This document provides an energy outlook and summarizes commodity price movements for crude oil, natural gas, and currencies. Crude oil and natural gas futures fell over 1% on the NYMEX and declined marginally on the MCX amid growing stockpile surpluses and weaker economic data from the US. Natural gas storage saw its first withdrawal since March 2012 but prices still closed lower. The dollar index was flat while the rupee appreciated against the dollar.
General motors straddle volatility strategyKaran Shah
Created a long volatility, neutral strategy (vega >0; delta= 0). suggested investment was for an
endowment fund so have considered carefully the levels of risk involved. Justified choice by considering the following factors: (i) the short duration of the strategy; (ii) current
market conditions (levels of the VIX, for example); (iii) historic volatility
of your asset and its current implied volatility; (iv) bid-ask spread and
liquidity of the relevant options, etc.
Graphed the expected profit/loss for our strategy for various choices of X,
assuming the stock price does not change and Implied Volatility changes by +/- 3%.
General motors straddle volatility strategyKaran Shah
Created a long volatility, neutral strategy (vega >0; delta= 0). suggested investment was for an
endowment fund so have considered carefully the levels of risk involved. Justified choice by considering the following factors: (i) the short duration of the strategy; (ii) current
market conditions (levels of the VIX, for example); (iii) historic volatility
of your asset and its current implied volatility; (iv) bid-ask spread and
liquidity of the relevant options, etc.
Graphed the expected profit/loss for our strategy for various choices of X,
assuming the stock price does not change and Implied Volatility changes by +/- 3%.
Nifty and Sensex were closed green; gained 1.04%, 1.05% resp. this week.
New Home Sales 377K and US Unemployment Claims at 350K.
US & Euro markets were mixed; Asian markets too were also mixed last week.
Sensex closed down 92.66pts@19691.432;Nifty closed down 27.75pts@5988.40.The
Market fell on Monday, posting its first losing session, as investors booked profits in
recent out-performers such as SBI after a four-day winning streak had sent indices to
two year highs. Oil eased to $111 a barrel on Monday as some investors booked profits.
Nifty and Sensex were closed red; lost 0.54%, 0.39% resp. this week.
Existing Home Sales 5.04M and US Unemployment Claims at 361K.
US & Euro markets were mixed; Asian markets too were also mixed last week.
Sensex dropped 104.4 pts @ 17,678.81 pts due to further downward journey in banks,
capital goods, & auto stocks while Nifty dropped 36.45pts @ 5,350.25 pts. Another
reason is that the governments under pressure in coal allocation scam with Rs.1.85 lakh
crore loss. MSCI's broader index of AsiaPacific shares was off 0.2% in this choppy trade.
Nifty and Sensex were closed green; gained 1.04%, 1.05% resp. this week.
New Home Sales 377K and US Unemployment Claims at 350K.
US & Euro markets were mixed; Asian markets too were also mixed last week.
Sensex closed down 92.66pts@19691.432;Nifty closed down 27.75pts@5988.40.The
Market fell on Monday, posting its first losing session, as investors booked profits in
recent out-performers such as SBI after a four-day winning streak had sent indices to
two year highs. Oil eased to $111 a barrel on Monday as some investors booked profits.
Nifty and Sensex were closed red; lost 0.54%, 0.39% resp. this week.
Existing Home Sales 5.04M and US Unemployment Claims at 361K.
US & Euro markets were mixed; Asian markets too were also mixed last week.
Sensex dropped 104.4 pts @ 17,678.81 pts due to further downward journey in banks,
capital goods, & auto stocks while Nifty dropped 36.45pts @ 5,350.25 pts. Another
reason is that the governments under pressure in coal allocation scam with Rs.1.85 lakh
crore loss. MSCI's broader index of AsiaPacific shares was off 0.2% in this choppy trade.
Indian Government’s reforms drive has been powering the rally in Indian shares for the
past few sessions. The same story was repeated this week as well, with the BSE
Sensex crossing 19,000 and the NSE Nifty surpassing 5,800. US presidential election,
leadership change in China and Gujarat election are the other important events to keep
on one’s radar in the coming weeks and months. Technically Nifty is expected to remain
consolidate or may continue the bull run; Nifty this week may range 5600-5880.
Theequicom Research published most accurate analysis report for equity market. We also provide sure shot calls and advice in various segments such as equity tips, commodity tips and nifty future tips.
