After a positive start to the new financial year 2024-25 (FY25), the second week of April 2024 brings in several key corporate and macroeconomic data releases, which will keep investors on their toes. The first set of January-March quarter results for fiscal 2023-24 (Q4FY24), domestic macroeconomic data, corporate announcements, crude oil prices, foreign capital outflow, and global cues are the main stock market triggers that will guide market direction this week.

Indian stock market traded volatile in the first week of the new financial year but managed to end on a positive note. Weak global cues continue to weigh on the sentiment however, buying in select heavyweights across sectors not only capped the damage but also helped the index to close in the green. Domestic equity benchmarks Nifty 50 and Sensex extended their winning streak and logged a third straight week of gains, with the onset of FY25.

Also Read: Q4 Results Preview | Telecom cos to report moderate growth on ARPU upgrades; Bharti Airtel, Jio to lead the pack

Nifty 50 clocked an all-time high of 22,619 and ended the week above the 22,500 mark with a decent gain of 0.84 per cent. The 30-share BSE Sensex rose 596.87 or 0.81 per cent to finish at 74,248.22 and touched a record high of 74,501.73. Mostly key sectors traded in sync with the move and edged higher wherein metal, realty and banking were among the top gainers.

The highlight of the week was the outperformance of the broader indices with the midcap index claimed its record high at 50,000, recording its biggest weekly gain in seven months, while the smallcap index gained over seven per cent.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unveiled the first policy decision for FY25 and decided to keep the interest rate unchanged for the seventh time at 6.5 per cent, in line with D-Street estimates.

Financial services, the highest weighted sub-index, gained 2.70 per cent this week, its best in four months, led by a rise in top private lender HDFC Bank after it posted a sequential growth in deposits in the March quarter. HDFC Bank gained 7.02 per cent this week, its best since November 2022.

Vinod Nair, Head of Research, Geojit Financial Services said, ‘’Towards the end of the week, volatility rose due to a surge in US bond yields and crude oil prices, along with escalating geopolitical tensions. Despite the RBI’s policy meeting aligning with expectations, concerns surrounding food inflation and alerts of a heat wave tempered market sentiment.”

Also Read: Dividend Yield Stocks: Coal India, GSFC, 8 others among top firms paying high dividends; do you own?

‘’The auto sector anticipates positive results in Q4 due to volume growth in the premium segment and higher price realisation. While weakness in the commercial vehicle and tractor segment continues owing to high base and lower reservoir level. However, the ongoing correction trend in the IT sector, influenced by global uncertainties, is anticipated to persist in the medium term, particularly with muted quarterly expectations,” added Nair.

Moving ahead, some major listings are slated across the mainboard small-and-medium enterprises (SME) segment in the primary market this week. Some new initial public offerings (IPO) across SME segments will open for subscription. The week will be critical from domestic and technical point of view as investors will eye economic indicators and the corporate results.

Also Read: Wipro’s stock price rose 121% during Thierry Delaporte’s tenure, revenue up 47% in last 14 quarters

Overall, analysts expect Nifty 50 to be in a consolidation phase with a prevailing bullish bias around 22,500. Experts advise traders to continue with ‘buy on dips’ approach until Nifty 50 breaks 22,200 and also suggest to focus on stock selection and not getting carried away with the recovery in broader indices.

Here are the key triggers for stock markets in the coming week:

Domestic Macroeconomic Data, Q3 Results:

Indian companies are set to enter the new corporate earnings Q4fy24 season this week. Leading the pack is information technology (IT) services giant Tata Consultancy Services (TCS), set to kick off the earnings season for the quarter ending March 2024. TCS Q4 results for the fourth quarter of FY24 will be announced on Friday, April 12, 2024, aftermarket trading hours.

Investors will also keenly eye macroeconomic data this week as India’s consumer price index (CPI)-based inflation or retail inflation rate for March 2024 and the index of industrial production (IIP) data for February are also scheduled to be released on April 12.

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In the SME segment, DCG Cables & Wires IPO and Teerth Gopicon IPO will open for subscription on April 8. Greenhitech Ventures IPO will open for bidding on April 12, 2024.

Among listings, shares of Bharti Hexacom will debut on stock exchanges BSE, NSE on April 12. Additionally, on April 8, shares of Yash Optics & Lens and K2 Infragen will debut on NSE SME and shares of Jay Kailash Namkeen will debut on BSE SME. On April 9, shares of Aluwind Architectural and Creative Graphics Solutions India will get listed on NSE SME.

