Indian basket of crude oils goes below $50/barrel-The Total Investment & Insurance Solutions

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6 June 2017

The Indian basket of crude oils closed below the psychologically important $50-a-barrel mark on Monday as geopolitical tensions in the Middle East raised market concerns.

Crude prices continued on their downward spiral following the OPEC cartel's decision last month to extend output cuts. The Total Investment & Insurance Solutions

According to the latest official data, the Indian basket, comprising 73 per cent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, closed trade on Monday at $48.58 for a barrel of 159 litres. It had previously closed lower on Friday at $48.53. 

The US West Texas Intermediate for July delivery lost $0.26 to settle at $47.40 a barrel on the New York Mercantile Exchange on Monday, while Brent crude for August delivery erased 48 cents to close at $49.47 a barrel on the London ICE Futures Exchange. 

The United Arab Emirates (UAE), along with Saudi Arabia, Bahrain and Egypt cut diplomatic ties with Qatar, accusing the Gulf state of supporting and financing "terrorism" as well as of interfering in their internal affairs. The Total Investment & Insurance Solutions

The decision of a number of Arab countries to sever diplomatic relations with gas-rich Qatar would impose a strict regional isolation on Doha, and raised concerns about a global deal reached last month to reduce oil production in order to check the fall in prices resulting from a global supply glut. The Total Investment & Insurance Solutions

The 13-nation Organisation of Petroleum Exporting Countries (OPEC) late in May agreed in Vienna to extend for nine months the output cut agreement put in place for six months effective from January 1. The extension of the accord, which was to expire in June, would effectively lower the OPEC's production by 1.8 million barrels per day.

Earlier last month, Saudi Arabia and Russia agreed on the need to prolong the current agreement on oil production cuts. The Total Investment & Insurance Solutions

In early December, oil producers outside OPEC, led by Russia, agreed to reduce output by 558,000 barrels per day (bpd). This decision came in the wake of OPEC's November 30 decision to cut output by 1.2 million bpd for six months effective from January 1.

The OPEC basket of 13 crude oils closed trade on Monday at $47.37 a barrel. 

In December, it was the first time since 2001 that OPEC and some of its rivals had reached a deal to jointly reduce output to tackle the global oil glut.

Oil prices had earlier fallen by more than 50 per cent in less than two years, from levels of over $120 a barrel. The Total Investment & Insurance Solutions

While the OPEC and non-OPEC producers agreed to extend until March 2018 their ongoing oil output cuts, India has reached an understanding with the global oil cartel to establish a joint working group to serve as a forum for "producer-consumer dialogue" to address mutual concerns. The Total Investment & Insurance Solutions

Indian Petroleum Minister Dharmendra Pradhan was present in Vienna at the time of the OPEC meeting on May 25 that agreed to extend the ouptput cuts, and led the Indian side at the India-OPEC Energy Dialogue earlier that week. 

"I believe the purpose of setting up this institutional dialogue is to exactly serve this, and to have a dialogue between OPEC as a producer and India as a consumer, to sensitise each other's concerns and to better understand our perspectives," he said at the meeting.

In the talks with OPEC Secretary General Mohammad Sanusi Barkindo, the Indian minister told OPEC to address concerns of major buyers like India at a time when there were multiple options in a situation of supply glut caused by US shale oil.

Making their fortnightly revision in fuel prices on June 1, state-run oil marketing companies in India raised the price of petrol by Rs 1.23 per litre, and of diesel by 89 paise, excluding state levies. Petrol in Delhi currently costs Rs 66.91 a litre, while diesel costs Rs 55.94.The Total Investment & Insurance Solutions

India's service sector regains momentum in May: PMI-The Total Investment & Insurance Solutions

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6 June 2017

India's service sector recovered last month due to a faster pace of new business generation and historically muted inflationary pressure, a key macro-economic data showed on Monday.

