Monday, February 20, 2012
The Ministry of Civil Aviation has written to the Ministry of Commerce on 15th February 2012 to take steps to allow direct import of Air Turbine Fuel (ATF) by Indian carriers in pursuance of the decision of the Group of Ministers’ (GOM) on Civil Aviation, which was taken in the GOM meeting held on 7th February 2012. The GOM in its meeting decided that the Ministry of Commerce will permit direct import of ATF by or on behalf of Indian carriers directly as the actual user and on actual use basis. The decision has come against the background that ATF prices in India are 30 to 40 % more than the prices in international market due to high base price and higher taxes. The sales tax on ATF in different States in India is on much higher side, and varies between four to 30 % in different States. The Minister of Civil Aviation has recently written to all Chief Ministers of the States to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers. It may be mentioned that the revenue from sales tax on ATF contributes only 0.5 % to 2% of the total sales tax collection of the States while in terms of operational cost of the airlines its portion is almost 40%, which makes the operational cost of the airlines very high. However, most of the States have not responded favourably. The Indian carriers would have to make their own tie-ups with the suppliers having infrastructure to import ATF directly for their use. The sourcing of ATF through direct imports has the potential to lower overall procurement cost of ATF for the airlines as sales tax varying from 4 to 30 percent in different States will be required to be paid only on unavoidable local purchase. Also this would bring down the cost of working capital to the air lines as suppliers credit on lower interest rates will be feasible.
India remains the largest country for demand with 933.4 tonnes, which is notable considering the volatility of the gold price and the weakness of the Indian rupee against the US dollar during the second half of the year.
In value terms, total demand reached Rs. 220,507 crores, an increase of 22% from Rs. 181,107 crores in 2010, which was in turn an increase of 98% from Rs. 87,430 crores in 2009.
In terms of tonnage, gold jewellery demand reached 567.4 tonnes in 2011, a decline of 14% from 657.4 tonnes in 2010. This was an increase of 49% from 442.4 tonnes in 2009.
In value terms, total jewellery demand reached Rs. 134,043 crores, an increase of 13% from Rs. 118,314 crores in 2010, in turn a rise of 75% from Rs. 66,860 crores in 2009.
With the liquidity flow continuing relentlessly, indices have no other way but to look up. The truncated week could see some wild swings though. The left out feeling is there in some quarters and a few are wary of the sudden rise and may prefer to sell into the strength. The week will give some opportunities to get in as the global macro factors could cause a temporary cooling anytime.
Among the global factors to watch out for there is Greece which is showing signs of pressure as the country faces a March 20 bond redemption totaling 14.5 billion euros ($19 billion). While the nation’s political leaders have signed up for fiscal retrenchment and detailed 325 million euros in new budget cuts for this year, euro-area governments have yet to approve a second bailout of 130 billion euros
Prices end little lower on Friday
Gold prices at Comex closed lower on Friday, 17 February 2012 as the precious metal lost some of its allure amid hopes Europe's leaders will agree to back a financial bailout for Greece next week. But limiting losses were data from the World Gold Council on earlier during the week. Traders also focussed over rising oil prices and data showing that U.S. consumer prices rose a little less than expected last month.
Gold for December delivery fell $2.50, or 0.1%, to settle at $1,725.90 an ounce on the Comex division of the New York Mercantile Exchange on Friday. It was flat on the week.
Good weekly gains for crude for the second consecutive week
Crude-oil futures at Nymex rose on Friday, 17 February 2012 to their highest level in nine months due to lingering geopolitical worries and ongoing Greek fiscal drama. Recent data showing improvement in the U.S. job, housing and manufacturing markets also helped move crude along, as did renewed optimism Greece will receive what it needs to avoid a disorderly default.
Light and sweet crude for March delivery rose 93 cents, or 0.9%, to end at $103.24 a barrel on the New York Mercantile Exchange. Oil gained 4.6% this week, advancing for two consecutive weeks.
There were reports that European leaders were moving closer to securing a second bailout for Greece, despite apparent friction between that country and Germany.
Copper loses 4% on a weekly basis
Copper prices at Comex sustained its biggest weekly loss in nine weeks on Friday, 17 February 2012 as slack physical demand from China and nervousness in front of a long-awaited bailout deal for Greece weighed on the market.
In New York, the key March Comex contract dropped 8.30 cents, or 2.2%, to settle at $3.7080 per lb, near the bottom of its $3.6935 to $3.8320 session range. Copper lost 4% this week, down for two straight weeks.
High volatility is expected in a truncated trading week as traders roll over positions in futures & options (F&O) segment from the near-month February 2012 series to March 2012 series. The near-month February 2012 F&O contracts expire on Thursday, 23 February 2012. The stock market remains closed on Monday, 20 February 2012, on account of Mahashivratri.
Ranbaxy Laboratories and ABB unveil Q4 December 2011 results on Thursday, 23 February 2012.
The Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee is reportedly likely to meet on Friday, 24 February 2012, to consider changes in the natural gas allocation policy. The EGoM meeting, the first in more than 18 months, would consider changes in gas allocation in view of a sharp drop in output from Reliance Industries' eastern offshore KG-D6 block.