Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Commodities, Indian inflation & more... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Mar 25, 2008

    Commodities, Indian inflation & more...

    • Against a backdrop of falling Indian stock market and property prices, commodities seem to be charting an upward path. Prices of commodities such as gold, crude oil, foodgrains and some metals have been rising for a variety of reasons and are expected to remain firm in the medium term atleast. This has largely been attributed to supply not being able to keep pace with the rising demand. Besides this, investors are flocking to commodities as an investment avenue given the meltdown in the global stock prices and the housing market. This explains why gold has been hitting highs recently as this precious metal is looked upon as a safe haven in times of turbulence in other asset classes. Prices of metals such as copper and aluminium have been moving northwards due to fears of power shortage in Chile and South Africa respectively. Crude prices have been escalating as China and India continue to guzzle oil. Besides this, given that the output from oilfields have been depleting, energy companies will have to not only scour for reserves in remote places but also employ advanced technologies to extract more oil from the fields - an increasingly difficult task indeed. Also, since prices are heavily subsidized in India and China, consumers in both these countries are not feeling the pinch and hence the demand has stayed firm.

    • Inflation in India is slowly creeping up and is largely being attributed to supply side factors and the rise in global commodity prices. Inflation (WPI) for the week ended March 08, 2008 at 5.92% was a hair's breadth away from the 6% mark. The main culprit seems to be the rising food prices. With the WPI inflation breaching the upper level of the RBI's target band of 5% to 5.5%, there might be pressure on the central bank to take note of the same and suggest some monetary adjustments so that the impact of rising prices is lowered on consumers. Further, with the crude oil prices touching US$ 110 per barrel, the pressure on domestic energy prices is also expected to increase, thus having the potential to increase inflation at a higher rate going forward.

    • The generics market in the US continues to be highly competitive with the prices of drugs going off patent falling by as much as 95% to 99% on day 1 itself. That said, there has been some semblance of stability as far as the base business of generics companies is concerned. Domestic pharma are increasingly focusing on niche product areas with growing focus on biotechnology, challenging patents and also settling legal suits. One of the growth drivers for generics in the US includes a strong marketing and distribution network. Since most of the domestic pharma majors sell unbranded generics in the US market, a strong sales force coupled with strong relationships with the distribution chain in the region will assume significant importance. Thus, even if a drug goes off patent, the revenue generating potential is likely to get undermined if the distribution and marketing network is weak. Other important strategies to sustain growth in this market include cost competitiveness, consolidation, continuous product flow and a balanced product mix in terms of Para IV opportunities and niche products.



    Equitymaster requests your view! Post a comment on "Commodities, Indian inflation & more...". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)