Report by- Sabyasachi Bhattacharya
Major impact of rising crude oil on the Energy sector-
As crude oil prices are increasing with each session, prices breached 4-year high on Wednesday. The prices are being lifted by expectations of a tightening market ahead of US sanctions that will target Iran’s oil exports from next month. Although Russia and Saudi Arabia stuck a private deal in September to raise oil output to cool rising prices, the market are still heated up ahead of US’s sanctions against Iran’s oil sector, which analysts expect to knock around 1.5million bps of supply out of markets. This impact has affected the Indian energy sector badly as major companies like BPCL, Adani Power, Indian Oil Corporation lost around 7%-10% of their equity value in intraday on Thursday. The rising crude oil has also shown its impact on automotive sector as well. As a matter of fact our today’s biggest losing sector is automotive itself. The deal between Iran and US seems cloudy as of now, there is no official statement by anyone regarding the future durability of the deal. Crude prices have impacted the Indian as well as the entire Asian markets in today’s Intraday. Even DAX and CAC remained flat for the day, showing uncertainty in the markets.
Rising oil prices usually impacts the Aviation industry too but on a very surprising note major airlines like JET Airways and SpiceJet moved upwards by 11% and 8% respectively. This can be turned as a surprising turn of events for the investors as Oil prices are generally proportional to Airline stock prices but this hasn’t been the case in today’s market.
The indirect reason why Aviation stocks went up is because Domestic aggregate passenger load is very high for these airlines, in other words capacity utilization of the airlines have gone up this year. The second half of the fiscal is a seasonally strong quarter for aviation companies is another reason. Besides, crude prices are expected to moderate from the current levels or remain stable due to marginal decline in global oil demand, sharp increase in non-OPEC supply, stable OPEC production and increase in global oil inventories. This will provide cushion to companies to reduce fare, which in turn can push passenger growth higher.
ICICI Bank welcomes a new MD & CEO-
The fearless MD and CEO of ICICI Bank, Chanda Kochhar, has quit her post in the bank with immediate effect. Kochhar led ICICI Bank since 2009 and her third term was due to end in March 2019. In June, Kochhar went on an indefinite leave pending an external enquiry against her on allegations of conflict of interest and quid pro quo charges relating to a loan given to Videocon group. ICICI Bank was quick to assure that the ongoing probe into allegations of financial impropriety and conflict of interest against her will remain unaffected. Kochhar was part of the core team that setup ICICI Bank and was promoted to assistant general manager in 1994 before becoming the deputy general manager in 1996.She was tasked with handling the newly-established Infrastructure Industry Group of the bank, which created industry expertise in areas of telecom, power and transportation.In 1998, Kochhar was promoted as General Manager and was tasked with handling the bank’s top 200 clients. She also oversaw the e-commerce wing of the lender. The Board has decided to appoint Sandeep Bakhshi as Managing Director and Chief Executive Officer. His appointment will be for a period of five years until October 3, 2023, subject to regulatory and other approvals. The other terms and conditions of his appointment, such as remuneration, would remain unchanged.
Source-Moneycontrol , Purple Trades Research Department
Sensex and Nifty are trapped by the bears, bulls show no signs of life-
Chart source- Upstox
There has been absolute carnage in the markets today. Major Indices, Sensex and Nifty were totally at the mercy of the bears. The bears didn’t even let the bulls enter the market at any point of time. The start of the day indicated bearish behavior as Nifty opened with a major ~100 points gap down. The markets after that were incapable of any recovery. Nifty has broken all the major supports estimated by major AMCs. More than 2 shares declined for every share rising on the BSE. The ice looks thin as of now for the October series as nobody knows how long this bloodbath will continue. Eicher motors, Hero Motocorp and Reliance Industries were the major losers for the day. The following reasons can explain such a movement in the market-
- Dollar scales 11-month peak on yen. Higher dollar is hurting rupee which hit a fresh record low in the previous session.
- Higher US yields are anything but favorable for emerging markets. This is pressuring local currencies badly.
- Brent crude rose nearly 2% after hitting a four-year high on Wednesday.
- Fears of a rate hike by RBI on Friday is keeping the investors away. The Reserve Bank of India is likely to raise the policy repo rate by 25 bps from 6.5% to 6.75%.
- Nifty closed below its 200DEMA which was considered as a major support. As Nifty closed below its 200DEMA markets look gloomy.
Source- Purple Trades Research Department
Top sectors that moved the market today- Data source- Moneycontrol
Top Gainers for today- Data source- Moneycontrol
Top losers for today- Data source- Moneycontrol