Posts Tagged ‘energy’

Weekly Update 19th – 23rd April 2010

After nine consecutive weeks of gains, domestic markets ended in the negative terrain in the week gone by on the concerns over interest rate tightening by the RBI in its monetary policy scheduled on 20th April coupled with weak cues from the Asian markets.

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Moreover increase in unemployment numbers in US and China’s measures to cool its real estate market raised the uncertainty over the global economic growth. Now, Investors are much wary over the signs of overheating in China as its economy grew almost 12%, the biggest expansion since 2007, Industrial production grew 18.1% in March & retail sales increased 18%. Closer home IIP numbers for the month of February grew by 15.1% as against an annual gain of 16.7% in January, and 17.6% in December. While India’s inflation, as measured by the wholesale price index (WPI), surprisingly stayed almost unchanged in March at 9.90% as compared to 9.89% in February. However, it is expected that after the strong Industrial numbers, improving trade, healthy credit off take in the last fortnight of last financial year & high Inflation, RBI may take steps to suck liquidity by increasing Cash Reserve Ratio & give signals of higher interest rates to the banking system & industry as well by increasing both policy rates. The other concern emerging for the manufacturing growth is appreciating rupee.

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As a major proportion of manufactured goods are meant for exports, the rise in domestic currency will arrest exporters’ margin & may result in lower export.

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FII’s also were a bit cautious to actively participate in the market ahead of RBI’s policy review. In the current CY, FIIs have so far pumped in more than $5.42 billion, while in the month of April; they have been net buyers at $ 1.05 billion in the Indian markets. Expectation of the good corporate results is likely to play a catalyst role for the next direction of the market. World stocks & commodity markets fell across the board after the revelation of SEC announcing civil fraud charges against Goldman Sach’s. This incident is likely to have its effect on the markets in the coming week.

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After 9 weeks of continuous rally in Indian stock markets, the rally ended last week after Nifty closed down 1.85% for the week. With world stock markets including the commodities taking a sharp correction on Friday, it seems that temporarily a top has been made in the market and one should be careful.

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Nifty has support between 5200-5100 levels and Sensex between 17400-17200 levels.

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On the commodity front, a range trading is expected in metals and energy.

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Since last few weeks, bullions and base metals have been trading in upper zone but are unable to break the resistance. Once they break their resistance then only, traders’ can see a new trading range. Back at home, sharp appreciation in rupee is also locking the movements. Data from European Union is important for the week apart from PPI and housing data of US. If improvement continues then only commodities will trade in upper trading range or vice a versa. Agro commodities could be more volatile ahead of expiry of April contract on NCDEX. In agro commodities, guar could see further rise on improved fundamentals as well as technical.

MCX Comdex & Benefits of Index :)

Hello Friends here we come up with another write up on “SMC Gyan Series”.

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INDEX - The Measuring Barometer

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Topic is  INDEX – The Measuring Barometer.

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Here, we would read that what is MCX Comdex and what are the advantages of Index.

MCX COMDEX captures diversified sectors encompassing futures contracts drawn on metals, energy and agricultural commodities that are traded on MCX.

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It is the significant barometer for the performance of commodities market and would be an ideal investment tool in commodities market over a period of time.

The MCX COMDEX futures give users the ability to efficiently hedge commodity and inflation exposure and lay off residual risk.

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Protection can be established regardless of overall market direction.

MCX COMDEX, India’s first composite commodity futures index was launched on June 7, 2005.

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Advantage:

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Investors who own stocks of companies having exposure to primary commodities could use the COMDEX as a guide to hedge their risk in the commodity exchange, thereby bringing stability to the financial markets and strengthening linkages.

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Weight age (%) of Commodities in MCX COMDEX:

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On the MCX-COMDEX, Agricultural sub-group carries 20% weighting.

It includes ref. soy oil, potato, chana, crude palm oil, kapaskhali & mentha oil.

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Metals also carry 40% weighting and comprise gold, silver, copper, zinc, aluminium, nickel & lead.

The energy sub-group consists of crude oil & natural gas and carries 40% weighting.

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Weight age (%) of Commodities in MCX COMDEX

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Also Group Indices for MCX AGRI, MCX METAL & MCX ENERGY on commodity futures prices have been developed to represent different commodity segments as traded on the exchange.

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

INDEX – The Measuring Barometer

Hello Friends here we come up with another write up on “SMC Gyan Series”.

.

INDEX - The Measuring Barometer

.

Topic is  INDEX – The Measuring Barometer.

.

Here, we would read that what is MCX Comdex and what are the advantages of Index.

