Due to the Ukraine crisis, investors continue to lose crores on crude oil within minutes
Despite UNDERINVESTMENT AND RISING OIL PRICES, the ORGANISATION OF PETROLEUM EXPORTING COUNTRIES (OPEC) is focused on keeping the global oil market well supplied.
After a recent energy conference, OPEC Secretary-General MOHAMMAD BARKINDO said, “There’s no doubt that we are concerned with ensuring that the security of supply is also guaranteed. The intergovernmental organization and its allies are working to ensure that we continue to be reliable and dependable to supply oil to global markets.”
This statement came when the oil prices were on their way to reach their highest level since 2014 steadily. The costs could reach even higher, attributing to a series of factors. Despite receiving the halted production steadily, OPEC has been struggling to meet its supply targets, mainly due to a lack of investment.
Brent Crude Futures earlier reached the highest peak since October of $96.16 and this week were at $95.56 a barrel, up to $1.12 or 1.2 percent in early trade. CHIEF INVESTMENT STRATEGIST AT GEOJIT FINANCIAL SERVICES, Vijayakumar said, “If crude remains at the level of $95 for an extended period of time, the RBI will be forced to revise its 4.5% CPI inflation projection for FY23 upwards. Continuation of the accommodative monetary stance, too, will be difficult. While all these are negatives, diffusion of the Ukraine crisis can trigger a sharp rebound in markets led by large capital blue chips.”
He also said, “Sentiments have turned very negative for the short term, with the heightened tension over the Ukraine crisis. The weakness in global markets is the direct fallout of the Ukraine crisis. Crude at a seven-year high is another major concern for India.”
As suggested by BSE market capitalization, investor wealth declined by Rs 6.27 lakh crore to Rs 257.62 crore from Rs 263.90 lakh crore on Friday. At the same time, the benchmark Sensex fell about 1,400 points, and the midcap index and small-cap index plunged about 4 percent each.
Given the fact that there are several macroeconomic concerns like the movement of commodities, what the US Fed is likely to do, and inflation, Sandip Sabharwal of asksandipsabharwal.com said that the macroeconomic texture should have changed a bit earlier.
On Friday, most Asian markets were trading in the red, and the US equities had settled lower. However, the worst performers were the Domestic stocks. In February, FPI outflows topped the Rs 10,000 crore mark and, so far, stood at Rs 43,383 crore for 2022.
Sandip Sabharwal added, “But markets were in a zone of its own. Global investors continue to reduce their positions in India while domestic investors continue to buy. And we see that phenomena like mutual fund flows continue to be quite strong, Rs 14,000 – 15,000 crores into equities every month, which is quite substantial relative to historical trends.”
The analysts believe that India is in a perfect position at a time when inflation is rising, liquidity is massive, and oil prices are 27 – 28% higher than levels at which petrol and diesel prices were changed last time in India.
The analyst doubted whether consumers could take a 25% price hike in petrol and diesel prices and still consume the way they always have consumed. Furthermore, the market was in a dilemma about how India’s biggest IPO by LIC would influence the secondary market.
Sameet Chavan of ANGEL BROKING said in a statement, “Till the time, global uncertainty looms over, we are likely to have challenging scenarios in the market where volatility is also expected to stay on the higher end. On technical aspects, 17,000 is expected to act as the key demand size zone as it is being backed by the supporting trend line.”
Amidst the Ukrainian crisis, the domestic stocks lost over Rs 6 crore worth of value within minutes, and the oil prices went to a seven-year high, stoking fears of inflation and substantial foreign outflows.
Edited By : Amisha Rampal
Published By : K. Bindhiya Prarthana
