Petrol watch

Last week, the markets turned negative as Nifty slipped towards the lowest point since October 7. We saw heavy selling in midcap and smallcap stocks with many of them testing their respective 52 week lows. Global markets including the US, Asian and Europe too slipped along with profit taking happening in gold. Last week we saw a hand full of decisions being taken on the domestic front, which caused some individual stock movements but failed to cheer the markets.

Spiralling fuel price was a major concern for the public and had become a problem for the central government. But this week we saw the PSU oil companies lowering the petrol price by Rs 1.85 per litre citing reason that the international crude price has remained more or less stable for some days. But this move by the central government might be an attempt to avoid some tough questions during the winter session of the Parliament in December.

As far as oil firms are concerned, they have decided to revise petrol prices every two weeks given the volatility in the international crude market. The domestic market outlook is weak and it is likely to test 4780 in the short term.  Movements below this level can further deteriorate the situation.  The resistance for the Nifty will be at 4957 and 5064.  Investors can buy Nifty December 4900 put option for a holding period of eight working days.

Apart from that, the food inflation has come down to 10.63 per cent for the week ended November 5th from 11.81 per cent in the previous week. The prices of vegetables moved up from 26.05 per cent to 27.26 per cent, while onions became cheaper by 22.89 per cent. Potatoes also became costlier by 1.61 per cent from 0.53 per cent a week earlier. Tomatoes, too, got expensive by 138.7 per cent during the week ended November 5, from over 100 per cent the earlier week. Cereals and rice saw inflation declining. Pulses, on the other hand, inched up further to 14.44 per cent from 13.27 per cent a week before.

Another major move last week was the approval of the draft cabinet note by the Finance Ministry, allowing up to 51 per cent FDI in multi brand retail. The ministry has approved the enhancement of the FDI to 100 per cent from existing 51 per cent for single brand retail. Retail sector stocks like Pantaloon retail, Shopper Stop and Trend moved up sharply. Also the cabinet has allowed 26 per cent FDI in the pension sector which is also seen as a great step. The Civil Aviation Ministry has given its proposal to the government to allow 24 per cent FDI by foreign carriers in Indian carrier which will help some of the debt ridden companies to reduce the debt burden. The stocks in the retail sector are likely to gain further momentum in coming days.

On the economic data front, European IIP was at -2 per cent against an estimated -2.2 per cent while the French GDP rose to 0.4 per cent against -0.1 per cent and the German Zew Economic sentiment slipped to -59.1 against -51.2. On the US front, the retail sales rose 0.5 per cent against an estimated 0.4 per cent while the NY Empire state-manufacturing index rose 0.6 against -8.5. One another data was the US jobless data, which showed that the jobless claims filed were at 38,8000 against 39,3000 previously indicating that the economy may be on the track of slow recovery.

Crude had recently fallen below $98, after moving above $102, as US crude inventories rose to -1.1 million against -1.4 million. Crude is having resistance at $99.95 above it can retest $101.99 and more while the support is there at $96 and $95. A strong dollar always will keep the gold price lower. Gold has support at $1707 and resistance at $1763. 

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