Companies & Sectors
Crude oil prices to remain around $90 in the near term

The uncertainty in Egypt and the faltering economic recovery in a few developed countries may ensure that prices may not come down dramatically from the current level

A weakening dollar, economic recovery in developed countries and the current political uncertainties in Egypt will support crude oil prices to hover at around the level of $90 a barrel in the near term.

Current crude oil prices are hovering at around $87 a barrel, while the price of Brent crude has crossed the $99 a barrel mark.

"Taking a cue from recovery in economies from developed countries, particularly from the US and European countries, the Federal Reserve Bank's decision to keep interest rates at zero levelwhich is already weakening the dollarand the current political turmoil in Egypt, has fuelled crude oil prices," an analyst (preferring anonymity) from a Mumbai-based research firm told Moneylife. 

"If these factors remain the same, then we would not see prices come down dramatically from the current level," added the analyst.

Crude oil prices are being cushioned by the current unrest in Egypt. Though this country is not a major oil supplier, the ongoing turmoil has caused a disruption in shipments through the Suez Canal, which accounts for around 5% of the world's oil & gas shipments.

Around 1.8 million barrels of oil per day move through the Suez Canal.
There are still uncertainties over the stability in the country and the industry fears that violence would spread in the area, which is one of the main oil-producing regions in the world.

"If the situation in Egypt worsens, we will see more increase in prices," added the analyst.
The greenback tumbled against other currencies as the Federal Reserve Bank maintained the stance of not changing current interest rates.

Commodity prices are shooting up all over the world and crude oil prices have become the main concern globally for all economies.

Economic recovery in the world largest oil-consuming country, the US, has finally gained momentum after the aftermath of the global recession is slowing fading. 

However, American recovery will fuel demand for crude oil in the future, which in turn will push up prices even further.

The Institute for Supply Management's index of manufacturing activity rose to 60.8 from 58.5 in December, showing 18 straight months of expansion for the sector. Any value above 50 for the PMI reflects expansion in the manufacturing sector.

"An indication of recovery in the manufacturing activity would cushion prices," added the analyst.

China's PMI (Purchasing Managers' Index) has also remained above 50 level in the last month. US unemployment data has fallen to 9% from 9.8% in just the past two months, which is another indicator that the economic is recovering from the recession.

However, market experts also feel that the current levels of crude oil pricesmainly Brent crudemay derail the recovery.

As of now, analysts are in the wait-and watch mode, and hope that Egypt does not implode, which would set the Middle-East on fire.


BSE escalates price war with rival NSE

The move is a part of the BSE's efforts to attract more business from brokers operating from areas other than big cities like Mumbai, Delhi and Ahmedabad

Mumbai: Taking its price war with main rival National Stock Exchange (NSE) up a notch, the Bombay Stock Exchange (BSE) has announced the waiver of all transaction charges for brokers from semi-urban areas with effect from next month, reports PTI.

The move is a part of the BSE's efforts to attract more business from brokers operating from areas other than big cities like Mumbai, Delhi and Ahmedabad.

In a circular to its members, the BSE said that "transaction charges accruing to BSE, equivalent to annual connectivity costs of the member pertaining to BSE will be waived off for semi-urban areas with effect from 1 March 2011."

The transaction charges will be waived for trading in any segment of the BSE, the bourse said.

"Semi-urban areas are defined as towns falling outside the municipal limits of Mumbai (including Thane and Navi Mumbai), New Delhi (including Delhi, Noida and Gurgaon), Kolkata, Chennai, Ahmedabad, Hyderabad (including Secunderabad) and Bangalore," the BSE said.

The NSE had in May last year decided to waive the transaction charges for brokers engaged in the cash and derivative segments through leased lines from rural and semi-urban areas. Prior to the waiver, the brokers were paying Rs1 lakh per year for these transactions.

The BSE has been in existence for over 135 years, making it the oldest bourse in Asia, but its business volumes are much lower than the NSE, which began operations in 1994. The NSE overtook the BSE to become the country's largest stock exchange in 1995.

The factors helping the NSE maintain its lead include a low-cost structure due to the use of the latest technology.

Nevertheless, the BSE has been trying to bridge this gap over the past few years.

Some of the steps taken by BSE on this front include the announcement of new derivative rates in December 2009, lowering transaction costs, and increasing the duration of trade by kicking off at 9 am. The NSE has also implemented this strategy of an early market opening time.


Govt announces 24-hour customs clearance at 8 ports

In India, the transaction cost for exporters is around 7%-8% of the total value of the cargo, which is among the highest in the world

New Delhi: The government today announced a slew of measures, including round-the-clock customs clearance at eight ports in the country, with the aim of bringing down transaction costs on exports by Rs2,100 crore, reports PTI.

"It is expected that implementation of the 23 issues is likely to mitigate transaction costs by approximately Rs2,100 crore," minister of state for commerce and industry Jyotiraditya Scindia said here.

The government expects that a permanent reduction in transaction costs through these initiatives will have a long-term positive impact on the competitiveness of India's exports.

Reducing transaction costs should be an "ongoing task", said finance minister Pranab Mukherjee while releasing the report of a 'Task Force on Transaction Cost in Exports'.

In India, the transaction cost for exporters is around 7%-8% of the total value of the cargo, which is among the highest in the world.

India's exports rose by 36.4% y-o-y to $22.5 billion in December, 2010, the highest growth rate in the last 33 months.

During the April-December period of the current fiscal, India's outbound shipments grew by 29.5% to $164.7 billion from $127.1 billion in the same period last year.


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