Saturday, June 26, 2010
Nifty July 2010 futures were at 5282.80, at a premium of 13.75 points over spot closing of 5269.05. Turnover in NSE's futures & options (F&O) segment fell to Rs 77,422.45 crore from Rs 1,54,837.50 crore on Thursday, 24 June 2010.
HPCL July 2010 futures were at premium at 403.20 compared to the spot closing of 399.70.
Reliance Industries July 2010 futures were at premium at 1072.95 compared to the spot closing of 1066.50.
BPCL July 2010 futures were at a premium at 622.90 compared to the spot closing of 617.70.
In the cash market, the S&P CNX Nifty fell 51.55 points or 0.97% at 5269.05.
The much-awaited Empowered Group of Ministers (EGoM) meeting on Friday culminated in a number of sweeping changes on fuel prices including shift to market-driven prices for petrol. This would result in rise in prices of petrol by 6.7% (an increase of Rs 3.5/ltr). Diesel would also be de-regulated over time and prices have been raised by 5% (Rs 2/ltr) for now.
The US federal judge denied a motion filed by the Obama administration to allow the ban to stay in place during the appeal process. The judge also denied a motion by plaintiffs to enforce his own injunction. This means that the US government can file an emergency motion with the appeals court asking it to keep in place the drilling moratorium until the legal fight over the injunction is resolved. The Obama administration plans to declare a new moratorium on deepwater drilling, Interior Secretary Ken Salazar said on June 22. Salazar's announcement came hours after US District Judge Martin Feldman overturned the administration's first six-month moratorium on exploration in deep waters. "We see clear evidence every day, as oil spills from BP's well, of the need for a pause on deepwater drilling," Salazar was quoted as saying. The new moratorium would contain more specific justification for the drilling ban, Salazar said.
BP stock hit a 14-year low on Friday and its credit weakened sharply on talk it needs extra cash to fund the clean-up and compensation bill for the worst oil spill in US history. Total share losses for the embattled oil major since the ecological disaster began on April 20 stand at around US$100bn, more than halving its pre-spill market value. BP said a relief well had successfully detected the MC252 well and would continue to a target intercept depth of 18,000 feet, when "kill" operations would begin. BP said 37,000 people, 4,500 vessels and 100 aircraft were currently helping the response effort.
The UK took action to get its own budget deficit under control even as world markets were hit by concerns about the exposure of French banks to Greece and other troubled euro-zone nations. The UK FTSE 100 index fell 1% to 5,246.98 but moved off early lows after UK Chancellor George Osborne announced spending cuts and tax increases that will total £40bn (US$59bn) a year by 2015. The budget, which came just six weeks after the Conservative and Liberal Democrat coalition took power, will eliminate the country's structural deficit by the end of the current parliament, Osborne said. He said that total borrowing would fall from £149bn this year to £37bn in fiscal 2015 and that borrowing as a percentage of gross domestic product (GDP) would drop to 1.1% over that period.
A panel of US lawmakers approved a sweeping bank reform bill, aimed at curbing some of the questionable activities of Wall Street in a bid to avert another financial crisis. According to reports, the so-called "too big to fail" Wall Street banks will face new fees and restrictions. Also, the bill brings derivatives market into the spotlight. The bill will create a consumer protection agency, besides clearing the 'Volcker' rule that intends to curb the proprietary trading activities of the big banks on Wall Street.
The yuan had its biggest weekly gain since December 2008 after China set the currency’s daily reference rate at a record high, just ahead of the G20 summit over the weekend after ending a two-year peg to the US currency. The yuan rose 0.5% this week, and 0.1% from yesterday, to 6.79 per dollar as of 5:51 p.m. in Hong Kong. The central bank fixed the reference rate at 6.7896 per dollar, 0.3% stronger than yesterday and 0.15% higher than the close in the spot market. The yuan is allowed to trade 0.5% on either side of the daily fixing. The yuan on Friday touched a post-revaluation high against the US dollar, marking a record modern low for the American currency against the Chinese unit.
Inflation in the food as well as non-food groups climbed in the second week of June, while fuel group inflation remained unchanged, data released by the government showed. Stubbornly high food inflation has been a major headache for policymakers, and if prices do not show any sign of moderation in the coming days, the RBI will be forced to act ahead of its scheduled policy meet in late July. It may be recalled that WPI-based inflation shot up to 10.16% in May from 9.59% in April, while the March figure was revised to over 11% from 9.9%.
The India Meteorological Department (IMD) said that rainfall over the country as a whole for the 2010 southwest monsoon season (June to September) is likely to be normal. Quantitatively, monsoon season rainfall for the country as a whole is likely to be 102% of long period average (LPA) with a model error of ±4%.
While the die-hard reformist would hail the Centre's decision to free petrol prices and hike prices of other fuels, the inflation hawks would frown upon the move. Clearly, the EGoM action will have more of a long-term impact on the economy but poses a short-term risk in terms of a spike in inflation. The next event to watch out for in this context will be the RBI's policy review. Whether the central bank goes for a rate hike before the scheduled meeting is anybody's guess. The RBI is also in a bind as the markets are also currently going through a temporary liquidity crunch.
Reliance Industries Ltd. (RIL) and Reliance Natural Resources Ltd. (RNRL) announced the signing of a revised gas supply master agreement (GSMA). RNRL said that the new GSMA with RIL was signed on June 25 pursuant to the judgment of the Supreme Court, dated May 7. RNRL also said that it will now take appropriate steps requesting the Government of India for expeditious allocation of natural gas to facilitate implementation of the same.
The Government finally managed to muster up the courage to do what it has been promising since long - free fuel prices from administrative shackles. After two aborted attempts in recent days, the Empowered Group of Ministers (EGoM) on de-regulation of fuel prices met today in New Delhi. Most members attended the meet, barring Railway Minister Mamata Banerjee. She later termed the move as "anti-people". There will surely be some more clamour from other political parties to rollback the proposed hike in fuel prices. All eyes will be on the monsoon session of parliament, which will no doubt be a stormy affair.
The key benchmark indices declined for the second straight day on weak European stocks and as US index futures declined. But, oil & gas stocks surged after the government freed petrol prices. The government will also eventually decontrol diesel prices, Oil Secretary S. Sundareshan said. Some auto shares fell on worries the latest fuel price hike may crimp sales. Bank shares, too, declined on worries the fuel price hike will stoke inflation. Index heavyweight Reliance Industries (RIL) rose after the company signed a new gas supply master agreement with Reliance Natural Resources.
Profit taking pulled the key benchmark indices off 2-Â½ month highs in what was an eventful week. An end to the row over regulation of Unit Linked Insurance Products (Ulips) and China's decision to allow its currency more freedom to move against the US dollar, boosted the market at the onset of the week. But, US Federal Reserve's more downbeat language on economic growth in the world's biggest economy weighed on the market towards the latter part of the week. The government's decision to raise fuel prices stoked inflation worries, pulling the market lower on last trading day of the week.