Crude falls..STOCKS RISE..!!!

Crude fall a boon for fisc: 4 questions
Sandeep Singh | November 29, 2014 10:37 am

Following the decision of the Organization of Petroleum Exporting Countries (OPEC) to not go for a cut in crude oil production, the price of Brent crude which fell to under $72 a barrel on Thursday, reached its four-year low mark of $72.50 on Friday, fuelling a market rally. Sandeep Singh explains how the Indian economy stands to gain.

When did the crude correction start and why is it falling?

Between July 2013 and July 2014, Brent crude hovered in the range of $105 and $115 per barrel. However, beginning August, the prices started to soften and while it fell below the $100 per barrel mark in August, on November 27, 2014 it hit a 50-month low to trade below the $72 per barrel mark. A number of factors are behind the fall, the primary ones being: demand slowdown in Europe and China, increased shale oil production in the US, cutting down demand for OPEC crude, and the move by some OPEC members such as Kuwait and Iraq to offer deeper discounts.

Has the US significantly reduced its dependence on oil imports?

A JP Morgan report says that while the United States imported 60 per cent of its oil needs in 2005, it came down significantly in 2013 to 35 per cent of its total energy consumption.

What does crude price fall mean for India?

Every $1 per barrel decline in crude prices brings down the current account deficit by about $1 billion and a decline of close to $40 per barrel in Brent crude price over the last five months will be significant both for fiscal and current account deficit and growth in the economy. The dip in prices benefits the oil marketing companies significantly in terms of their under-recoveries. In May 2014 when Brent hovered around $110 per barrel the daily under-recoveries of OMCs stood at Rs 318 crore. With the decline in global prices, this came down to Rs 188 crore for the first half of November 2014 even after the companies reduced the retail fuel prices. A dip in domestic fuel prices impacts the WPI inflation as it has a weightage of 9.3 per cent to the index. Fuel price inflation which hovered above 10 per cent till June 2014, started slipping since then and it stood at zero for the month of October. This will also act as a factor for the Reserve Bank of India in taking a call on interest rate cut in its forthcoming monetary policy review on December 2.

What will happen if oil falls below $70 per barrel?

Oil at $70 per barrel may provide the much needed comfort to the Centre when it is looking to meet the fiscal deficit target of 4.1 per cent for 2014-15. Savings from lower crude oil prices will bring down the fuel subsidy bill for the government. Experts feel that it would also provide government to push for productive expenditure next year which may push growth in the economy. The Union Budget had allocated Rs 63,427 crore as fuel subsidy in 2014-15 (taking crude oil price at $110 per barrel and the rupee at 61 against the dollar for calculating the Budget Estimates). The trend in oil prices shows that any shortfall on revenue side at the end of the fiscal may be met through savings on oil subsidy front.

http://www.financialexpress.com/article/economy/crude-fall-a-boon-for-fisc-4-questions/

NIFTY-EXPIRY-NOV-14

Who sold it any in JSPL and DLF

On the day when CBI filed fresh charge sheet against JINDAL STEEL the stock touched a multi-yearly low of 128 on Friday, it went back again to touch 170 odd now ruling at 145 around. There is no fundamental change in the view but markets punished from 170 to 128 and again made a fresh buying/value hunting and short covering from 128. The story is very similar with DLF fell from 135+ to 100 and bounced back to 150+ level a see-saw move on bad news. It is very difficult to assess and come to a conclusion on these counters where the promoter stake is high and volatility will be more. The story is very similar to other high flying stocks

Similarly in the COAL block cancellation all PSU banks especially PNB, BOB, Bank INDIA, OBC, PFC, REC and Canara Bank took severe beating fell by close to 20-30%, but bounced with vengeance. Now the headlines are covered with the restructuring of loans and its impact on the banking system, again the roller coaster ride is on…

The Nifty saw serious selling at 8550 level with rumours on P-notes and Insurance bill pass to become difficult, the fundamentals are gaining to positive and to bet on the economic revival is high. So the nifty may hold 8100-50 first support and 7800-7840 second and third one at 748-7420 as we keep on rising the bar. The waiting may take longer for participating in the markets in a big way.

The momentum indicators are in favour of up move and B-Nifty is well placed. More good news stored in for banks, SBI has very good support at 275-278 levels, and similarly LIC Housing has support at 373-368 levels so until the break out of such good support for now need to be taken as a bench mark for identifying BULLs command over markets.

For Today, as the day of expiry, the Nifty has resistance at 8511-14 and support at 8442-44 level. The volatility may not move the Bulls from buying the FUTURE_RISING-stocks. The China stimulus may give boost to metal stocks and may participate today.

The Sun Pharma support at 833-35 and resistance above 848-52 needs to be closely watched. The Gold import restrictions may hurt TITAN but the support at 360 is good. The reality sector got good boost with the policy of increasing construction area.

The results of shipping companies are showing positive vibrancy, are coming out of woods and they would do well in future.