Nifty March 2008 futures at discount

Turnover in F&O segment declines


Nifty March 2008 futures were at 5271, at a discount of 14.10 points as compared to spot closing of 5285.10. Derivatives contracts for February 2008 series expired today, 28 February 2008.

NSE's futures & options (F&O) segment turnover was Rs 61,065.26 crore, which was lower than Rs 63,256.76 crore on Wednesday, 27 February 2008.

Reliance Industries March 2008 futures were at premium, at 2550, compared to the spot closing of 2533.25.

Tata Steel March 2008 futures were at premium, at 827, compared to the spot closing of 824.30.

NTPC March 2008 futures were near spot price, at 203.30, compared to the spot closing of 203.55.

In the cash market, the S&P CNX Nifty gained 16.70 points or 0.32% at 5285.10.

Crude jumps, dollar sulks

Price settles above $102 as dollar slips to new low against the euro


Crude prices rose by almost $3 today after the dollar fell to new lows against most of its counterparts, mainly the euro. The dollar fell on interest rate outlook in the US as Chairman Ben Bernanke continued to answer questions for the second day at Capitol Hill. He had hinted yesterday that Fed will go for further softer landing in the coming days and might reduce interest rate by another fifty bps in its next meeting.

Crude-oil futures for light sweet crude for April delivery today closed at $102.59/barrel (higher by $2.95/barrel or 3%) on the New York Mercantile Exchange. Prices are 66% higher than a year ago. Reports of production disruption at Nigeria also pushed up crude prices today.

In the currency market today, the U.S. dollar tumbled to record lows against the euro after lackluster economic data and Federal Reserve Chairman Ben Bernanke's comments raised fears about the U.S. economy. The trade-weighted dollar index, which measures the greenback against a basket of six major currencies, fell 1.2% to 73.68.

The Commerce Department reported today that the U.S. economy grew at an unrevised 0.6% annual rate for the fourth quarter. And for all of 2007, the economy grew at the weakest pace in five years.

Today, oil prices were also supported by reports of a partial shutdown of production in Nigeria, Africa's largest oil producer and the U.S.'s fifth-largest crude supplier.

Yesterday crude prices had infact dropped after EIA had reported in the weekly inventory report that crude inventories grew more than expected, rising 3.2 million barrels to stand at 308.5 million barrels in the week ended 22 February. Market was expecting an increase of 2.6 million barrels.

Brent crude oil for April settlement today rose $2.63 (2.7%) to $100.9 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.

Natural gas supplies drop more than average

Natural gas advanced after a government report showed supplies fell more than average, signaling inventories may end the cold-weather demand season at the lowest since March 2005. Gas for April delivery rose 38.3 cents (4.2%) to settle at $9.433 per million British thermal units. EIA reported that stockpiles declined 151 billion cubic feet to 1.619 trillion cubic feet for the week ended 22 February.

Against this backdrop, March reformulated gasoline gained 2 cents to $2.50 a gallon and March heating oil rose 8 cents to end at $2.85 a gallon. Both contracts are due to expire tomorrow.

In a monthly report released earlier this month, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.

At the MCX, crude oil for March delivery closed at Rs 4,034/barrel, higher by Rs 27 (0.7%) against previous day’s close. Natural gas for March delivery closed at Rs 374.5/mmtbu, higher by Rs 13.6/mmtbu (3.8%).

Record close for bullions

Gold and silver prices take a leap on interest rate outlook


Bullion metal prices rose sharply higher for the third straight day today, 28 February, 2008 after the dollar slumped sharply against its rival currencies, mainly the euro. The dollar have been dampened mainly since yesterday after the Federal Reserve Chairman, Ben Bernanke hinted that Fed in all possibility will go for another soft landing in its next meeting thereby reducing interest rates by another 50 bps.

This has been weakening dollar further. Gold, as a dollar-denominated commodity, suffers from dollar strength. On the contrary, gold prices rise with falling dollar as inflationary concerns boosts the metal's appeal as an inflation hedge. Silver prices also gained substantially today, reaching the highest level in twenty eight years.

Comex Gold for April delivery rose $6.5 (0.7%) to close at $967.5 an ounce on the New York Mercantile Exchange. Prices touched a record $975/ounce during after hours trading. This year, gold prices have gained 15.7% till date. In January, prices gained 11%, the highest monthly gain since April 2006.

Last week, gold gained $41.5 (4.6%). Prices increased due to the slumping dollar and supply issues at South Africa.

Comex Silver futures for May delivery rose by 43.2 cents (2.2%) to $19.756 an ounce. Silver has gained 28% in 2008. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years. In January this year itself, prices climbed 14%.

The Fed has cut the federal funds rate to 3% from 5.25% in mid-September. January 2008 itself saw two rate cuts in a gap of ten days.

In the energy market today, crude-oil futures rose substantially and closed at more than $102/barrel on reports of production disruptions in Nigeria and record low dollar against the euro.

In the currency market today, the U.S. dollar tumbled to record lows against the euro after lackluster economic data and Federal Reserve Chairman Ben Bernanke's comments raised fears about the U.S. economy. The trade-weighted dollar index, which measures the greenback against a basket of six major currencies, fell 1.2% to 73.68.

Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.

Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. The Fed reduced federal funds rate three times in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for April delivery closed higher by Rs 59 (0.5%) at Rs 12,293 per 10 grams. Prices rose to a high of Rs 12,330 per 10 grams and fell to a low of Rs 12,175 per 10 grams during the day’s trading.

At the MCX, silver prices for March delivery closed Rs 326 (1.3%) higher at Rs 24,683/Kg. Prices opened at Rs 24,255/kg and went to a high of Rs 24,840/Kg during the day’s trading.