Tag: bombay stock exchange
India To Benefit As Global Crude Prices Tumble
Posted by BizGuy on Sep.05, 2008, under Uncategorized No Comments
The Indian stock market is back to its normal bullish run again after a prolonged dull run. The BSE Sensex gained 551 points to close at 15049.86 on Monday, single largest gain in a day since July 23rd, 2008 when the index surged 838 points. The index has been hovering around 14000 mark for long time. This bullish run has been due to rate-sensitive stocks and that of state owned oil and gas companies gaining ground as news of Hurricane Gustav sparing major US oil fields caused a further collapse of international crude price. The price of crude oil has been cooling down steadily after it hit high of $147.27 per barrel on 11th July as Russia’s conflict with Georgia disrupted supply of oil and gas. Demand of fuel in US and China, the two biggest energy consumers has also softened the international market.
More than anything else, international oil price has single most important bearing on Indian economy as India’s 90 percent energy consumption depends on crude oil exports. Since oil prices started to soar, the country’s trade deficit has also been widening every month and it touched a record $10.80 billion for the month of July on higher oil import bill. Inflation has also been rising rampantly despite the government raising interest rates to check it. It also came down to 12.34, the first time in moths after a prolonged series of increase.
Now that everything is over, we can hope the inflation to come down to normal (4 to 5 percent), the trade gap to decrease, stock market to be buoyant and the overall health of the economy to become better.
Despite the decrease in the international crude price, the government has ruled out any slash in the existing fuel price. In a meeting with the media, Petroleum Minister Murli Deora told reporters
“Where is the scope for reducing prices? Oil companies are still making losses,”
Petroleum Secretary R.S. Pandey said that
“Oil companies continue to lose money on petrol, diesel, domestic LPG cylinder and kerosene. There has not been a substantial reduction in global prices to warrant a price cut,”
Airlines also announced that the fall in Air Turbine Fuel will not see an immediate reduction in air fares.
