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Sensex Finishes Firm; Oil & Gas Sector Up 0.8%
Tue, 13 Dec Closing

Indian share markets gathered some momentum in the afternoon session and finished the trading day on a positive note amid strong international markets. At the closing bell, the BSE Sensex stood higher by 183 points, while the NSE Nifty finished up by 51 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished down by 0.4% and 0.1% respectively. Gains were largely seen in auto and IT stocks.

Asian markets finished higher today with shares in Japan leading the region. The Nikkei 225 is up 0.50% while China's Shanghai Composite is up 0.07% and Hong Kong's Hang Seng is up 0.06%. European markets are higher today with shares in Germany leading the region. The DAX is up 0.56% while France's CAC 40 is up 0.55% and London's FTSE 100 is up 0.17%.

The rupee was trading at 67.49 against the US$ in the afternoon session. Oil prices were trading at US$ 53.07 at the time of writing.

According to a new report from the International Energy Agency (IEA), the growth in global coal demand is expected to stall over the next five years. The report also noted that the share of coal in the power generation mix will fall to 36% by 2021, down from 41% in 2014, due to lower demand in China and the United States, combined with the increasing growth and popularity of renewables and a strong focus on energy efficiency.

Global coal consumption declined for the first time this century in 2015, while global production decreased for the second year in a row. Global coal supply fell mainly because of production cuts in China, the US and Indonesia.

Global coal consumption fell by between 90 and 180 MT in the first half 2015

The dynamics in the coal market will continue to be determined by China, which will remain the largest consumer by far, representing with about half of total demand. The country demonstrated its global market leverage this year when its government's decision to curb domestic output triggered a remarkable recovery in coal prices.

The report also stated that Chinese coal demand will decrease through 2018, followed by a slight recovery. Still, the country's demand in 2021 will remain below 2013 levels. In the United States, coal consumption dropped by 15% in 2015, precipitated by competition from cheap natural gas, cheaper renewable power.

Meanwhile, there will be strong growth in demand in Asian countries such as India, Vietnam and Indonesia, where coal-based electricity is one of the preferred options to increase power generation. Smaller importers including Pakistan, Turkey and Malaysia will also drive demand, spurring seaborne trade growth through 2021. Indian demand will rise 5% a year through 2021, while that in the Association of Southeast Asian Nations will jump 7.2% a year.

Mining stocks finished the day in red with MMTC Ltd and Gujarat Mineral Development Corp Ltd leading the losses.

Moving on to news from stocks in oil & gas sector. According to an article in The Economic Times, India's oil demand grew 12% in November as customers rushed to petrol pumps to purchase fuel with their old currency notes after the government demonetized high-value notes.

The government made 500 and 1000 rupees notes illegal on November 8 but allowed petrol pumps, along with hospitals, railways and some other essential services providers, to accept old notes for several days after that.

Petrol sales surged 14.25% in November while the demand for diesel, which accounts for nearly 40% of all oil consumed in the country, rose 10.45%.

The sale of aviation turbine fuel also rose 8% on the back of increased air traffic. The use of kerosene fell dramatically by 32% as the central government is cutting down on the allocation of subsidized kerosene to states as access to cooking gas and electricity increases in rural areas.

In another development, Indian Oil Corporation's share price finished the trading day on an optimistic note (up 2%) after it was reported that the company is in advance talk to acquire 26% stake in debt-laden Gujarat State Petroleum Corporation's (GPSC). GPSC has almost-completed Rs 45 billion Mundra LNG import terminal in Gujarat.

The 5 million tonnes a year import terminal which is the third facility in Gujarat for import of natural gas in its liquid form in ships, is nearing completion and GSPC is keen to exit the project completely. IOC is keen to take half of GSPC stake and wants the Gujarat government entity to keep the remaining 25%.

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S&P BSE OIL & GAS


Jul 21, 2017 (Close)

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