Posts Tagged ‘domestic market’

COMMODITY WEEKLY COMMENTARY 13th – 17th September 2010

Silver along with gold once again shoot up last week as international prices tested $20 and $1255 respectively on COMEX division. Each time a rise in gold hits the headlines, it steals the limelight from silver. But this time silver has not only followed rallies in gold, but usually out performed, as can be seen in a fall in the gold/silver ratio. Prices went towards north last week as global stocks tumbled and the euro slipped on renewed fears about the health of the global economy.

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Base metals witnessed see saw movements as highly volatile currency market is rolling the prices in both direction. However, bias remained down side as fresh concerns about the health of the European banking sector fed a wave of risk reduction in the broader market and helped drag red metal (copper) prices away from four-month highs. Energy counter also remained under pressure as investor’s eye U.S economic strength and demand on fuel, while the dollar gains against a basket of foreign currencies amid the jittery sentiment. In other related news the dull hurricane season also limiting the upside in prices. The U.S. National Hurricane Center was monitoring three tropical systems in the Atlantic basin, one approaching the Caribbean Sea and two near Africa’s west coast. The NHC said cloudiness and showers over the Leeward Islands and northeastern Caribbean Sea were associated with Gaston’s remnants, but the system had just a 20 percent chance to become a tropical cyclone.

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Despite holiday’s shortened week, agro commodities witnessed active trading. After a noteworthy decline, oil seeds and edible oil counter was somehow able to cap the downside on the news of better soyameal export amid short covering in overseas market. Crude palm oil was also trading up. On the other hand upside was limited on the absence of fresh demand.

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Favourable weather and better outlook of crop shed the gain of wheat futures. Northward journey of maize futures supported by multi month’s higher prices in CBOT surprised the market players. Spices counter traded with downside bias moreover. Chilli, jeera, turmeric and cardamom were down on lower offtake in physical market. Turmeric futures were in complete grip of bears on lower demand in spot market. It touched multi week lows on NCDEX as well. It was only pepper in spices counter which propped up on fresh buying. Mixed sentiment in guar compelled guarseed to trade in slim spread whereas guargum was rangebound with upside bias.

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Chana continued to witness downtrend following lower demand in the domestic market.

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Low Cost Airlines on Capex Spree as Air-Traffic Surges

After facing tough couple of years, India’s aviation sector is booming and low-cost operators seem to be getting a greater chunk of the business. While the trend globally has been turning in favour of low cost air-travel as high prices of crude makes mainstream carriers less competitive, in India, the change seems to happening at a rather swift pace.

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Most of the low-cost airlines have been enjoying 5-15% higher load factors compared with their mainstream counterparts, and this is also leading to ambitious capex plans by these companies. Most of the no-frill players are adding aircrafts to their existing fleet and have applications before the government for approvals for future acquisitions.

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In the latest such clearances given by the government,  the aviation ministry led empowerment committee has given the green signal for importing 46 new aircraft worth over Rs 19,000 crore by three low-cost carriers –  SpiceJet, IndiGo and Jet Lite. While the planes will arrive in a gradual way, some of these at least will be added to the fleet within the current calendar year.

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IndiGo, the largest low-cost carrier in the country has got an approval for 14 A-320s. The Gurgaon-based carrier currently has a fleet of 27 aircrafts and a market share of 16.9% in domestic market. It plans to increase its fleet to 35 within the current calendar year. It had earlier ordered a whopping 100 planes whose delivery is scheduled to begin from 2015-16, and the current orders are in addition to them.

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SpiceJet, another low-cost carrier, has received clearance for 30 Boeing 737-800s at a cost of about $2.7 billion (Rs 12,660 crore). Delivery for these planes will start from 2014. It will however add 8-10 planes, which had been ordered earlier, to its current fleet of 21 aircrafts within the current fiscal. The airline plans to operate 50 aircraft by 2014.