The seasonally adjusted Nikkei India Services PMI Business Activity Index registered a higher rate of expansion at 52.2 in May, up from April's 50.2. An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease.

The higher Services PMI coupled with Nikkei India Manufacturing PMI led to an accelerated growth in overall activity of India's private sector.

Consequently, the Nikkei India Composite PMI Output Index reached a seven month high of 52.5 last month from 51.3 in April. The Total Investment & Insurance Solutions

"The pick-up in service sector growth seen mid-way through the first quarter (FY) suggests that GDP could expand at a faster rate should growth momentum be maintained in June, though there are downside perils to this," said Pollyanna De Lima, Economist at IHS Markit, and the author of the report. The Total Investment & Insurance Solutions

"Despite accelerating from April, rates of increase in both services activity and new work are much weaker than typical for India. Moreover, business confidence fell as a reflection of firms' concerns regarding competitive pressures and lacklustre demand."

According to Pollyanna De Lima, the "uninspiring growth" of the manufacturing sector may prompt the Reserve Bank of India (RBI) to lower the benchmark rate in order to support the economy.The Total Investment & Insurance Solutions

Global Stocks Lower As Investors Gauge Political Risks-The Total Investment & Insurance Solutions

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6 June 2017

Global stocks (The Total Investment & Insurance Solutions)

Global stocks mostly fell Tuesday as investors digested soft economic data and looked toward the British election later in the week. The Total Investment & Insurance Solutions

KEEPING SCORE: France's CAC 40 lost 0.6 percent to 5,276 and Germany's DAX fell 1 percent to 12,701. Britain's FTSE 100 was down 0.2 percent at 7,509. U.S. shares were set to drift lower, with Dow and S&P 500 futures both shedding 0.3 percent.

EUROPE'S OUTLOOK: Investor sentiment was dampened slightly by a weak report on retail sales in the 19-country eurozone. Retail sales rose 0.1 percent in April, below expectations. More broadly, markets are also subdued ahead of an increasingly unpredictable U.K. election on Thursday. The race has tightened between the Conservatives and the Labour party, with uncertain consequences for the country's Brexit negotiations. The Total Investment & Insurance Solutions

MIDEAST TENSIONS: A diplomatic rift between Qatar and other major Middle Eastern countries also drew attention. Qatar is one of the world's largest suppliers of natural gas, and any effort to halt its exports could affect the energy market. Investors will also be aware of the potential for greater instability in the region as Qatar clashes diplomatically with regional heavyweights Saudi Arabia, a massive energy supplier, and Egypt. Qatar is also home to some 10,000 American troops and a major U.S. military base.

ASIA'S DAY: Japan's benchmark Nikkei 225 dipped nearly 1.0 percent to finish at 19,979.90. Australia's S&P/ASX 200 was down 1.5 percent at 5,667.50. South Korean markets were closed for the Memorial Day holiday. Hong Kong's Hang Seng edged up 0.5 percent to 25,997.14, while the Shanghai Composite rose 0.3 percent to 3,102.13. The Total Investment & Insurance Solutions

ENERGY: Benchmark U.S. crude fell 12 cents to $47.28 a barrel. It fell 26 cents to $47.40 a barrel in New York on Monday. Brent crude, used to price international oils, slipped 14 cents to $49.33 a barrel in London. The Total Investment & Insurance Solutions

CURRENCIES: In currency trading, the euro fell to $1.1257 from $1.1276 late Monday. The dollar weakened to 109.39 yen from 110.48 yen.The Total Investment & Insurance Solutions

Nifty, Sensex still on an uptrend – Monday closing report-The Total Investment & Insurance Solutions

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5 June 2017

I had mentioned in Friday’s closing report that Nifty, Sensex were continuing to head higher. The major indices of the Indian stock exchanges closed with minor gains over Friday’s close. The trends of the major indices in the course of Monday’s trading are given in the table below: The Total Investment & Insurance Solutions

