely blamed for high inflation, but fuel index is also catching up fast. This move of EGoM is likely to put more pressure on inflation. However, Oil minister was of the opinion that the hike will have marginal effect on inflation and the hike will be absorbed by the consumer. An increasing inflation will put pressure on RBI to raise policy interest rates (What are policy rates?), may be even before First quarterly review of Monetary Policy towards the end of July.
G-Sec markets experienced selling pressure after the release of news and yields on benchmark 10 year bond, 7.80% 2020 bond rose to touch a high of 7.6368 from the close of 7.5682 yesterday. Towards the end of the day, yields have risen to as high as 7.67%.
Equity markets have taken this as a very positive note for oil marketing companies particularly HPCL and BPCL, which jumped 5.4% and 5.5% respectively from yesterday’s close. HPCL finally ended 13.66% up whereas BPCL ended 12.8% up on Sensex. Overall equity index have been on a negative side since morning and have not shown any significant movement to the news. Sensex was down 0.88% on the close of market.
Author:Praveen Bajaj
Weekly equity update June 5, 2010
Dear readers, we have been publishing weekly review of major market movement to enable our readers to take better investing decisions. I hope these reviews are informative.
Markets gained for a second consecutive week to reach 17,117 on Friday, rising 1.5% over the last week. The week saw a lot of good news for the markets. In the beginning of the week, better than anticipated GDP data set the bullish tone. But on Tuesday, week Chinese industrial production combined with negative global cues pushed the markets to the extent of 372 points or 2.2%. However, post that, positive global cues, good auto and cement numbers kept the mood upbeat in the market for the rest of the week. Sensex touched 17,000 mark on Thursday, first time since May 18. The BSE auto index jumped 4.4% to 7,894, it was followed by FMCG, PSU and healthcare. Fact that monsoon reached the coast earlier also added to positive sentiments.
Markets should open weak under the influence of weaker than expected US Employment numbers and weak closing of US markets on Friday. For next week, key events to watch out will be the meeting of empowered group of ministers (EGoM) on Monday, 7 June 2010 regarding the decontrolling of oil prices. Also IIP data for the month of April will be released which is keenly watched.
Author:Praveen Bajaj