FII Activity

Foreign portfolio investors (FPIs) started the new fiscal 2024-25 (FY25) on a subdued note after emerging as net buyers in Indian equities and debt during FY24. FPIs pumped ₹2.04 lakh crore in Indian equities during FY24, which was the highest FPI inflow since FY21 when the total investment stood at ₹2.74 lakh crore, according to stock exchange data.

FPIs have sold ₹325 crore worth of Indian equities and the total inflow stands at ₹1,444 crore as of April 5, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. The total debt inflows stand at ₹1,215 crore this month so far.

“There have been big swings in US bond yields this year in response to expectations regarding rate cuts by the Fed. The year started with market discounting six rate cuts in 2024 and consequently the yields drifted down. Then the market started factoring in only three rate cuts since the US labour market continued to be tight,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Also Read: FY24 Review: FPIs infused ₹2 lakh crore in Indian equities, highest since FY21; What lies ahead?

‘’Now many experts think that there may be only two rate cuts and these will be back loaded in 2024. Consequently the US 10-year yield has spiked to 4.4 per cent. This will impact FPI flows into India in the near term. However, FPI selling will be limited despite the high US bond yields since the Indian stock market is bullish and has been setting new records consistently. An important trend in FPI activity is the big selling in the FMCG segment and big buying in telecom and realty,” added Dr. V K Vijayakumar.

Foreign institutional investors (FIIs) were net sellers for four out of five sessions in Indian markets last week and the net outflow stands at ₹3,835.75 crore, while the inflows and outflows by domestic institutional investors (DIIs) counterbalanced each other last week, according to stock exchange data.

Global Cues

On the global front, the US market has shown some profit booking from higher levels due to heightened attention on the rising US bond yield, rising commodity prices (crude oil, gold, and silver), and also the geopolitical situation (the Iran-Israel proxy conflict and the Russia-Ukraine war). These factors will be closely monitored, as they have the potential to influence market sentiment, according to Santosh Meena, Head of Research, Swastika Investmart Ltd.

Additionally, the US will announce its inflation rate on April 10, 2024. The US non-farm payrolls and unemployment rate for March that were disclosed on April 5, 2024, and will play a significant role in shaping the market mood in the near term. The European Central Bank (ECB) will also unveil its interest rate decision in the coming week.

Also Read: Explained | Why are crude oil prices elevated after OPEC+ policy decision and how will it impact India?

‘’The performance of the US markets, after the recent decline, will also be in focus and a close below 38,500 in the Dow Jones Industrial Average (DJIA) may prompt further fall. On the higher side, it would face stiff resistance around the 39,300-39,800 zone,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Oil Prices

International crude oil prices hit their six-month high mark in the previous session, reporting a second straight weekly gain, driven by the ongoing geopolitical conflicts in the Middle-East. Brent and US West Texas Intermediate (WTI) crude oil benchmarks last rose more than $1 per barrel with Brent settling at $91.17 per barrel, up 52 cents, or 0.57 per cent.

US WTI crude closed at $86.91 a barrel. Both benchmarks notched more than four per cent gains last week after Iran, vowed revenge against Israel for an attack. Last week, the Organization of the Petroleum Exporting Countries and allies (OPEC+) kept its oil supply policy unchanged and pressed some countries to increase their respective compliance with the targeted output cuts.

Corporate Action

In the second week of the new fiscal 2024-25 (FY25), Shares of several companies such as Vesuvius India, Sun TV Network, Goodluck India Ltd, DCM Shriram Industries, among others will trade ex-dividend, starting from Monday, April 8. Along with these, some other firms will also trade ex-split, ex-rights, and ex-bonus, according to data on the BSE. Check full list here

Technical View

Nifty 50 is currently in a consolidation phase, hovering around the 22,500 mark with a prevailing bullish bias, according to Swastika Investmarts’ Santosh Meena. Religare Brokings’ Ajit Mishra said, ‘’We are currently seeing time-wise correction in Nifty around its record high and it is healthy amid weak global cues. Traders should continue with a “buy on dips” approach until Nifty breaks 22,200.”

‘’On the higher side, it can gradually inch towards the 22,700-22,850 zone. Meanwhile, participants should maintain their focus on the selection of stocks and suggest not to get carried away with the recovery in broader indices and stick only with the quality names,” added Mishra.

Also Read: Stocks to buy: Balaji Amines, Deepak Nitrite among 6 chemical stock picks by Vaishali Parekh of Prabhudas Lilladher

According to Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd, the support is expected around the 22,400-22,300 range. ’’The near-term trajectory of the Nifty remains positive, and the current range-bound movement suggests the potential for significant swings in either direction,” said Nanda.

‘’This market behavior indicates a tightening range near record highs. It would be prudent to monitor for a range expansion around the 22,600 and 22,300 levels on both ends”, added the analyst.