 

Major Indices (The Total Investment & Insurance Solutions)

Despite trading on a cautious note, the key Indian equity indices on Monday scaled fresh highs during intra-day trade, as buying was witnessed in consumer durables, oil and gas, and capital goods stocks. The NSE Nifty rose to a new high of 9,687.20 points and the Sensex that of 31,355.42 points intra-day. Market observers pointed out that investors were cautious ahead of the Reserve Bank of India's (RBI) two-day monetary policy review that begins on Tuesday. On the NSE, there were 758 advances, 608 declines and 65 unchanged. On the BSE, there were 1,434 advances, 1,243 declines and 187 unchanged. The market trend was bullish and there were new intra-day highs that were reached for the major indices. But the major indices closed with minor gains, as investors were largely waiting for the RBI policy decision.

The Reserve Bank of India's monetary policy review, along with the finalised Goods and Services Tax (GST) sub-rates and the last of quarterly results are expected to affect the movement of key stock markets during the week’s trading. Market analysts observed that other major themes like news on monsoon progress, global geopolitical situation and crude oil prices would impact investors' risk-taking appetite in the highly expensive market environment. Some profit-booking is being expected and markets may witness some shallow correction; however, the trend in both the short- and medium-term remains positive, forecast market analysts. Banking sector stocks would be in focus with the RBI's credit policy scheduled on the 7th of June. 

With the Goods and Services Tax (GST) rate fixed at 3% for gold, stocks of gems and jewellery companies like PC Jeweller, Titan, Tribhovandas Bhimji Zaveri (TBZ), Gitanjali Gems and Tara Jewels shone and hit fresh highs on Monday. With the implementation of GST, compliance level will increase which will benefit the organised sector against the unorganised sector. So the surge in prices is factoring better-than-expected tax rate and level playing field for organised sector against the unorganised sector, pointed out market analysts. Titan shares closed at Rs552.40, up 16.97% on the BSE. The Total Investment & Insurance Solutions

The price of oil gained over 1%, while stock prices in the Gulf retreated across the board after Saudi Arabia, the UAE, Bahrain, Egypt and Yemen cut diplomatic ties with Qatar on Monday. In Doha, the Qatar Exchange Index plummeted 7.94% to hit 9,135, marking an 18-month low. Media reports indicated that all UAE airlines, including budget flyer FlyDubai and Etihad from Abu Dhabi, will stop flying to Qatar from Tuesday. The Bahraini All-Share Index bucked the regional slump and gained 0.58%. The Total Investment & Insurance Solutions

Airtel Business, the business-to-business arm of Bharti Airtel, has rolled out a dedicated digital platform to serve the growing connectivity, communication and collaboration requirements of emerging businesses, including small and medium enterprises (SME) and start-ups, a company statement said on Monday. "Emerging enterprises are a key growth driver for the economy. Airtel, with its nationwide reach and enterprise solutions, is uniquely positioned to address the needs of the segment. Our new digital platform will help the enterprises get quick and easy access to our connectivity solutions, resulting in a speedier deployment and business scale up for them," said Ashok Ganapathy, Director & CEO, Airtel Business. With growing digitisation, emerging businesses are looking at connectivity solutions that are available/ activated in quick time and are highly reliable and scalable as per their requirements. Airtel Business aims to address the needs of this segment with its wide product portfolio that is already serving some of the largest businesses in the country, the statement said. Bharti Airtel shares closed at Rs371.30, down 0.50% on the BSE. The Total Investment & Insurance Solutions