MCX COMDEX captures diversified sectors encompassing futures contracts drawn on metals, energy and agricultural commodities that are traded on MCX.

It is the significant barometer for the performance of commodities market and would be an ideal investment tool in commodities market over a period of time.

The MCX COMDEX futures give users the ability to efficiently hedge commodity and inflation exposure and lay off residual risk.

.

Protection can be established regardless of overall market direction.

MCX COMDEX, India’s first composite commodity futures index was launched on June 7, 2005.

Advantage:

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Investors who own stocks of companies having exposure to primary commodities

could use the COMDEX as a guide to hedge their risk in the commodity exchange,

thereby bringing stability to the financial markets and strengthening linkages.

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Weight age (%) of Commodities in MCX COMDEX:

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On the MCX-COMDEX, Agricultural sub-group carries 20% weighting.

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It includes ref. soy oil, potato, chana, crude palm oil, kapaskhali & mentha oil.

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Metals also carry 40% weighting and comprise gold, silver, copper, zinc, aluminium, nickel & lead.

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The energy sub-group consists of crude oil & natural gas and carries 40% weighting.

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Weight age (%) of Commodities in MCX COMDEX:

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Performance 2009:

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The chart above depicts that with the bull-run in commodities,

this index has outperformed throughout in the year 2009,

as compared to other years, where they had shown a sideways movement.

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Also Group Indices for MCX AGRI, MCX METAL & MCX ENERGY on commodity futures prices have been developed

to represent different commodity segments as traded on the exchange.

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Performance 2009

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

Cabinet is Expected to Allow Trading of Energy Units Saved

On the lines of sale of carbon credits by 9 power-intensive sectors, under the clean development mechanism, the Cabinet is expected to discuss a proposal in order to allow trading of energy units saved.

However, saving of an energy unit is to achieve the targeted production by consuming energy lesser than the prescribed level while the saved units can be sold to those who consume more energy than the norm.

Meanwhile, the proposal by the Power Ministry will require amendments to the Energy Conservation Act of 2001 whereas if the amendment goes through, the companies in power, steel, cement, fertilizer and five other sectors will be able to trade energy units saved.

Further, it is said that this would be a tad different from sales of carbon credits under the CDM, wherein a certificate of efficiency is issued to companies on the basis of overall energy conservation.

On the other hand, the proposal suggests reduction in the threshold limit of minimum load for buildings/offices to 100-kw from the existing 500-kw to bring in more commerce buildings and offices under the purview of the Energy Conservation Act.

WEEKLY COMMENTARY

Bulls added more strength to precious metals and base metals while energy and most of the agro commodities back pedaled during the last week. Fear of crisis in Dubai resulted in more capital inflow in precious metals, which resulted in nonstop seven week rally in gold.

It made a high of 18294 and $1226.40 on MCX and COMEX respectively. However, in the later part of the week, we saw a halt in rally and prices corrected marginally on Friday. On Friday, December contract expired on MCX, because of which it traded down. Silver followed the footsteps of gold.

Many base metals made higher trading range last week on improvement of economic releases, except nickel. Lead performed better on technical support. Similar to precious metals, base metals saw profit booking on Friday. Red metal copper fell from its 14 months high.

After the release of U.S. inventory data, which showed crude and gasoline inventories jumped last to last week, crude tumbled down. It breached the mark of $76 per barrel last week. Natural gas also slipped for the same reason of inventory rise amid low demand. Guar pack traded sideways to bearish bias in the week gone by.

Upside movement was capped in prices as investors booked their profits at higher levels. However, slack demand in physical market also added bearish sentiment to the market. In spices pack; pepper, jeera and turmeric along with chilli got hammered and settled in red territory.

Chilli futures settled down for the fourth consecutive week on account of reducing participation in the physical market. Harvesting of fresh produce has already been started and the ongoing dry weather is favorable for the post harvesting activities.

Turmeric prices once again settled down as demand is not picking up and traders are waiting for the arrival of fresh stock which may add bearish momentum to the trend. After witnessing three week rally, pepper prices cooled down in the week gone by on an account of profit taking and continuity of weak export demand.

Jeera futures which got under pinned and gained for seven straight weeks also took a breath of relief and settled down in absence of fresh cues due to closure of major spot market at Unjha for some local festivals.

Lack of buying activity on the futures platform also led to the fall in prices. In oil seeds section; soya bean futures started the week with positive note but later on some profit booking at higher levels pressurized prices to settle near the opening price. Mustard seed futures ended the week on positive note on firm demand in spot market.

IMCX-India’s Fourth National Commodity Bourse, To Be Launched Soon:)

IMCX-to-be-launched

International Multi Commodity Exchange (IMCX)

Commodity trading in India has a long history & was started much before it started in many other countries.