Bank Nifty exhibits notable strength, marked by a breakout from a bullish cup and handle formation, signaling potential upward momentum towards the coveted 50,000 level, according to Santosh Meena.

‘’Looking ahead, we anticipate encountering an immediate obstacle at 48,650. However, should we surpass this level, the upward momentum is expected to persist, potentially reaching up to 49,400. It’s noteworthy that the range between 47,800 and 47,500 holds paramount importance as a crucial support zone in the near term,” said Arvinder Singh Nanda.

Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Brent crude has topped $90 per barrel for the first time since October, as Middle East tensions threaten to boil over into a wider regional war. Oil markets are increasingly pricing increased geopolitical risk after Iran promised retaliation following this week’s Israeli strike in Syria that killed high-ranking Iranian military personnel. Whereas the majority of analysts remain cautious with their oil price targets, commodity analysts at Standard Chartered have predicted that Brent will average $94 per barrel during the current quarter.

Unfortunately, the same cannot be said about natural gas markets. Warmer-than-expected winters for two years in a row have left gas markets awash with the commodity, taking a toll on gas prices and the equities that track them. A late cold snap has helped to extend the EU gas withdrawal season for another week; however, it’s unlikely to change the bigger picture after Europe exited the winter heating season with its highest level of natural gas inventories. According to to data from Gas Infrastructure Europe (GIE), the EU’s natural gas storage capacity at the end of March was 68.59 billion cubic meters (58.7% full), 4.32 bcm higher than a year ago; 21.16 bcm above the five-year average and the highest level on record at the end of any winter.

The same scenario has been playing out in the U.S. gas market. Natural gas stocks for the week ended March 29, 2024 were 2,259 Bcf, 422 Bcf higher than last year’s comparable period and 633 Bcf above the five-year average of 1,626 Bcf. Related: Musk Lashes Out at Reuters for “Lies” Over Inexpensive EV

Not surprisingly, natural gas prices have been hammered: European natural gas futures were trading at €26.6/MWh on Thursday, 50% lower than the 52-week high achieved in October while Henry Hub gas was quoted at $1.82/MMBtu, good for a 30% drop in the year-to-date. Exchange-traded funds (ETFs) that track natural gas have emerged as some of the worst performing equities in the current year. At a time when the S&P 500 has climbed nearly 10% in the year-to-date, United States Natural Gas Fund, LP ETF (NYSEARCA:UNG) has declined 24.9% while the  ProShares Ultra Bloomberg Natural Gas ETF (NYSEARCA:BOIL) is down 50.9%. The worst performing ETFs so far this year are those that bet against AI and GPU chipmaker, Nvidia Corp. (NASDAQ:NVDA): T-Rex 2X Inverse NVIDIA Daily Target ETF (NVDQ) has cratered 74.3% YTD while GraniteShares 2x Short NVDA Daily ETF (NASDAQ:NVD) has tanked 72.2%.

Interestingly, betting against natural gas has become a smart play with the ProShares UltraShort Bloomberg Natural Gas ETF (NYSEARCA:KOLD) up 47% YTD and 88.6% over the past 12 months. KOLD seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the performance of the Bloomberg Natural Gas SubindexSM for a single day. 

Russian Gas Cuts

With the current inventory levels, it would take an extraordinary set of circumstances for Europe to run out of gas any time soon. Still, there could be some reprieve coming for gas bulls.

Four years ago, Russia and Ukraine signed a five-year pipeline transit agreement to supply natural gas to EU countries. So far, both countries have continued to honor the deal despite war still raging in Ukraine. However, the EU will have to contend with even less Russian gas after Ukraine signaled it has no intention to renew the deal when it expires at the end of the year, while the EU executive says it has “no interest” in pushing to revive the agreement.  Ukraine gas amounts to 5% of total EU gas imports, by no means insignificant.

And now, the EU is warning member countries to prepare for a world where the loss of Russian gas is accompanied by a harsh winter. Aura Sabadus, a senior analyst at the ICIS market intelligence firm, has told Politico that  Austria, Hungary and Slovakia are likely to be the hardest hit when the imports are cut off. The situation is further exacerbated by the recent decision by Berlin to unilaterally tax gas exports, making it harder for these countries to swap Russian imports for supplies coming via Germany, Italy or Turkey.

“We should avoid steps that will damage the work done and strengthen the Russian aggressor,” Czech Industry Minister Jozef Síkela has said of the levy. 

The EU executive says losing Russian supplies through Ukraine may lead to higher transport costs while storage levies imposed between the bloc’s countries could “make this diversification more difficult and costly.”