India's economic fundamentals have deteriorated in the near term leaving the country with weaker growth. The country is grappling with problems of rising inflation and booming fiscal and current account deficits. Global macro-economic environment seems equally gloomy. European debt crisis has been escalating with more and more countries finding it difficult to re-finance their government debt without the assistance of third parties. China's growth has also moderated along with other Asian countries. Against the backdrop of weak global growth and high global commodity prices, the Indian economy has taken a severe beating due to weak domestic political climate. Indian government has failed to reduce the fiscal deficit and to device structural reforms to open supply-side bottlenecks. Rising subsidy bills, slow decision making on behalf of the government due to scandals and back-tracking on reforms due to influence of regional political parties have curtailed the growth potential. Any significant economic reform or any serious effort to curtail the fiscal deficit seems unlikely in the face of general elections due in May 2014.
The weakness in the Indian economy is reflected in the Indian equity market as well. Over the last two years, the equity market has given a negative return of nearly 4% while in the last year, it gave a negative return of nearly 8%. Thus, investment in the equity market has been quite difficult. We expect the market to consolidate in a broad range in the remaining part of the year, giving us the opportunity to accumulate stocks at reasonable prices. Thus, we have attempted to create a model portfolio to generate superior returns over the market. Given the weak domestic and global economic environment, we prefer to keep more than 70% of out portfolio in liquid funds. The funds would be deployed as and when the time will be ripe.
USD was little changed against the INR as it sustained above the 56.5 mark. The next resistance is seen around 57.35 . If the currency breaches 57.35 on a closing basis, it might surge to 57.8 in the near term. On downside, a short term support is seen around 56.5 and a strong support is seen around 56.
USD is currently trading at record high against INR. The probability is quite high that the currency might reverse direction from the current levels and slip to 53 in the near term (3-4 months) and to 50 in the long term (8-9 months).
If, on the other hand, the currency breaches 56.5, (probability seems quite less), it might surge towards 57.8.
India’s rupee has been the worst performing currency in Asia, excluding Japanese yen since August 2011. It declined by nearly 22% from August 2011 to December 2011. Although the currency stabilized somewhat in February 2012 after the intervention from Reserve Bank of India, the pain seems far from over. Given the macro-economic situation, both domestically and globally, we might see further depreciation in rupee and we might have to adjust ourselves with lower levels of currency in times to come.
The Union Budget for FY13 is to be presented in the parliament on 16th March. This will be a crucial Budget as it sets the tone for policy stance relating to not just fiscal issues but also monetary policy and economic reforms. Also, it is being announced at a time when the economy is looking for a boost from the government through appropriate policy announcements
In a scenario of high inflation, liquidity crunch, high interest rates and subdued business sentiment, the Budget is expected to provide certain policy directions which will shape the course of the economy in the coming months
Ideally, the response from the policymakers should be a quick reversal in less productive government spending, and at the same time initiating policy measures to boost private investments. Apart from this, the government should consider expediting the disinvestment process and ensure key reforms such as GST are implemented quickly
With this, we also need to tackle the implementation risk that has often been associated with the Indian economy for many years. Particularly, on the expenditure growth target, the implementation of the promise in the budget is more important than the promise itself
Industry expects the government to give policy directions to re-build investors' confidence. Yes, not all of the issues are directly addressable in a Budget, but the Budget this year can be a starting point towards such enabling policy making
