Saturday, October 5, 2013

Uncertainty and volatility expected to continue


Oil prices rose due to lower production from Gulf of Mexico, where a tropical storm forced the companies to shut down several oil rigs. Crude oil prices could further rise next week if the current US shutdown (first government shutdown in 17 years) continues and a weaker dollar usually boosts the prices of dollar denominated commodities. 

India's economic growth rate slipped to a decade low of 5% in 2012-13 and declined to 4.4% in the first quarter (April-June) of the current financial year. The Reserve Bank of India expects the economy to grow by 5 to 5.5% in the current fiscal, pinning its hopes on good farm output and improved exports. The Prime Minister's Economic Advisory Council scaled down its growth forecast for the current fiscal to 5.3% from 6.4% earlier.

India is undergoing a significant period of economic uncertainty and volatility. Monsoon has been good; hopefully, this will translate into an increase in consumption mainly driven by rural demand. According to auto industry estimates, in the run-up to the festive season, the value of discounts, which is already higher than those offered last year, may inch up only marginally from the current levels as there is upside pressure on margins, led by a depreciating rupee and higher fixed costs.

Apollo is aiming to gain a foothold in China and the United States through the pending acquisition, but the deal is being opposed by workers at Cooper's joint venture in China, and has further run into trouble over demands made by labour from the United Steel Workers union.

In the domestic market, National Multi Commodity Exchange October futures closed with a positive note at `.169.37 a kg, November at `.168.97, December at `.170.75 and January 2014 at `.172.54 a kg.

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