Today, apart from numerous regional exchanges, India has three national commodity exchanges namely, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX) and National Multi-Commodity Exchange (NMCE).

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THE RISING WAVES

These commodity exchanges have been performing extremely well in these years.

The turnover of commodity exchanges in India surged by 31% in the April-August period, led by a surge in trading of farm goods.

Total value of trading at the Commodity Exchanges during the fortnight from 16th August 2009 to 31st August 2009 was Rs. 3,04,651.88 crore.

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NEED OF THE HOUR

In India, futures’ trading in commodities is zooming.

India’s commodity exchanges have witnessed major action this year and are getting into investing and managing new commodity bourses.

Another commodity exchange may help using the opportunities better ; thereby improving trading volumes of specific contracts & be more efficient is the price discovery, which in turn will attract a wider constituency of participants from the entire commodity value chain i.e. government, producers, marketers, importers, exporters etc.

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THE FIRST STEP

A new commodity exchange, International Multi Commodity Exchange is going to launch very soon under the market regulator Forward Markets Commission (FMC).

IMCX is promoted by Indiabulls Financial Services Ltd (IBFSL) and India’s biggest state-run trading firm, MMTC Ltd, and part-owned by more institutions.

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The exchange is planning to start operations next month as the country’s fourth national commodity bourse & is ready to grab its share of a futures market that is growing 30% a year.

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BUILDING TECH – PLATFORM

The US-based exchange services provider Millennium Information Technology (MIT) has been awarded the contract for implementing the technology platform for the aforesaid exchange.

The US-headquartered MIT provides application solutions to financial and telecom industries.

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THE PILLARS OF FOUNDATION

IMCX will be the first commodity bourse in India to comply with the criteria of revised ownership criteria that makes the participation compulsory of public sector units or cooperatives.

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Currently, Indiabulls Financial Services Ltd. (IBFSL) holds 40% of the exchange, state-run MMTC Ltd. holds 26%.

Forward Markets Commission rejected the United Stock Exchange of India’s (USE’s) 10% stake buy in the bourse, on the grounds that the stock exchange is yet to be fully recognized.

So far, Indiabulls has diluted 24 per cent to HDFC Bank, Yes Bank and Indian Potash Ltd & IDFC + Krishak Bharati Cooperative Limited (KRIBHCO) have purchased a stake of 5% each in Indian Commodity Exchange, which was to be sold to the USE earlier.

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BUSINESS OPERATIONS

The exchange will start operations by launching 10-12 contracts in bullion, metals, energy and agricultural commodities with some uniqueness in contracts to attract more volume.

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·The exchange will launch gold mini and gold 1 kilogram contracts in the bullion segment. The gold contracts will have multiple delivery centers in five-six cities.

· In base metals, it is planning to offer copper, zinc and lead or nickel futures, and in the energy segment it will launch crude oil and natural gas contracts. Delivery-based contracts will be launched in the base metal segment, where contracts are mostly non-deliverable at other exchanges.

·The exchange has also tied up with several logistic providers for warehouse facilities, & in the next phase of expansion, the exchange may create its own warehouses

·Guar seed, rapeseed, refined soyoil, soybean and turmeric will be among the agricultural contracts.

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India on way to Become 3rd Largest Steel Producer by 2013.

India-3rd largest-steel-producer

The capacity expansions being carried out by various steel majors and the increase in crude steel production has pushed up India’s ranking to the fifth largest crude steel producer in the world.

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However, during the financial year 2008-2009, India produced 55 million tonne of steel and became the fifth largest steel producer stated Goutam Kumar Basak, Executive Secretary of the Joint Plant Committee (JPC) constituted by the Government of India.

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Additionally, as per the data available with JPC they have produced 22.14 million tonnes of steel during April-August this year, a jump by 6.6% compared to the figure of corresponding period last year.

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The capacity expansions being carried out by various steel majors and the increase in crude steel production has pushed up India’s ranking to the fifth largest crude steel producer in the world.

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Moreover, he expressed assurance that the steel sector would produce 60 million tonne steel this financial year.

On the other hand, China, which produced 501 million tonnes last year, was the leading steel producers in the world followed by Japan(119 million tonnes), USA (91 Million tonnes), Russia (69 Million tonnes).

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India, which had earlier set itself the target of becoming the world’s third largest steel producer by 2013, is also aiming to produce 124 mt of steel by 2011-12, as per the 11Th five year plan.

Going by the production of steel in the country so far, India is on its way to become the third largest steel producer in the world very soon.

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