Software major Tech Mahindra has been recognised as a global engineering and R&D services provider based on the comprehensive assessment of its 'Design to Build Engineering' capabilities by management consulting firm Zinnov, the company said on Sunday. The study titled 'Zinnov Zones - Product Engineering Services (PES) 2016' placed Tech Mahindra Integrated Engineering Solutions (IES) in the 'Leadership Zone' in seven industries -- such as aerospace, automotive, telecom, industrial, energy and utilities, transportation, and consumer electronics -- and 'Expansive and Established' zone for two horizontals -- Mechanical Engineering Services and Embedded Systems. "We are delighted to be recognised as a leader among global engineering players. The ratings are testimony of our ability to integrate design, styling, new age customer experience through design thinking approach and help transform our customers as a product engineering partner," said Karthikeyan Natarajan, Global Head (Engineering, IoT and Enterprise Mobility), Tech Mahindra.  The company’s shares closed at Rs402.65, up 0.74% on the BSE.

Jet Airways said that it has deployed its flagship Boeing 777 jetliner to operate the daily flights between Delhi and Singapore. "The state-of-the-art aircraft, with its three-class configuration commenced operating on the sector effective today (Friday)," the airline said in a statement.  "Jet Airways has seen an increase in air traffic between Delhi, Singapore and beyond to Asean region." The airline added that the Boeing 777 jetliner provides it with more flexibility in transporting various types of consignments, including perishables, pharmaceuticals, machinery and industrial goods between Delhi and Singapore. The company’s shares closed at Rs497, up 2.57% on the BSE. The Total Investment & Insurance Solutions

The top gainers and top losers of the major indices are given in the table below:

Top Gainer (The Total Investment & Insurance Solutions)

The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions

Asian Indices (The Total Investment & Insurance Solutions)

Bank union urges Modi to fill workman/officer bank director vacancies -The Total Investment & Insurance Solutions

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5 June 2017

The All India Bank Employees' Association (AIBEA) on Sunday sought Prime Minister Narendra Modi's personal intervention to fill up the vacancies of workman/officer directors on bank boards. The Total Investment & Insurance Solutions

In a letter to Modi, AIBEA General Secretary C.H.Venkatachalam said the posts of workman and officer directors in the banks that have fallen vacant from 2014, 2015 and 2016 still remain vacant and there is no representation of employees and officers on the boards of all the banks.

He noted that they had met Union Finance Minister Arun Jaitley on three occasions with our representation and were assured that the matter is under process and would be expedited "but still nothing has happened so far for the past two years", he said in the letter.

Venkatachalam said the unions have already submitted the panel of names for appointment as Workman/Officer director and the bank managements have also sent in their recommendations.

"We learn that all other formalities have also been completed but yet the appointments are withheld by the Government," he said. The Total Investment & Insurance Solutions

Venkatachalam told IANS that there were 19 government banks which did not have workman directors and 20 did not have officer directors on their boards.The Total Investment & Insurance Solutions

Integrating weather reporting in India: The big challenge -The Total Investment & Insurance Solutions

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5 June 2017

 

Weather(The Total Investment & Insurance Solutions)

As the advent of the 2017 summer monsoon over mainland South Asia showed once again, Indian meteorologists have become highly accurate in their forecasts. Gone are those Jerome K. Jerome days when you left your umbrella at home if the Meteorological Department predicted rain. Now the weather office can even anticipate a relatively unpredictable phenomenon such as a dust storm in the north Indian summer. It may not be as good for forecasts more than a week in advance, but it's far better than before.

Farmers all over India -- especially those who do not have irrigation facilities -- are now using the agricultural meteorology (Agrimet) service of the India Meteorological Department, and they can get crucial information such as rainfall forecast over the next week through text messages on their phones.

There is a lot that can and should be done to extend the scope of these weather predictions to large-scale hydrological predictions, both short- and long-term, so that farmers and administrators can plan for the more frequent and more severe floods and droughts that are occurring in South Asia because of climate change. The Total Investment & Insurance Solutions

Information about water flow in rivers is now available through a water resources information system (WRIS) but that has severe limitations due to regulatory issues -- there is no information available to the public about real-time water flow in trans-boundary rivers, thanks to an outdated law. This means there is no real-time water flow information available in the public domain from the three largest river basins in the country -- those of the Indus, Ganga and Brahmaputra. This clearly affects preparations to face floods.

