X

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.
Oil's boil, sustainable growth & more - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jun 16, 2008

    Oil's boil, sustainable growth & more

    Saudis' nervous on oil spike
    In what would bring some sort of respite for oil consumers, Saudi Arabia, the world's biggest oil exporter and the OPEC's most powerful member, is planning to increase its output by about 500,000 barrels a day next month onwards. This will be a rise of nearly 6%, and is expected to bring Saudi output to a production level of 10 million barrels per day (mbpd), its highest ever. As reported by the International Herald Tribune, the Saudis have already increased its oil output by 300,000 bpd over last month's production, 'a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices'.

  • Also read - Oil's continuous boil

    As a matter of fact, crude oil prices have gained 40% since January this year, with a barrel's (159 litres or 42 gallons) cost increasing from US$ 96 to US$ 135 currently. This has led to widespread protests in regions ranging from South Asia to Eastern Europe to South America. The spectre of inflation induced by such a rise in fuel prices has also had an impact on the 'borrow-to-spend' kinds - the American consumers - who have been gradually cutting back on their consumption, including reducing their driving binge. For the record, gasoline (petrol) prices in the US have risen above US$4 a gallon, from US$ 3 at the start of this year. Signs of nervousness all around!

    In the meanwhile, prospects of increase in production by the Saudis led to oil prices falling last Friday, with a barrel's cost declining by almost US$ 2 to settle just under US$ 135 on the New York Mercantile Exchange.

    In India, the argument continues...
    From accusations of corporate spying to rigging prices of a mega IPO (initial public offering), the Ambani brothers (Mukesh and Anil Ambani) are at it again. This time, the bone of contention is the latter's proposed deal to form a mega telecom venture for his company, Reliance Communications (RCOM) with the South African major, MTN.

    As reported in frontline business media, Reliance Industries Ltd. (RIL), which is India's most valuable company and is controlled by elder brother Mukesh, has objected to the talks between RCOM and MTNL, saying it is entitled to the right of first refusal on purchasing a controlling stake in the phone company. As reported on the Bloomberg, this latest move from RIL may seem as an extension of the ongoing dispute over gas prices between the two brothers. Now, that's competition of a different kind!

    Some good news at last for India Inc.
    Facing the threat of rising commodity (metals, fuel) prices on one hand and higher employee costs on the other, India's manufacturing and infrastructure sectors should finally have something to cheer for. As reported in a leading business daily, the country's steel production is expected to surpass domestic requirement by 2011-12, thereby easing pressure on prices of the alloy, which has been adding to the spiraling inflation. As reported by the steel minister, the country shall 'achieve 124 million tons (MT) of steel capacity by 2011-12 (52 MT currently), well exceeding the requirement of 110 MT at that point of time'. As a matter of fact, steel prices have shot up by over 50% over the past six months, adding to the woes of the UPA government, who in its last year at the helm is battling a seven-year high inflation of 8.75%.

  • Also read - Steel's supply outlook

    Against an annual increase of 6% in production over the past few years, the annual demand for steel in India has been rising by about 13%, which has led to spiraling metal prices, thereby inflicting profitability pressure on industries like power and capital goods, manufacturing and infrastructure, which are the biggest consumers of steel in the country.

    Mantra for sustainable growth
    Slowdown or no slowdown, record spending on infrastructure will continue in emerging economies, reports The Economist, with a special mention of the BRIC economies (Brazil, Russia, India and China). This will help the countries sustain rapid growth. As reported, emerging economies are likely to spend an estimated US$ 1.2 trillion on roads, railways, electricity, telecommunications and other projects in 2008.

  • Also read - Opportunities in infrastructure

    This will be equivalent to 6% of their combined GDPs and twice the average infrastructure-investment ratio in developed economies. With respect to India, the report talks about the government's eleventh five-year plan (2007-2012) of spending nearly US$ 500 bn in infrastructure projects. Whether this is achievable is highly questionable, given the government's deficit and lack of will that has impaired the country's all round development for so many years in the past. As a matter of fact, the World Bank estimates that a 1% increase in a country's infrastructure stock is associated with a 1% increase in the level of GDP. This can be true for India as well, but only if...

     

     

    Equitymaster requests your view! Post a comment on "Oil's boil, sustainable growth & 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.

    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.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    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...

    More
    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

    S&P BSE SENSEX


    Aug 18, 2017 02:28 PM

    MARKET STATS