Fuel Price May Increase by 3 rupees-

 

Auto-fuel prices may rise further by Rs 3/litre to support OMC marketing margins

The Centre’s tax (basic excise, surcharge, agri-infra cess and road/infra cess) is currently Rs 31.83/litre for diesel and Rs 32.98/litre for petrol.

Retail prices of auto-fuels may rise by another Rs 3/litre as state-run oil marketing companies (OMCs) will likely want to improve their marketing margins amid rising global crude and product prices, analysts feel.

The marketing margin of Rs 1.56 per litre in the ongoing quarter till date is the lowest encountered by OMCs in the last nine quarters and with recent snowstorms impacting refinery operations in the US, the margin will fall further if retail prices are unchanged.

On Friday, retail petrol price in Delhi was at an all-time high of Rs 90.93/litre, rising by about 9% in the last two months. “More hikes are needed to prevent margin from plunging in Mar’21 and being over Rs 2.5/litre from Apr’21,” ICICI Securities said in a recent note, adding that “retail price hikes of Rs 2.9/litre is required for net margin to rise to over Rs 2.5/litre at latest international prices”.

The price of Indian basket of crude is currently at $63.79/barrel, up from $50/barrel in mid-December, supported by global demand recovery and voluntary production cuts from major oil exporting nations. “If crude rallies further and settles higher and excise duties are not cut, we see pressure on marketing margins in FY22E which along with higher interest expenses could hurt OMC earnings,” analysts at Jefferies warned. However, the brokerage firm said that OMCs might get a relief from rising global prices in the form of higher inventory gains, ranging between $2 and $8 per barrel in 4QFY21.

(financial express)

How bond Yield Effect The Market-

 How bonds affect stock markets?

When valuing equities, investors add the equity risk premium they seek to a risk-free rate to compute the expected rate of return. Usually the easiest way to estimate the risk-free rate is to default it to the long government bond yield. This is why long bond yields matter to equities.

Now, theoretically, given that the long bond yield is the risk-free rate, a higher bond yield is bad for equities and vice versa. But one must also remember why bond yields are changing and not just the direction of change.

“Long bond yields reflect the growth and inflation mix in the economy. If growth is strong, bond yields are usually rising. They also rise when inflation is going higher. The impact of these two situations is different for equities,” explains Ridham Desai, equity strategist at Morgan Stanley, in a co-authored note with Sheela Rathi and Nayant Parekh.

When growth is strong, the impact of higher growth in terms of cash flows or, more precisely, dividends more than offsets the negative impact of the rise in yields, causing equity share prices to trade higher.

“The gap between real GDP growth and the 10-year bond yield correlates well with share prices, underpinning the point made above. Indeed, to the extent that growth accelerates in the coming months faster than the rise in bond yields, share prices should be fine,” says Desai, adding that Indian equities/bond valuations are at the top end of their 2010-21 ranges.

“If growth accelerates from here, as we expect, it is likely that equities break this range on the upside, consistent with the fundamental relationship,” he believes.

How should investors trade?

Morgan Stanley suggests two scenarios for investors. Under the first scenario, where growth accelerates, portfolios should be positioned in domestic cyclicals, rate-sensitives, and mid- and smallcaps.

Under the second scenario, where inflation makes a rapid return, the brokerage advises investors to bet on technology, healthcare, and consumer staples.

(From Business Standard) 

Reasons For Share Market Crash-

 

Reasons for share market crash-

 

Experts say that there were 8 main reasons behind the stock market crash today:

1.      Weakness in global markets

2.      Soaring US 10-year bond yields

3.      Rising COVID-19 cases

4.      Heavy profit-booking

5.      Frantic selling

6.      Crashing banking stocks

7.      Fear of FIIs pulling out

8.      Speculation that GDP figures to be announced today by India might not point to an economic recovery.

 

Some Points explained  by market expert-

 

Asian stocks skidded to one-month lows on Friday after an overnight slump in  Wall Street's main indexes after a steep rise in benchmark US Treasury yields.

In a sign the gloomy mood will reverberate across markets, European and US stock futures were a sea of red. Eurostoxx 50 futures lost 1.7 percent while futures for Germany's DAX and those for London's FTSE dropped 1.3 percent each, a Reuters report said.

MSCI's broadest index of Asia-Pacific shares outside Japan slid more than 3 percent to a one-month low, its steepest one-day percentage loss since May 2020.

For the week the index is down more than 5 percent, its worst weekly showing since March last year when the corona-virus pandemic had sparked fears of a global recession.

 

Rising bond yields

A surge in global bond yields spooked investors and triggered distressed selling in other assets. Yields on the US Treasury note vaulted to their highest since the outbreak of corona-virus pandemic on expectations of a strong economic expansion and related inflation.

Bond yields are also rising in other countries as well, including Japan, Australia and India.

"The rising bond yields in the US have spooked investors sentiments which have led to a sell-off in global markets. Moreover, the geopolitical tensions between US and Iran have also weighed on sentiments," said Ajit Mishra, VP - Research, Religare Broking.

 

US-Iran tensions

Investors' sentiment dampened on rising geopolitical tensions between the US and Iran. US President Joe Biden on Thursday directed US military airstrikes in eastern Syria against facilities belonging to what the Pentagon said were Iran-backed militia, in a calibrated response to recent rocket attacks against US targets in Iraq.

The strikes, which were first reported by Reuters, appeared to be limited in scope, potentially lowering the risk of escalation.

 

India's GDP 

Investors remained cautious ahead of the release of gross domestic product (GDP) growth estimates for the third quarter of fiscal 2021 later today by the National Statistical Office (NSO).

A CNBC-TV18 poll estimates growth at 0.6 percent versus negative 7.5 percent on a sequential basis.

Rising COVID-19 cases

India recorded its single-day increase in corona-virus cases above 16,000 for the second consecutive day as the infection tally rose to 1,10,63,491, while the recoveries have surged to 1,07,50,680, according to data updated by the Union Health Ministry on Friday.

A total of 16,577 infections were reported in a day, while the death toll increased to 1,56,825 with 120 new fatalities. The number of active cases increased to 1,55,986, which accounts for 1.41 percent of the total infections, the data stated.