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Another no-frills carrier GoAir has also announced that it was in talks with Airbus to advance the delivery of 10 planes within a year. The Wadia Group-promoted airline currently has an all-Airbus fleet comprising of eight aircraft. While it already has plans to add two new Airbus A320s in the next two months, it wants to get advanced delivery of 10 out of a total order of 20 Airbus aircrafts in next one year.

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Ambitious capex plans as reflected in large number of aircrafts to be acquired by the low-cost airlines reflects their growing market share. Together, these carriers have already cornered nearly half of the market share if we add up the shares of low cost subsidiaries of mainstream carriers as well. Even the stand alone no-frill players have a one-third share of the market. With the air-traffic in the country growing at over 20% annually, the prospects to these carriers are certainly very bright.

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COTTON…. “The soft, fluffy plant doing a great job”

China becoming export-oriented &‘hungering’ for most commodities for their industries at an alarming rate has been the main driver for high and increasing cotton prices.

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Cotton season 2009-10

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To start with the some statistics of current season 2009-10, the Cotton Advisory Board, in its recent meeting held on 8th April 2010 has placed the cotton acreage in the country during 2009-10 to 101.71 lakh hectares as against the acreage of 94.06 lakh hectares during the previous year. However, due to the vagaries of monsoon (irrigation coverage is 63%) & severe pest attack, cotton production in the country during this season has been revised downward from the earlier estimate of attack, cotton production in the country during this season has been revised downward from the earlier estimate of 295.00 lakh bales to 292.00 lakh bales as against cotton production of 290.00 lakh bales in the previous year.

Quantity in lakh bales of 170 kgs each Source: Cotton Advisory Board vide its meeting dt.08-04-2010

Arrivals scenario

As per the latest release by Cotton Corporation of India (CCI), cotton arrivals in India’s local markets were up by 3.3% to 27.90 million bales during the October- April period.

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Cotton Season 2010-11

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Assuming normal 2010 monsoon, India’s cotton production may increase by over 6% to a record 25 million bales in 2010-11 season, acc to the US Department of Agriculture. Productivity is also expected to rise by 6 per cent at 528 kg per hectare in the next season.

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Cotton mill use in 2009-10 rebounded faster and stronger than expected after a sharp drop in 2008-09 caused by the global financial and economic crisis.

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•Cotton ending stocks, a measure of available supply, for the current 2009- 10 year will drop by 43.35% to 40.5 million bales.

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Government Intervention

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In order to check the rise in prices of raw cotton in the domestic market, the government of India has imposed a duty on the export of the commodity. Apart from this, the Centre has also decided to levy a 3 per cent duty on cotton waste exports. An export duty of Rs 2,500 a ton is imposed export duty of Rs 2,500 a ton is imposed from April 9, 2010.

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The Deep Impact….

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•Ban on cotton exports has forced Pakistani buyers to look for alternative supplies.

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•Pushed cotton prices in New York to a two-year high on concern reduced exports from the nation may worsen tight global supplies.

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Global Scenario

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•World cotton production is forecast up by 13% in 2010/11 to 24.8 million tonnes, driven by high cotton prices.

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•World cotton mill use is expected to continue to recover in 2010/11, growing by 2% to 24.8 million tonnes, pushed by continued improvement in global economic growth but limited by high cotton prices.

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•World cotton trade is expected to increase to 7.7 million tons. Global cotton ending stocks are expected to remain stable in 2010/11. Global cotton stocks are expected to drop by 18% to 10.4 million tons by the end of July 2010, the smallest level in six years.

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•U.S. cotton plantings are accelerating, reinforcing expectations for a bumper crop following a wet winter in the big producing states. The U.S. cotton crop was 26% planted in the week to May 2, up from 16% the week before and slightly higher than the five-year average of 25% for this time of year, according to the latest data from the U.S. Department of Agriculture.

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Optimistic Outlook for Cotlook

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The continuous increase in Cotlook index was driven mainly by a rising gap between declining production and recovering consumption. The Cot look A Index jumped to over 90 cents per pound in the last part of April, after the Indian government announced the suspension of cotton export registrations and requested that cotton exports already registered, but not yet shipped, be revalidated, with a monthly  cap on revalidations to be determined.

