Money Morning….


Safegaurd duty imposed against the seamless pipes and tubes

Positive in short term for players like Jindal Saw and ISMT To provide relief to domestic producers, the Government has imposed safeguard duty on the import of seamless pipes and tubes, which are used in equipment for power generation, oil exploration, and bearing industry, besides others. BHEL, ONGC and Oil India are among the largest consumers of such products, while Jindal Saw and ISMT Ltd are key domestic producers of these products.

According to a notification issued by the Central Board of Excise and Custom (CBEC), safeguard duty will be imposed at the rate of 20% in the first year (August 13, 2014-August 12, 2015), 10% in the second year (August 13, 2015-August 12, 2016) and at the rate of 5% in the third year (August 13, 2016-February 12, 2017). This will not be applicable on imports from developing countries such as Indonesia, Malaysia, Thailand and South Africa, besides others.

We believe this development to be positive in short term for players like Jindal Saw and ISMT
Crude oil corrects further to 14 months low; Brent @ $101.8/barrel and NYMEX @96.8 – Positive in short to medium term for ONGC, OIL, BPCL, HPCL, IOC Crude oil has further corrected led by easing concern on supply from Middle East and increase in supply from Libya. However, the situation in Iraq needs to be monitored on continuous basis. Brent WTI has corrected from the highs of ~$114/barrel in the month of Jun14 to $101.8/barrel.

NYMEX crude has corrected from highs of ~$106/barrel in the month of Jun14 to $96.8/barrel. We believe that, probably Sept14 will require last hike for diesel and then subsidy on diesel will be almost nil from Sept14 onwards. Petrol is already de-regulated. We believe this development to be positive in short to medium term for ONGC, OIL, BPCL, HPCL and IOC.

NABARD cuts interest rates up to 50 basis points

The National Bank for Agriculture and Rural Development (NABARD) cut interest rates on medium and long-term refinance facilities with immediate effect. “NABARD has reduced the rate of interest by 20 bps on their long term refinance facility (3-5 years and 5 years) and by 50 bps for the medium-term refinance facility (18 months to 3 years) to banks with an objective to give a spur to investments in agriculture,” the bank said .
Cash-starved Food Corporation of India asks government to clear Rs 500bn dues

Faced with liquidity crunch, state-run Food Corporation of India (FCI) has asked government to clear dues of Rs 500bn in a phased manner. The dues have accumulated to Rs 500bn at the end of 2013-14 due to lesser allocation of funds against the estimated subsidy bill in last three-four years. The FCI has also asked the government to allow it to securitize the dues for raising funds from markets, sources said.

Eurozone Trade Surplus Rises Unexpectedly In June

Eurozone’s trade surplus increased unexpectedly in June. The trade surplus rose to EUR 16.8 billion in June from EUR 15.4 billion in May. Economists had expected the trade surplus to decrease to EUR 15.1 billion. Exports increased 3% YoY and imports grew 2% in June. On a seasonally adjusted basis, the trade surplus fell to EUR 13.8 billion in June from EUR 15.2 billion in May. Exports fell 0.5% MoM, after rising 0.7% in the previous month. Meanwhile, imports grew at a stable rate of 0.5% in June.

South Korea July PPI Rises At Faster Rate

Producer prices in South Korea rose at a faster rate in July. Producer prices rose 0.2% YoY in July following the 0.1% increase in June. Agricultural, forestry and marine products prices increased at a slower rate of 2.4%, after the 3% rise in June.

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