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Wednesday, September 03, 2008
India nuked or was it ?
India’s stand on not linking the Indo-US nuclear deal with nuclear tests may have been contradicted by US President George W Bush in a letter he wrote to the US Congress. The 26-page letter links India’s commitment to abstaining from conducting a nuclear test to nuclear supplies. US based daily The Washington Post has revealed the contents of the ‘secret’ letter a day before the Nuclear Supplier Group is scheduled to meet over a waiver to India for nuclear trade.
PM Manmohan Singh has called for an emergency meeting with the Congress core committee to discuss the issue at 8.30pm in Delhi.
The letter’s contents are contradictory to what the Manmohan Singh led government has been insisting upon- that India’s testing of nuclear weapons will not come in way of uninterrupted supply of nuclear fuel under the nuclear deal.
To this effect, in August 2007, the PM had told Parliament, "The agreement does not in any way affect India's right to undertake future nuclear tests, if it is necessary."
However the letter, made public by Republican Howard L. Berman, Chairman of the House Foreign Affairs Committee, appears to be at variance with the stand. It says the United States would help India deal only with "disruptions in supply to India that may result through no fault of its own," such as a trade war or market disruptions.
"The fuel supply assurances are not, however, meant to insulate India against the consequences of a nuclear explosive test or a violation of nonproliferation commitments," the letter said.
The letter implicitly states the US administration had discretion to disrupt nuclear fuel supplies to India swiftly and that the supply assurances made by the United States are not legally binding, but simply a commitment made by President Bush.
The letter was a reply to 45 highly technical questions that US Congressmen had put to Berman's predecessor, the late Tom Lantos. However, since the subject was so sensitive, and particularly to UPA government because of the political debate in Parliament, it was kept secret. As per Berman, the contents have been made public now so that in case of an NSG nod, the US Congress is aware of all the information it has from Bush administration.
The NSG waiver for India is not appearing a smooth ride as a few nations - Austria, New Zealand, Netherlands, Ireland- had objected to the amended draft. Even China had on Tuesday voiced concerns and its Foreign Ministry had said in a statement that the NSG must "strike a balance between nuclear nonproliferation and peaceful use of energy".
While the BJP and CPM have been quick to slam the revelations, the government has distanced itself from the controversy saying none of clauses in the 123 treaty are binding on India’s nuclear programme. Congress spokesperson Manish Tiwari said, “This is said by Bush to the US Congress, and not our problem at all.”
He added that the treaty is extremely good and did not require a relook at any cost.
New monthly inflation index by mid-Nov
ndia plans to release wholesale price inflation data on a monthly basis from end-October or mid-November, and says the new reading will include a larger number of items and better reflect prices.
A senior official at the Indian Commerce and Industry Ministry involved in developing the new data series said on Tuesday the current weekly Wholesale Price Index (WPI) would be discontinued.
"The (new) series is going towards finalisation. When we switch over to monthly data, there will be no need for the weekly data," he told. The new index would be based on 2004/05 prices.
The official said the government would also release weekly price data for primary articles, which includes food, non-food products and minerals, after it switches over to a monthly reading.
Indian inflation jumped to a 13-year high in June after a 10 percent increase in local fuel prices and in mid-August was ruling just below an annual 12.5 percent.
The widely watched WPI rose 12.40 percent in the 12 months to August 16, below the previous week's annual rise of 12.63 percent.
But there has been criticism that the data underestimate price pressures in the Asia's third-largest economy.
Policy makers say monthly WPI data in tandem with weekly numbers for primary articles would help the central bank better calibrate its monetary policy decisions.
The sharp increase in the inflation rate in the past few months has forced the government and the central bank to raise rates, tighten liquidity and cut taxes to rein in soaring prices to avoid voter anger during state and federal polls.
India is also hoping to bring out a new urban Consumer Price Index (CPI) in April or May next year to give a more accurate and harmonised picture of prices in towns and cities.
Bullion metals slip
Gold and silver prices register substantial fall as oil prices retreat
Bullion metals ended considerably lower on Tuesday, 02 September, 2008 after crude prices retreated back on news that hurricane Gustav will not hit the oil rigs at the Gulf of Mexico. Prices also slipped after the dollar strengthened. These factors reduced the precious metal’s appeal as a hedge against inflation.
On Tuesday, Comex Gold for December delivery fell $24.7 (3%) to close at $810.5 an ounce on the New York Mercantile Exchange. It fell to an intra day low price of $795.2, lower by $40. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly since then.
This year, gold prices have lost 3.3% till date as the dollar rallied against the euro. Gold had lost 8.8% in August, 2008. Gold ended July, 2008 lower by $11 (1.1%).
Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. It ended June, 2008 with a gain of 4.1%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, in April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.
On Tuesday, Comex silver futures for December delivery fell 56.1 cents (4.1%) to $13.15 an ounce. Silver has lost almost 12% in 2008 till date. It ended August with a loss of 2.4%. It ended July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.
At the crude market on Tuesday, crude-oil futures for October fell $5.75 (5%) to $109.71 a barrel. Earlier, the price touched $105.46, the lowest since April, 2008. Commodities tumbled the most since March today, led by energy prices, as Hurricane Gustav spared U.S. Gulf petroleum rigs the destruction caused by Katrina and Rita in 2005.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies. 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 and vice versa.
At the currency markets on Tuesday, a sharp fall in oil prices and rising worries about the economic outlook in Europe and Asia boosted the U.S. dollar. The dollar rose to its highest in almost seven months against the euro. The dollar index, a measure of the greenback against a trade-weighted basket of currencies, was 0.9% higher at 78.02.
Crude loses almost $6
Prices drop as Gustav spares gulf
Crude oil prices registered substantial losses on Tuesday, 03 September, 2008 after news hit that hurricane Gustav will not hit the oil rigs at the Gulf of Mexico. Natural gas tumbled the most in more than a year, crude oil fell to a five-month low and gasoline dropped 4.2%. Nymex floor trading was closed yesterday for the Labor Day holiday.
Crude-oil futures for light sweet crude for October delivery closed at $109.71/barrel (lower by $5.71 or 5%) on the New York Mercantile Exchange. Last Prices are 52% higher than a year ago. Prices reached a high of $147 on 11 July but have dropped since then.
The International Energy Agency said that once Gustav's impact becomes clear, the IEA, together with the U.S. government, will assess whether it caused severe and prolonged damage to oil facilities.
At the currency markets on Tuesday, a sharp fall in oil prices and rising worries about the economic outlook in Europe and Asia boosted the U.S. dollar. The dollar rose to its highest in almost seven months against the euro. The dollar index, a measure of the greenback against a trade-weighted basket of currencies, was 0.9% higher at 78.02.
Crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the year, crude is up by 6% till date.
Against this background, prices for natural gas followed oil prices lower, with the October natural gas contract closing 68.2 cents, or 8.6%, lower at $7.261 per million British thermal units.
Prices for natural gas followed oil prices lower, with the October natural gas contract closing 68.2 cents, or 8.6%, lower at $7.261 per million British thermal units.
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