By Alex Kimani for Oilprice.com

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Global crude oil prices reported a second straight weekly gain and hit six-month high levels as markets watched for signs of any direct conflict between Israel and Iran that could further tighten supplies. This sudden uptick in crude oil prices has reignited fears of inflationary pressures and instilled fresh concerns among global central bankers, policymakers, and investors.

The Brent and US West Texas Intermediate (WTI) crude oil benchmarks rose more than $1 a barrel during trade in the previous session driven by geopolitical tensions. Brent crude settled at $91.17 a barrel, up 52 cents, or 0.57 per cent.

Also Read: Explained | Why are crude oil prices elevated after OPEC+ policy decision and how will it impact India?

US WTI crude finished at $86.91 a barrel, up 32 cents, or 0.37 per cent. Both benchmarks settled on Thursday at their highest levels since October, according to news agency Reuters. Coming to domestic prices, crude oil futures settled 0.03 per cent higher at ₹7,286 per barrel on the multi commodity exchange.

Both global benchmarks, Brent and WTI clocked over four per cent gains this week after oil producing major Iran, vowed revenge against Israel for an attack that killed high-ranking Iranian military personnel, according to reports.

What’s driving crude oil prices?

-Adding to geopolitical tensions, Israel has not claimed responsibility for the attack on Iran’s embassy compound in Syria, according to Reuters. Analysts say that if Iran directly attacks Israel – that’s never happened before – it will be just another geopolitical risk domino about to fall. Iran is the third-largest OPEC producer.

-The ongoing Ukrainian drone attacks on refineries in Russia may have disrupted more than 15 per cent of Russian capacity, a NATO official said earlier last week, hitting Russia’s fuel output, which could lead to global supply risks.

-The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC+, this week kept its oil supply policy unchanged and pressed some countries to increase compliance with output cuts. Analysts say that the prospect of a tighter market should see a drawdown in inventories during the second quarter of 2024.

-US job growth soared in March, according to official data released on Friday which also showed a steady increase in wages. The gain of 3,03,000 jobs last month points to likely robust oil demand but potentially delays the anticipated interest rate cuts by the US Federal Reserve later this year.

Also Read: FY24 Review | Brent rises 9% in last 12 months on OPEC cuts, Middle-East tensions; Will crude oil hit $100 in FY25?

-According to analysts at JPMorgan, the global oil demand is expected to grow by 1.4 million barrels per day (bpd) in the first quarter of 2024. This could add to supply risks amid the ongoing geopolitical conflicts in the Middle-East.

-US energy firms this week cut the number of oil and natural gas rigs operating for a third week in a row for the first time since October. The oil and gas rig count, an early indicator of future output, fell by one to 620 in the week to April 5, the lowest since early February, according to Reuters.

Where are prices headed?

Crude oil is getting war premium due to escalating tensions between Israel-Iran. The Chinese economic data released this week is also better than expected and decline in the US gasoline stocks are also supporting crude oil prices. However, a steady dollar index is limiting gains.

‘’We expect crude oil prices to remain volatile. Crude oil is having support at $85.20–84.40 and resistance is at $86.90-87.70. In INR terms, crude oil has support at Rs7,040-6,940 while resistance is at ₹7,215-7,280,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Cryptocurrency companies have been increasingly looking to power mining operations in more sustainable and affordable ways, as governments worldwide crack down on energy-intensive crypto operations by introducing more regulations in the sector. We have previously seen companies across the U.S. establish mining operations on existing oil and gas sites, using waste gas from fossil fuel production activities to power mining. But this is getting more and more difficult as the government pursues a green transition and some states introduce strict regulations on digital currencies. Now, many crypto companies are looking to Argentina to set up similar operations and bolster the country’s flailing currency. 

As governments worldwide put pressure on oil and gas companies to decarbonise, many have sought innovative ways to prevent CO2 from being released into the atmosphere. This has largely been supported by the incorporation of carbon capture and storage (CCS) technology into operations. However, some have begun to work with cryptocurrency companies that are seeking to use waste energy from gas-flaring activities to power digital currency mining. Previously, gas released from flaring on oil sites was not captured and reused, as it was deemed to not be economically viable. Governments are increasingly calling on oil and gas companies to stop highly polluting flaring practices. However, many companies are finding an alternative solution by letting crypto companies use their waste gas. 

Some of the first of these operations took place in 2019, when Giga Energy Solutions signed agreements with several oil and gas producers in East Texas to use their waste energy. Giga puts shipping containers filled with thousands of Bitcoin miners on an oil well, diverting the natural gas into generators. This gas is then transformed into the electricity that is used to power the miners. This helps oil and gas companies reduce their emissions by around 63 percent compared to conventional gas flaring activities.