When it comes to drought preparedness, the situation is similar -- the information available is better than before but not good enough. The Central Water Commission now puts out in the public domain the water storage status of the 91 largest reservoirs in India and updates this information every week. This list still leaves out far too many water bodies that are crucial in determining if a region will have a drought.

The other crucial information needed to know if there will be a drought is status of groundwater, but the latest status available on the website of the Central Ground Water Board is dated March 31, 2011. India is a country where over half the irrigation is from groundwater. It is the world's largest groundwater user.

There is another shortcoming -- India does not have enough monitoring stations to map the air pollution over the country. Most of the monitoring stations are scattered over a few large cities, though satellites show the most polluted zones to be in and around industrial townships and highways. Improving this observation system is crucial because air pollution -- especially through aerosols -- affects local and regional weather patterns. The Total Investment & Insurance Solutions

Improving these hydrologic and air quality information systems is essential to manage the crucial food-water-energy nexus in a warming world. This will need integrated observations and predictions, which can be carried out through a Regional Earth System Prediction (RESP) framework. RESP treats land, ocean, atmosphere, ecosystem, agriculture, and human interactions as components of one integrated system. This has to be used with an integrated observation system (IOS) that provides the data needed to build, validate and verify local and regional weather and long-term climate system models.

Despite some shortcomings, all the pieces are in place to build the RESP and IOS for India. The country now has of one of the best instrumental climate data records of a sufficiently long-time series covering a large-enough area. Empirical forecasts of the monsoon and various hydrologic variables such as stream flows are now advancing to dynamic forecasts. The research work going on at the Indian Institute of Tropical Meteorology in Pune now includes extending short term weather forecasts to long term climate predictions. The Total Investment & Insurance Solutions

For information essential to manage the food-energy-water nexus, India needs two steps. The first is to improve its hydrologic and air quality information systems. The second is a national strategy to integrate the weather and climate information with the hydrologic and air quality information and manage this together. Then agricultural scientists can improve what they are doing right now to help farmers plan their crops. The Total Investment & Insurance Solutions

To make such an integrated system useful, scientists also need to estimate the length of time to which forecasts from such an integrated system will be reliable.

When all these are added up, integrating and managing this information may seem a daunting task, but it can be done. Building this capability is a necessary requirement to safeguard the nation's future.The Total Investment & Insurance Solutions

US Productivity Flat In First Quarter, While Labor Costs Up-The Total Investment & Insurance Solutions

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5 June 2017

American workers (The Total Investment & Insurance Solutions)

The productivity of American workers was flat in the first three months of this year, while labor costs rose at the fastest pace since the second quarter of last year.

Productivity growth was zero in the January-March quarter after rising at a 1.8 percent annual rate in the fourth quarter, the Labor Department reported Monday. It was the weakest performance since productivity had fallen at a 0.1 percent rate in the second quarter of last year but an improvement from an initial reading of a 0.6 percent decline. The Total Investment & Insurance Solutions

Productivity, the amount of output per hour of work, has been weak through most of the current recovery. Many analysts believe finding a way to boost productivity growth is the biggest economic challenge facing the country, but there is no consensus on the cause of the slowdown.

Labor costs rose at a 2.2 percent rate after having fallen at a 4.6 percent rate in the fourth quarter. It was the fastest gain since April-June of last year. The Total Investment & Insurance Solutions

The revision in first quarter productivity had been expected because of the revision to first quarter gross domestic product, the economy's total output of goods and services. The government initially reported that GDP had risen by a tepid 0.7 percent rate in the January-March perio. But that was revised to show a slightly better reading of a 1.2 percent gain. The boost in output led to the better reading for productivity.

