West Bengal chief minister and Trinamool Congress chief Mamata Banerjee opposed the hike in fuel prices, saying it will put the common man in great difficulty. The AIADMK has demanded an immediate rollback of the increase
New Delhi: The fuel price hike saw the government coming under fire from ally Trinamool Congress and political rivals BJP and Left parties which decided to hit the streets on the issue while AIADMK demanded an immediate rollback of the increase, reports PTI.
West Bengal chief minister and Trinamool Congress chief Mamata Banerjee opposed the hike in fuel prices, saying it will put the common man in great difficulty.
“We do not support the repeated rise in fuel prices. This will put the common man in great difficulty. We have conveyed our view where it needs to be conveyed,” Ms Banerjee, whose Trinamool Congress is a key UPA ally, said in Kolkata.
Pointing out that fuel prices were already high, she said, “Kerosene and domestic gas are used by common people.
The price of petrol was also recently hiked.”
Describing the hike in diesel and LPG prices as an “inhuman step”, BJP spokesperson Nirmala Sitharaman said “the increase will also affect India's growth story” the party would hold protest demonstrations tomorrow across the country.
“BJP President Nitin Gadkari has announced that the party will hold protests from the district to the national level across the country against the hike,” BJP vice-president Mukhtar Abbas Naqvi told PTI.
He said the hike has been announced by the government to “serve the interest of the oil mafia”.
“In the last one year, the government has increased petroleum prices ten times. While the common man is bearing the brunt of price rise, the government has now added fuel to fire,” Mr Naqvi said.
Nifty may head to 5,556
Global events like the International Energy Agency releasing strategic crude stockpiles to overcome the supply disruptions from Libya and easing of the Greek debt crisis helped to offset the rise in weekly food inflation on the domestic front. The positive developments led the market 2% higher in the week.
However, after the market closed for the week the government announced a Rs3 per litre increase in diesel prices, Rs2 a litre hike in PDS kerosene prices and a steep Rs50 hike per domestic LPG cylinder. It also reduced customs and excise duties on petroleum products, sacrificing Rs49,000 crore a year. The under-recoveries which stood at Rs1,71,140 crore will now come down by Rs21,000 crore after Friday's decision.
Giving details of the duty restructuring, oil minister S Jaipal Reddy said the elimination of 5% customs duty on crude oil and all petroleum products will result in a revenue loss of Rs26,000 crore and the excise duty cut on diesel from Rs4.60 a litre to Rs2 a litre which will entail a revenue loss of Rs23,000 crore during the current fiscal.
Terming the hike as 'modest', finance minister Pranab Mukherjee expressed hope that state governments would reduce their taxes to provide relief to consumers. However, the fuel price hike saw the government coming under fire from ally Trinamool Congress and political rivals BJP and Left parties which decided to hit the streets on the issue while AIADMK demanded an immediate rollback of the increase.
Talks of the review of the double taxation avoidance agreement with Mauritius resulted in a huge sell-off on Monday, but the market bounced back and posted marginal gains the next day. The indices ended flat with a mixed bias on Wednesday in the absence of any domestic triggers.
The market showed strong resilience on Thursday as it shrugged off weak global cues and high food inflation to close with decent gains. The gains were extended on Friday on news that the IEA will release two million barrels a day for the next 30 days. India, which imports nearly 70% of its crude requirements, was upbeat on the news. The Sensex closed the week at 18,241, a gain of 370 points for the week, and the Nifty settled at 5,471, up 105 points. The market might see a small rally with the Nifty going up to 5,556.
Food inflation touched a two-and-half month high of 9.13% in the week ended 11th June, higher from 8.96% in the previous week. The latest food inflation numbers are the highest since the week ended 26 March 2011, when the rate of price rise of food items touched 9.18%.
On the international front, the International Energy Agency on Thursday announced that it would release two million barrels a day for 30 days, to make up for supplies choked off by an armed rebellion in Libya.
The Greek cabinet earlier in the week approved a 2012-2015 austerity budget plan as well as laws for its implementation, a key condition for further EU-IMF help to tame a massive public debt. Eurozone ministers have insisted on the latest measures before they would release the next tranche of debt funding worth 12 billion euros ($17 billion), part of a 110-billion-euro rescue package agreed with the European Union and International Monetary Fund last year.
As the intermediate trend is down, the strategy should be to use rallies to exit long positions
S&P Nifty close: 5471.25
SHORT term: Down; MEDIUM term: Down; LONG term: Up
The S&P Nifty recovered smartly (+2.84%) on the last day of the week to close above the trendline support (in pink). It ended the week 1.95% higher, on significantly higher volumes. The sectoral indices which led the recovery were BSE IT (+2.97%), BSE Bankex (+2.50%) and Teck (+2.12%), while the laggards were BSE Reality (-4.91%) and BSE CDS (-2.76%).
It is visible from the weekly chart that the S&P Nifty continues to be in an intermediate term decline, as depicted by a lower top and lower bottom formation. Despite the smart recovery, the histogram MACD continues to be below the median line, implying that the intermediate trend is still down.
It must have been a big relief for the already battered Bulls when the S&P Nifty recovered sharply on the last day of trading for the week, to close above the trendline support (in pink). In the process it has completed the 38.2% retracement of the fall from 5,944-5,195 points and the 50% and 61.8% retracement levels are pegged at 5,570 (which also coincides with the 20wema) and 5,658 points, respectively. One has to keep a close watch on the trendline (in pink) which is pegged at 5,373 points, this week, as only a breach of this would make the Bears more aggressive. What this means is that the Bulls can afford the Nifty to slip close to this level, but certainly not below it, on a weekend.
For any bullish possibility (which was mentioned last week) the S&P Nifty had to survive above the support line this week and bounce, which it has done. The 20wema pegged at 5,575 points is the first major hurdle that it has to cross and the trendline resistance (in purple) pegged at 5,715 points is the next hurdle to watch out for, from an intermediate term perspective.
The only hope for the Bulls at this moment is that the market maintains symmetry to the movement in the period August 2009 to June 2010. In this scenario, we would see a sideways move in the weeks ahead.
Here are some key levels to watch out for this week.
Last week, the Bulls barely managed to avoid crossing the crucial resistance area of 5,486-5,501 points, though they came within handshaking distance of this level.
The Bears still hold a slight edge in the short term till the 5,521 points level is crossed. As the intermediate term trend is down, the strategy should be to use rallies to exit long positions and wait to see whether we get a higher bottom in the next decline. If we do, then we could see the Nifty test the 5,658 points of trendline resistance in the weeks ahead. For the Bulls to capitalise on the comeback made last week, they must defend 5,362 points (in lows), this week. It would be an absorbing week of trading as the Bulls and Bears resolutely try to defend 5,362 and 5,575 points levels, respectively.
(Vidur Pendharkar is a consultant technical analyst and chief strategist at www.trend4casting.com.)