Now, Giga is looking to expand its crypto-mining operations into new markets. The Mendoza province in Argentina is home to the world’s second-largest shale gas reserve – Vaca Muerta, which could provide immense quantities of waste energy to be used by digital currency miners. In March, Giga announced plans to expand into Argentina following the successful rollout of operations across the U.S. and its entrance into Shanghai. It will partner with the oil and gas company Phoenix Global Resources, as well as the IT services company Exa Tech, to develop a 2 MW project on Vaca Muerta. 

This will help the oil and gas producers both reduce emissions as well as turn waste into something valuable. Brent Whitehead, the co-founder of Giga, explained “By capturing stranded natural gas to power modular data centres for energy-intensive computing, Giga is actively contributing to reducing global methane emissions.” 

Argentina has been battling an economic crisis with an inflation rate that rose above 211 percent in December, according to official data. This marked the highest inflation level since the 1990s. The country’s libertarian President Javier Milei has been hoping to avoid hyperinflation through strict austerity measures. In December, the new government devalued the peso currency to try and tackle inflation. 

As the country has faced greater financial insecurity, with a highly volatile currency, the government has increasingly embraced digital currencies in recent years. Milei is seen as a crypto-friendly President and at the end of last year, the government “ratified and confirmed” that contracts can be set in Bitcoin. Grayscale Investments stated, “Milei sees Bitcoin as a crucial tool in countering the inefficiencies and corruptions of centralised financial systems.” If Argentina is seen to welcome cryptocurrency, this could encourage other countries in the region to follow suit. 

In addition, while Bitcoin has had its ups and downs in recent years, its value has increased by 170 percent over the last six months and has touched several all-time high prices, making it very attractive. Giga has achieved revenues of over $10 million so far this quarter, according to the co-founder of the company Matt Lohstroh. Giga plans to launch small-scale operations before expanding. The company expects to eventually reduce carbon emissions by around 30,000 tonnes a year at the Vaca Muerta upstream facility, with excess power being sold to the Argentinian grid. 

However, it is not the only crypto company looking to develop operations in Argentina, which is one of the biggest methane emitters globally. There is a huge opportunity to develop crypto mining operations in Argentina, particularly under the leadership of a pro-crypto president. Giga will likely be one of many crypto companies to enter the Argentinian oil and gas market over the coming years with companies such as these offering a win-win scenario for fossil fuel companies.  

By Felicity Bradstock for Oilprice.com

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Oil prices (CL=F, BZ=F) are on the rise again, with Brent crude oil now sitting well above $90 per barrel. Multiple factors have impacted oil commodity prices, including hotter-than-expected inflation data, a boom in travel, and risks affiliated with ongoing conflicts in the Middle East.

Market Domination Anchors Josh Lipton and Julie Hyman break down the movement in oil prices and take a look at how prices could play out going forward.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

Editor’s note: This article was written by Nicholas Jacobino

Video Transcript

JOSH LIPTON: The price of Brent crude on the rise again here. Reaching $91 a barrel in today’s trade. So this has been interesting, Julie. Prices moving now back up to their highest level really in months. Brent is up about 4% this week, and we different sort of factors driving this– strong economy. Obviously, we were just talking to Michael about the jobs report we got today. Blockbuster OPEC production cuts. But also, of course, geopolitical conflict is also front and center as well.

JULIE HYMAN: Yeah, and it’s become more– I mean, at this point, as we know, when you have a geopolitical conflict that then goes on for a little while without any meaningful change, it doesn’t affect consistently necessarily the price of an asset, but this week, when we had speculation and reports out of Israel that it was anticipating some sort of retaliatory attack from Iran, that’s then the, you know, X factor or the latest catalyst that helped push prices higher.

We did speak to some folks this week who said there’s a lot of speculation in the oil market as well. So you have to keep that in mind. It looks like we’re setting up for the best week for WTI since February 9th in terms of the magnitude of the gain and the best for the XLE. That’s the energy ETF going back to January 26. But there was still underperformance on the part of those energy stocks versus the actual commodity. That’s something we’re going to talk about a little bit later in the show. But it is something that the, um, energy stock bulls have been pointing out here.

JOSH LIPTON: Yeah, it is a question, and we are talking to a smart strategist later about this– about at what point, Julie, it becomes more of an issue for the Fed. Like if you have Brent at $91. Is it– is it $95? Is it $100 and sort of– and staying there? So we’ll– we’ll ask some smart people later about that.

JULIE HYMAN: Well, we just talked to Michael Gambon. He said it is something to keep an eye on.

Crude oil prices have seen a significant rise in the last few days amid simmering tensions in West Asia following an Israeli attack on the Iranian embassy in Syria.

