Mkts to correct if oil rises by more than $10/bbl: BofA-ML

Moneycontrol Bureau

The market has been on the back foot as it was anticipating a dull FY 12-13 Budget that was presented by Finance Minister Pranab Mukherjee last Friday. Hence, the passive behaviour of participants was no surprise, making the Budget a no-show for many.

For Jyotivardhan Jaipuria, head of research at BoFA Merrill Lynch, Budgets announced by the government in the last couple of years have been non-events but credits Mukherjee of presenting a realistic one this year as far as fiscal deficit projection is concerned. Lack of reforms announcement is not a key concern for Jaipuria, who sees them happening outside the purview of the Budget. He terms last year's Budget as one that went completely off-track, with commodity prices being the biggest evil.

Also Read: Budget 2012-13: Market may remain range bound ahead of Q4 results: BofA-ML

Wrath of commodity prices continues this fiscal as well. On Sunday, the finance minister indicated a possible petrol price increase once the Budget session gets over. Prices of petroleum products such as diesel, kerosene and LPG in the domestic market are hugely subsidised, burden of which is borne by oil marketing companies like Indian Oil, Bharat Petroleum and Hindustan Petroleum whose cumulative revenue loss per day stands at Rs 486 crore.

Geopolitical tensions from the Middle East and high consumption of crude from fast-growing economies like India and China have seen oil prices surging. Struggling to tackle the rising cost of crude, China today raised the prices of petrol by about 6% and diesel about 7% for the second time in 2012. Jaipuria sees FY13 as a tough year for market