Since 2007, productivity increases have averaged just 1.2 percent. That's less than half the 2.6 percent average annual gains turned in from 2000 to 2007, when the country was benefiting from increased efficiency from greater integration of computers and the internet into the workplace.

Rising productivity means increased output for each hour of work, which allows employers to boost wages without triggering higher inflation. The Total Investment & Insurance Solutions

The effort to boost productivity back to the levels since before the Great Recession will likely be a key factor in determining whether President Donald Trump will achieve his goal of boosting overall growth from the weak 2.1 percent average seen since the recession. The economy's potential for growth is a combination of increases in the labor force and growth in productivity.

During the campaign, Trump pledged to double growth to 4 percent or better. Trump last month released a budget that projects faster economic grwoth will produce $2 trillion in deficit reduction over the next decade but that forecasts expects growth to rise over the next few years to a sustained pace of 3 percent annual gains.The Total Investment & Insurance Solutions

European Stocks Subdued At Start Of Potentially Big Week -The Total Investment & Insurance Solutions

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5 June 2017

European stock markets (The Total Investment & Insurance Solutions)

European stock markets were modestly lower Monday at the start of a busy week that includes the latest policy decision from the European Central Bank and the British general election, which is taking place in the wake of a series of attacks. The Total Investment & Insurance Solutions

KEEPING SCORE: Britain's FTSE 100 dipped 0.3 percent to 7,525 while France's CAC 40 dropped 0.6 percent to 5,309. The German stock exchange was closed for a holiday. U.S. stocks were poised for a tepid opening, with Dow futures and the broader S&P 500 futures down 0.1 percent.

LONDON ATTACK: Much attention in Britain was focused on the fallout from Saturday's attack in London, which killed seven people. The three attackers were shot dead by police. The attack followed on from another in Manchester two weeks ago and comes ahead of Thursday's general election. Though Prime Minister Theresa May's Conservative Party is still ahead in the polls, the main opposition Labour Party has narrowed the gap during the campaign.

ANALYST TAKE: "The markets will be watching opinion polls to judge what, if any, impact this latest round of terror is having," said Jane Foley, a senior strategist at Rabobank International.

ECB WEEK: Perhaps of wider consequence to the markets in Europe will be the outcome of Thursday's policy meeting of the ECB. Following a recent decline in inflation, the bank is not expected to signal that it's ready just yet to ease up on its monetary stimulus, even though growth across the region has picked up momentum. The Total Investment & Insurance Solutions

GULF RIFT: Qatar's main stock index tumbled about 5 percent after Bahrain, Egypt, Saudi Arabia and the United Arab Emirates announced they would withdraw their diplomatic staff from Qatar over its support for Islamist groups and its relations with Iran. The news sent the price of crude oil briefly higher, but that soon dissipated — benchmark crude was down 30 cents at $47.36 a barrel while Brent, the international benchmark, fell 36 cents to $49.59 a barrel.

THE QUOTE: Jason Tuvey, Middle East economist at Capital Economics in London, said the impact on oil markets will "likely be limited" because Qatar is one of the smallest producers within the OPEC oil cartel. Its daily production of some 0.6 million barrels is equivalent to Ecuador's and far below Saudi Arabia's 10 million barrels a day. However, the impact on energy markets could become greater if the Dolphin gas pipeline from Qatar to the United Arab Emirates is disrupted. Qatar is the world's biggest exporter of liquefied natural gas. So far, there's no sign of the pipeline being disrupted, Tuvey said.

ASIA'S DAY: Asian stock markets finished mixed after trading within a narrow range. Japan's Nikkei 225 ended flat at 20,170.82 while South Korea's Kospi dipped 0.1 percent to 2,368.62. Hong Kong's Hang Seng index fell 0.2 percent to 25,862.99 and China's Shanghai Composite index dropped 0.5 percent to 3,091.66. Australia's S&P/ASX 200 lost 0.6 percent to 5,754.90.The Total Investment & Insurance Solutions