As per media reports, Israeli warplanes bombed Iran’s embassy in Syria on Monday, April 1. Iran claimed the attack killed seven of its military advisers, including three top commanders. The attack on the Iranian embassy marks a big step up in Israel’s conflict with its adversaries in West Asia. On the following day, Iran said it would take revenge on Israel for the attack.

The fresh flare-up of tensions has raised concerns about potential disruptions in crude oil supply, as Iran is the third-largest producer of crude oil within OPEC (Organization of the Petroleum Exporting Countries).

Crude oil benchmark Brent Crude is now above the $91 per barrel mark. On Friday, Brent crude settled at $91.17 a barrel, rising over 4 per cent for the week.

Apart from geopolitical tensions, healthy economic growth of the US and signs of economic recovery in China have also boosted crude oil prices. This year so far, Brent Crude prices have jumped over 18 per cent.

India is the third-largest consumer and importer of crude oil, importing over 80 per cent of its crude oil needs. An escalation in crude oil prices can disrupt India’s fiscal calculations, damaging the economy, putting pressure on its currency, and negatively impacting foreign capital inflow.

Another important factor is that a sharp rise in crude oil prices will exacerbate persistent inflation and further undermine the likelihood of rate cuts, which are already expected to be delayed and minimal. An increase in inflation would deal a serious blow to market sentiment.

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Crude oil price outlook for short term

The majority of experts expect crude oil prices to move higher in the short term due to supply-related factors and escalating geopolitical tensions. However, crude oil prices could ease in the second half of the year after, near the US elections.

Also Read: Explained | Why are crude oil prices elevated after OPEC+ policy decision and how will it impact India?

“Short-term outlook for crude oil prices is positive until the second quarter of the year (June Q2) according to global markets.

Stable demand coupled with supply constraints from OPEC & OPEC+ is driving crude oil prices higher. However, a weakness is anticipated in the second half of the year, particularly post-June, as the US is expected to increase production aggressively in the lead-up to the elections,” said Jateen Trivedi, VP and a research analyst at LKP Securities.

Trivedi believes crude oil could rally towards the $90-$94 mark in the short term, but strong resistance is foreseen around these levels based on past price movements in August 2022 and September 2023.

Also Read: Buy or sell: BHEL to Bajaj Finserv — Sumeet Bagadia recommends three stocks to buy on Monday — April 8

According to V K, Vijayakumar Chief Investment Strategist at Geojit Financial Services, Brent Crude may move in the $89 – 92 range in the short run.

Rahul Kalantri, VP of commodities at Mehta Equities expects crude oil prices to remain volatile to positive bias in the short term due to geopolitical tensions and good macroeconomic numbers from China.

However, he added that due to the US election, the potential upside in the crude oil prices could be limited.

Also Read: Weekend Wrap: From Vedanta to Hindustan Zinc, top market movers this week

Kaynat Chainwala, Senior Manager- Commodity Research at Kotak Securities pointed out that during the April JMMC (Joint Ministerial Monitoring Committee) meeting, OPEC extended output cuts till June and asked for better compliance from members like Iraq and UAE pumping above their quotas, further tightening supplies in Q2. At the same time, non-OPEC supply growth is expected to ease this year.

Also Read: FY25 Outlook: Can Nifty 50 repeat the feat of FY24? 5 crucial challenges that loom

Chainwala said an escalation in geopolitical tensions has improved the risk premium. With tightening supplies and improving demand, oil prices look constructive for the short term.

Pranav Mer, Vice President, EBG – Commodity and Currency Research at JM Financial Services finds the outlook for oil positive despite Brent inching towards $90, as the global economic activity is showing signs of rebounding and is likely to be led by China and the US, where the recent economic data’s have been encouraging even as the supply side remains a concern due to geopolitical events amid falling fuel inventories in the US.

The underlying trend remains positive and Mer sees Brent oil moving towards $95-$97 and WTI oil towards $90-$92 in the short term.

However, some correction could be seen in crude oil prices since they have already gained significantly.

How can rising crude oil prices affect the Indian stock market?

For now, experts do not see crude oil prices impacting domestic market sentiment. However, they agree that if crude oil prices rise and sustain above the $90 per barrel mark, they can negatively impact the overall market sentiment.

Trivedi of LKP Securities underscored that Indian equities are currently not highly reactive to crude oil price rises, as domestic factors have a stronger influence on fund flows in the market. However, if crude oil prices surge suddenly or start to hold above $95 in WTI, it could negatively affect Indian markets, particularly companies reliant on oil.

Trivedi believes the timing of the Indian elections will keep the focus on domestic politics until around the first week of June, after which the impact of crude oil prices may become more apparent.