If the Budget assures a certain degree of fiscal prudence, without compromising on growth excessively, the sentiment should improve. Nonetheless, in order to surge ahead, industry will seek signs of at least an optimistic outlook from the FM
1. Energy Outlook November 16 2012
cvdc
commodities@bmastock.com
Commodity/Contract Net Chg % Chg Open High Low Close Volume Open Int
New York Mercantile Exchange (NYMEX)
CRUDEOIL CL Z12 ETH (0.87) (1.01) 86.36 86.83 84.68 85.45 114,280 85,411
CRUDEOIL CL F13 ETH (0.88) (1.01) 86.77 87.25 85.10 85.87 259,921 314,064
CRUDEOIL CL G13 ETH (0.87) (1.00) 87.24 87.83 85.70 86.44 42,296 132,439
NATURALGAS NG Z12 ETH (0.06) (1.52) 3.76 3.83 3.68 3.70 148,838 107,615
NATURALGAS NG F13 ETH (0.06) (1.50) 3.87 3.94 3.80 3.82 75,103 273,949
NATURALGAS NG G13 ETH (0.06) (1.44) 3.89 3.95 3.81 3.83 23,073 64,492
Multi Commodity Exchange (MCX)
CRUDEOIL 15NOV2012 (15.00) (0.32) 4,795.00 4,819.00 4,715.00 4,725.00 137,406 32,322
CRUDEOIL 18DEC2012 (10.00) (0.21) 4,860.00 4,878.00 4,775.00 4,785.00 8,395 2,506
CRUDEOIL 21JAN2013 (9.00) (0.19) 4,914.00 4,930.00 4,834.00 4,843.00 172 192
NATURALGAS 27NOV2012 (1.80) (0.86) 208.50 210.40 203.30 206.70 97,059 21,843
NATURALGAS 26DEC2012 (1.90) (0.88) 216.00 217.30 210.80 214.10 15,762 6,152
NATURALGAS 28JAN2013 (1.70) (0.78) 217.30 219.20 213.00 216.00 1,441 1,661
Currency Prices
FINEX USD INDEX 0.00 0.00 0.00 0.00 0.00 80.25 0 0
USDINR (0.18) (0.33) 54.98 55.08 54.68 54.70 0 0
EURUSD 0.00 0.37 1.28 1.28 1.27 1.28 0 0
EURINR 0.13 0.19 69.49 69.94 69.15 70.16 0 0
JPYINR (0.01) (1.40) 0.68 0.69 0.68 0.68 0 0
GBPINR (0.02) (0.02) 86.92 87.28 86.57 87.05 0 0
BMA Wealth Creators Commodity Research
2. Energy Outlook
Correlation Matrix
Commodity Gold Spot Silver Spot Dow Jones Indus. Avg WTI Crude Oil Dollar Index Spot
Gold Spot 1.000 0.761 0.064 0.284 (0.328)
Silver Spot 0.761 1.000 0.245 0.458 (0.408)
Dow Jones Indus. Avg 0.064 0.245 1.000 0.517 (0.562)
WTI Crude Oil 0.284 0.458 0.517 1.000 (0.471)
Dollar Index Spot (0.328) (0.408) (0.562) (0.471) 1.000
Commodity WTI Crude Oil Natural Gas Future Dollar Index Dow Jones Indus. AVG
WTI Crude Oil 1.000 0.179 (0.471) 0.517
Natural Gas Future 0.179 1.000 (0.045) 0.056
Dollar Index (0.471) (0.045) 1.000 (0.562)
Dow Jones Indus. AVG 0.517 0.056 (0.562) 1.000
Fundamental Outlook
US Crude Oil futures eased on Thursday, on concern over a growing stockpile surplus and weaker economic data
from the world top consumer of oil. The most actively traded Crude Oil contract tested a low of $84.68 before
settling at $85.45, fell more than a percent or 87 cents per barrel on New York Mercantile Exchange while
domestic Oil prices declined marginal despite a stronger rupee against the dollar which appreciated 0.33% or 18
paise to close at Rs 54.70. MCX Crude Oil futures moved down 15 points or 0.32% to close at Rs 4725.00 after
having tested a high of Rs 4819.00.
NYMEX Oil prices were trading lower in the earlier session on the hopes of increase in inventory and greater
number of US Jobless Claims. US Department of Labor showed that Initial Jobless Claims climbed 78,000 to
439,000 numbers, much weaker than the expectation of 372,000 numbers. US DOE showed that Crude Oil
Inventories rose for the second week by 1.1 million barrels. Data from the Energy Information Administration
showed Crude Oil stocks rose but little lesser than the market expectation of +2.5 million barrels in the week
ended November 09. US Crude Oil stocks also hit a three years high last week and 13.4% above the five year
average. It also seen that market is overlooked the Middle East tension on last day but still on track as the traders
are looking the situation nervously.
Front month Natural Gas futures closed lower and reversed a three days rally despite a decline in Natural Gas
Storage which was the first withdrawal in US Gas Storage since March 15, 2012. NYMEX Natural Gas closed lower
by 1.52% or 6 cents to $3.70 after having a tested a high of $3.83 per mmBtu while MCX Natural Gas prices
tested a high of Rs 210.40 before settling at Rs 206.70. In the earlier session Natural Gas prices were trading
lower on the back of cooler weather but after the release of US Natural Gas Storage prices moved lower and
closed in negative territory. EIA Natural Gas storage decreased 18 billion cubic feet against -13 billion cubic feet
of market forecast.
BMA Wealth Creators Commodity Research
3. Energy Outlook
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