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Conclusion

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To sum up, cotton futures last week declined in New York, but physical prices remained at a very high level on the international market irrespective of stronger U.S. dollar index. In absence of Indian exports, an expected short-supply is increasingly looming, especially for higher grades. Cotton prices will sustain its rally on back of shrinking stocks and non- availability of fine lint besides arrival of new cotton lots not before July 2010.

Weekly Update of The Market (15th – 19th February)

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and latest global business and industry updates.

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Weekly Update of The Market (15th - 19th February)

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The much awaited gains in global markets which came in the week gone by, was a big relief for investors.

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Improving Australian Jobless rate (falling) to 5.3% from 5.5% & China‘s lending surged to 1.39 trillion yuan ($203 billion) in January, more than in the previous three months together lowered the concerns of global economic recovery and proved to be some of the triggers for the global markets gain.

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European Union statement that it is ready to support Greece somewhat eased pressure but China central bank another move to hike reserve requirement by 50 basis point to rein the credit growth spoiled the mood of the markets.

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Chinese banks disbursed 19% of the lending target in January alone.

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The existing reserve requirements stood at 16 percent for the biggest banks and 14 percent for smaller ones.

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🙂

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Back at home, CSO expectations of decline in farm output to be contained within 0.2 per cent & robust recovery in industrial performance rejoiced the markets that GDP growth may come even better for the current fiscal year.

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On the flip side, market is cautious from budget outcomes on expected move towards fiscal consolidation.

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High fiscal deficit together with high inflation pose some long term risk for the equity market.

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The much awaited reforms in the areas FDI, BFSI & fuel and fertilizer subsidiary & a roadmap for implementation of Goods & Services Tax & Direct Tax Code can spark the rally in the domestic market.

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In the coming week, we may see some activity in capital goods sector on the back of very good IIP numbers.

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Industrial production witnessed a growth of 16.8% on Year on Year basis while cumulative growth for the April to December period has now inched up to 8.6% over the corresponding period.

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Overall the trend of most asset classes including stock markets around the world is down due to rising dollar index.

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Going ahead in the budget, we expect volatility to increase and markets to see big moves up and down.

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🙂

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International cues are positive on the fundamental side but Europe problems and stimulus withdrawal along with rising inflation are having negative effect.

One should remain cautious going ahead.

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Nifty faces resistance between 4900-5000 levels and Sensex between 16400-17000 levels.

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A pick up in investor’s sentiments, softer dollar amid expectation of rescue plan for Greece have rejuvenated most of the commodities, especially metals and energy.

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We are expecting a thin trading in the beginning of the week, as US market is closed on Monday on the occasion of “President Day”.

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Absence of participation of Chinese market due to celebration of New Year holidays can limit the volatility of commodities further.

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If we talk about the trend, overall commodities may trade in a range now.

Any improvement in Japanese GDP data can give further boost in the prices.

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🙂

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Stay Tuned for More on weekly updates.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Weekly Update of The Market (1st – 5th February) Part 1

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and along with the latest global business and industry updates.

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Weekly Update of The Market (1st - 5th February) Part 1

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A bout of volatility was witnessed in the domestic market throughout the week due to

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1.  F&O expiry,

2.  unfavorable global cues because of gloomy earnings forecast,

3.  anxiety about China‘s monetary tightening,

4.  the deteriorating finances of countries ranging from Greece to Japan and

5.  India’s central bank‘s decision to raise the CRR to 5.75.

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🙂

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But on later days of the week, US Federal Reserve’s decision to keep interest rates unchanged boosted sentiments of global markets.

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Closer home, investors also heaved a sigh of relief as the central bank kept key interest rates unchanged at the quarterly policy review indicating that it would maintain a balance between price stability and growth and raised its GDP growth projection for the current fiscal to 7.5 %.