Vijayakumar is of the view as long as Brent crude remains in the $89-92 range, it won’t cause any serious problems for India’s macros. But if it crosses $92 and moves beyond $95 it can impact the Indian economy and the rupee will also come under pressure. This will have negative implications for the stock market, too.

As per Kalantri of Mehta Equities, rising crude oil prices may not have a significant impact on the Indian market in the near term as due to the upcoming election, the government will not pass this burden to the public. However, some sectors might be impacted like tyres, paints and some oil companies.

But, if WTI crude oil crosses and sustains above $90 then there could be an adverse impact on the Indian equity market, said Kalantri.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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All major North Sea oil countries are expected to continue drilling for oil and gas as they fail to agree on climate measures. The major oil-producing countries operating in the North Sea have all announced ambitious production goals for the coming years, despite pressure from European governments and environmentalists to reduce fossil fuel production in favour of renewable energy projects. 

A new report found that none of the major oil and gas companies operating in the North Sea have plans to stop drilling in time to achieve the 1.5oC global heating limit. The Oil Change International report says that the U.K., Germany, the Netherlands, Norway, and Denmark have not been able to align their oil and gas policies with their climate promises under the Paris Agreement. The report suggested that the policies in Norway and the U.K. were furthest from the Paris climate agreement as they were both “aggressively” exploring and licensing new oil and gas fields. Meanwhile, the Netherlands hopes to increase its oil and gas production. 

While Germany produces only small quantities of oil and gas in the region, the government has failed to set adequate climate policies for a green shift. Denmark came out on top, having reduced its oil production by half in the last five years. The Scandinavian country has set an end date for oil and gas production and has cancelled new state-initiated licensing rounds. However, environmentalists are calling on the Danish government to close loopholes that allow new licensing under certain circumstances to be closed by the early 2030s rather than in 2050. 

The co-author of the report, Silje Ask Lundberg, emphasised the need for governments in the region to do more to curb oil production and act on climate pledges. Lundberg stated, “Failure to address these issues not only undermines international climate goals but also jeopardises the liveability of our planet.” 

Many believe that the five North Sea countries should be leading the way when it comes to climate action, rather than contributing to the problem. These are some of the world’s richest countries and it is unjust to expect the developing world to undergo a green transition while they continue to benefit from oil and gas production. Truls Gulowsen, the head of the Norwegian branch of the environmental group Friends of the Earth, stated of Norway’s role in the North Sea, “Despite having all the tools in the world to ensure a just transition, our government’s choice is to continue to be Europe’s most aggressive oil and gas explorer. This is completely out of place, and totally unaligned with the Paris Agreement and our climate responsibility.”

The U.K. has been heavily criticised for its ongoing support of oil and gas production, as the government announced 24 new North Sea oil and gas licences in January. Licenses were given to 17 oil firms, including Shell and BP, to drill in the Central North Sea, Northern North Sea, and West of Shetland areas. Opposition MPs and environmentalists labelled the move as “grossly irresponsible” and suggested that the government was overstating the economic benefits of the North Sea and compromising the U.K.’s climate leadership. 

Graham Stuart, the minister for energy security and net zero, defended the move, stating, “If we didn’t have new oil and gas licences we would import new [liquefied natural gas] from abroad which is four times as carbon-intensive as the gas produced here. I accept it’s counterintuitive but it’s not a complex argument to see it’s the right thing to do.” He added, “New oil and licences strengthen our ability to get to net zero, they strengthen and support our climate leadership.”

However, critics suggest that although the move secure billions in oil and gas revenues, it will do little to secure the country’s energy supplies or decrease energy bills because the new licences will mostly produce oil that the U.K. typically exports to European refineries. Others accuse the government of greenwashing for suggesting that new oil and gas production could ever contribute to the country’s decarbonisation efforts. 

Meanwhile, in Norway, oil and gas companies plan to invest a total of $21.85 billion in 2024, marking an increase from $20.5 billion in 2023. This is an increase from the previous forecast of around $18 billion. This comes following several new developments and the expansion of existing projects, as well as inflation and a weak currency. Despite deriving around 98 percent of its domestic energy from renewable sources, Norway continues to be Europe’s largest oil and gas producer, with an output of around 4 million bpd. The government’s aim to achieve net-zero greenhouse gas emissions by 2050 appears to be at odds with its strategy to continue to explore for and develop new oil and gas fields. 

Instead of leading the world in a shift away from fossil fuels to renewable alternatives, five of the world’s richest countries and proponents of a green transition continue to support oil and gas production in the North Sea. The countries have no clear plan to cut production or work together to establish steps to achieve their climate pledges when it comes to North Sea operations, undermining their roles as ‘climate leaders’. 