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The RBI at its quarterly monetary policy review raised CRR by 75 basis points to suck out excess liquidity from the banking system to the tune of Rs 36000 crore.

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On the flip side, the challenges that RBI foresees for the economy is fiscal consolidation.

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The central bank lifted its wholesale price index inflation forecast for the end of the fiscal year in March 2010 to 8.5% from its earlier forecast of 6.5%.

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RBI also said it expected inflation to moderate starting in July 2010, assuming a normal monsoon and global oil prices holding at current levels.

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Moreover, US Federal Reserve too maintained interest rates at near zero levels and vowed to do so for an extended period of time.

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Additionally, it also signaled its intention of unwinding the massive monetary stimulus that it had undertaken during the peak of the crisis.

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🙂

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Stay Tuned for More on weekly updates.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Cashew Kernel Exports Decline to 1,07,496 Metric Tonnes

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Cashew Kernel Exports Decline to 1,07,496 Metric Tonnes

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Cashew kernel exports decline 4% in 2009

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India’s cashew kernel exports have showed an overall drop of a marginal 4 per cent to 1,07,496 metric tonnes during the calendar year 2009 compared to the previous year.

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During the period January to December 2009, the value of kernel exports was marginally lower by 2.2 per cent to Rs 2,869 crore as against the year ago period.

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The drop in exports was mainly attributed to a sharp rise in domestic consumption.

The exporters had to draw down to meet the domestic demand than export commitments.

The local consumption is pegged at around 1,30,000 tonnes for the year.

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According to Kochi based Cashew Export Promotion Council of India (CEPCI), the unit value realization was up by 2 per cent to Rs 266.87 per kg in the export market during 2009.

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🙂

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In Other major Commodities Updates we have news on the Govt Plans to buy 280 lakh tone of rice for central pool.

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Govt plans to buy 2.8 cr tonne of rice for central pool

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The government hopes to buy 280 lakh tonne of rice for the Central Pool during the ongoing 2009-10 marketing season, more than earlier target of 260 lakh tonne, even as the grain production this year is expected to be lower by 13 million tonne.

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According to the latest official data, total rice purchases by the Food Corporation of India (FCI) and state agencies stand at 178.30 lakh tonne as on Thursday, slightly below 182 lakh tonne procured in the same period of the 2008-09 season.

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The country’s rice production from the current Kharif season is estimated to be lower at 71.45 million tonne, compared with 84.58 million tonne in the last year season.

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🙂

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Additional Directional Movement (ADX) Final Part

Hello Friends here we come up with an extension of our previous blog “Additional Directional Movement (ADX)” Part 1.

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Additional Directional Movement (ADX) Final Part

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In this blog we would read about the features of ADX and the current scenario of the ADX in the market.

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ADX On PRACTICE

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The great feature of ADX is the ability to see buying and selling pressure at the same time.

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Values above 40 indicate very strong trending while values below 20 indicate non-trending or ranging market conditions.

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The indicator does not grade the trend as bullish or bearish, but merely assesses the strength of the current trend.

When ADX begins to strengthen from below 20 and moves above 20, it is a sign that the trading range is ending and a trend is developing.

The current scenario of ADX falling from the levels of 32 & now continuing at 25, tells that the momentum of price is toward a weaker section with a sideways movement.

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It shows that the sellers are stronger than the buyers,this is seen in a downtrend.

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The lesser volumes of trade & the bearish fundamentals also confirm that the overall sentiments are not supportive to the prices.

The factors are as follows:

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· Fresh arrivals are coming to the spot market with harvesting in Idukki.

· Commencement of fresh arrivals with higher moisture content is likely to keep check on the price.

· Indian production is also expected to be higher by 10% to 55,000 tonnes.

· Indian parity in the international market quoting at $3,200-3,225 a tonne (c&f).

· Spot prices have plunged by 9% within a span of 4 weeks, quoting near the levels of 14K.

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The investors are being cautious to enter the trade, which is hence keeping the price in a range between Rs. 13800-14800.

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However, the current tight stock levels in pipeline, & demand from the overseas and domestic market is adding support to prices.

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The DMI lines are good reference for price volatility.

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In a nutshell, values of the ADX can be used to confirm the strength of an upward/down trend & also give the investor the confidence to enter into the trade.

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🙂

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

RUBBER – STRETCHING & MOVING ON THE WAY AHEAD Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

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Topic is RUBBER ………… “STRETCHING & MOVING ON THE WAY AHEAD”

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RUBBER - STRETCHING & MOVING ON THE WAY AHEAD

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We would touch upon aspects like the investment scenario of rubber in India and price movement of the rubber in Indian market.

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We would also read about the gap in the demand and supply of the rubber in the market.

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Rubber is springy & has the potential energy of getting stretched.

These properties are also seen in the price movement of the prices.

The year 2009, has given stretchable & phenomenal return on investing in rubber futures.

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INDIAN SCENARIO :

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The four-month period between October and January is the peak season of rubber output in the country.

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The total area of plantations in the country is 662,000 hectares of which 92-93 per cent is in Kerala.

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Tripura is the second-largest rubber planting state in India after Kerala.

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DEMAND & SUPPLY GAP –Walkthrough 2009:

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As we know that profit increases when the difference or the gap between the cost price & the selling price increases.

This immense gap was witnessed in rubber prices.

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Tight supply & tracking the rise in Asian markets like Tokyo and Singapore gave momentum to the prices to rise through out the year.

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The Indian industry consumed 356,400 tonnes of natural rubber (58 per cent of the total domestic consumption) during April-November.

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In April-November, natural rubber production in India dropped 6.5 per cent at 538,125 tonnes against an increase of 3.5 per cent in consumption at 614,600 tonnes.

So there was a gap of 76,475 tonnes in production and consumption.

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PRICE MOVEMENT “Focus on the journey, not the destination”:

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The spot prices at the benchmark Kochi had begun its journey at Rs.67.23/Kg & touched the high of Rs. 139.19 within a year.

Strong appreciation in prices in all major global markets which touched Rs 130.48 per kg, made the domestic market bullish.

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Similarly, the futures at MCX posted a gain of 78.94% as of 22nd December, 2009.

This spike was also supported by the increased gap between production & supply.

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Next Blog we would read about the impact of the shortage of rubber industry on major industries and the scenario of the rubber production in other countries.

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Stay Tuned for more on this.

🙂

Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

🙂

Coming ‘Diwali’ – Gold Prices Set to Reach Over, Rs 16,000 level :)

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

Gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before 'Diwali'.

After taking a brief consolidation, gold prices are again ready for a good rally and is likely to reach over Rs 16,000 level before ‘Diwali’.

🙂

According to experts, gold prices have declined for a short period last week as the precious metal dipped following a counter rally taken by the dollar.

However, the US dollar index has again started showing weakness and today dipped by 0.6 per cent at 76.54 level, which will be positive for the gold price, SMC Global’s Rajesh Jain said.

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He said gold is likely to reach 1,020 dollar an ounce (28.34 grams) level in the international markets before ‘Diwali’.

However, in the domestic market the rising trend is likely to be capped with strengthening of Rupee against the US dollar, he added.

In the domestic market the prices are likely to be slightly over Rs 16,000 per 10 grams level, Jain said.

He said, the Rupee will keep on strengthening as the equity markets are performing well, which will encourage the Foreign Institutional Investors (FIIs) to bring in more money.

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Today, the gold was trading at Rs 15,585 per 10 grams, while in the global markets it was at $1,001 an ounce.

Meanwhile, independent analysts have remarked that the bull run in gold will continue as the various monetary and fiscal stimulus programs have failed to boost the world economy, feeding through to a dis-inflationary conditions.

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The US dollar, which is considered a safe haven, softens due to the weakening economic condition.

As dollar declines, many investors and central banks continue to hold gold as their safe haven to protect themselves from unforeseen global economic shocks, boosting the demand for the yellow metal.

🙂