By Felicity Bradstock for Oilprice.com

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ChiniMandi, Mumbai: 5th April 2024

Domestic Market

Domestic sugar continue to trade stable

Domestic sugar prices in major markets were reported to be stable after a mixed session yesterday. However, with a larger monthly quota, they are likely to face more pressure in the coming days. Furthermore, demand in the major markets is expected to be low, putting pressure on prices.

In Muzaffarnagar, M-grade sugar is priced between Rs 3,770 and Rs 3,800 per quintal, while S-grade sugar is expected to cost between Rs 3,420 and Rs 3,450. Agrimandi predicts that the price of S grade sugar in the Kolhapur market will fall to between Rs 3,380 and Rs 3,460 per quintal within the next two weeks.

Ex-mill Sugar Prices as on  April, 5 2024 :

Destination-wise Spot Prices as on April, 5 2024 :

 

International Market

At the time of writing this update London White Sugar #5 front month contract is trading at $647.00 ton, whereas the New York Sugar #11 front month contract is trading at 22.25 c/lb.

Currency, Commodity & Indian Indices

The rupee traded against the US dollar at 83.326 whereas USD was trading with BRL at 5.0549, Crude futures traded at ₹7207, Crude WTI traded at $86.53 barrel. Sensex closed 20.59 points higher at 74248.22 whereas Nifty ended 0.95 points lower at 22513.70

News Round-Up

Government allows 64,494 tonnes of sugar export to Maldives

Government allows 64,494 tonnes of sugar export to Maldives

Government has no plans to resume sale of subsidised rice for ethanol production: Food Secretary

Government has no plans to resume sale of subsidised rice for ethanol production: Food Secretary

Wheat price won’t be affected: RBI Governor on heatwave predictions

Wheat price won’t be affected: RBI Governor on heatwave predictions

 

First it was a group of children in Montana. Then, in Portugal, a group sued their local governments for allowing climate change to happen. The Montana group even won. It’s open season for suing governments—and Big Oil.

Of course, the supermajors have been a top target for environmentalist groups and some local authorities in the U.S. for years, but the lawsuits have not really resulted in any significant victories for the plaintiffs—yet.

But now it seems that anyone who has reason to be unhappy with their lot can just take Big Oil to court, which is exactly what one Belgian farmer did a month ago. According to Hugues Falys, “Climate change is having a tangible impact on my work and life: yield losses, extra work, and the stress that comes from dealing with a disrupted crop calendar.”

“My profession is intimately linked to the climate. In recent years, climate change has caused farmers a great deal of damage and left us uncertain about the future,” the farmer explained in March. Yet rather than suing all the Big Oil majors, Falys singled out TotalEnergies—possibly because it is the largest fuel distributor in Belgium.

Falys’s case opens in mid-April, and it may be interesting to keep an eye on developments in the courtroom as a possible sign of things to come. Meanwhile, Shell’s appeal against a landmark climate ruling by a Dutch court also began this month in The Hague.

Back in 2021, the District Court in The Hague ordered the oil supermajor to slash its carbon emissions by 45% by 2030 in a first-of-its-kind ruling in a climate case brought by environmentalists that could set precedents for other oil companies. The court said Shell must start doing this immediately and include the so-called Scope 3 emissions, those generated by the use of its producers, per the order.

Shell appealed the ruling and, at the hearing, will argue that the original ruling had no legal basis and that it also overstepped the boundaries of judiciary authority, per the Financial Times. The environmentalist organization that won the original case, for its part, will present the same argument it used in 2021: that Shell has an obligation to act in accordance with studies suggesting the oil and gas industry causes changes in weather patterns and in accordance with international agreements such as the Paris Agreement.

Meanwhile, that same group of activists, Friends of the Earth, is threatening to sue ING—a Dutch lender that, like all lenders, does business with the oil and gas industry. The reason: that the bank does business with the oil and gas industry.

In January this year, Friends of the Earth sent the CEO of ING, Steven van Rijswijk, a notice of legal liability, informing him that the bank had violated its legal obligations “by contributing to dangerous climate change.”

In another remarkable development in the litigation world, a climate NGO claims that Big Oil majors can be sued for what they call “climate homicide.” The theory is that Big Oil knew about climate change but hid it, while climate change caused fatalities. For now, many believe this theory is outlandish and it would break down in court but its authors are not giving up, saying there has been interest from prosecutors.

Suing Big Oil is already a business, and in some cases it can be a lucrative business. Pushing the boundaries of what grievances can be taken to court is a marked feature of the litigation push against Big Oil—and a sign of tough times to come for an industry with a big climate change target on its back.

By Irina Slav for Oilprice.com

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