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Moneycontrol Pro Panorama | Gas trouble brews, MPC’s job has just got tougher

In today’s edition of Moneycontrol Pro Panorama: Indian markets remain optimistic, Gold prices touch a record low, HAL is back on track, RBI support to INR, and more

September 28, 2022 / 04:11 PM IST
Representative image

Representative image

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

Europe is in for a colder winter, not only this year but probably the next. Many citizens in European countries have been protesting against their government for high energy costs on account of the non-supply of gas from Russia. Most European countries had sided with the US-led NATO in imposing sanctions on Russia, which led the country to shut off its supply of gas to the continent.

But any possibility of a truce has disappeared on account of recent developments under the sea.

Russia supplies its gas to Europe through two undersea pipelines called Nord Stream 1 and Nord Stream 2. Two explosions on Monday caused three leaks in the pipeline. The first explosion was recorded early Monday southeast of the Danish island of Bornholm and the second, a stronger blast northeast of the island that night was equivalent to a magnitude-2.3 earthquake. Seismic stations in Denmark, Norway, and Finland that recorded the explosions have ruled out that an earthquake caused seismic disruptions.

Both NATO and Russia are blaming each other for the explosion, even as videos of US officials talking in the past about disrupting Russia’s gas supply to Europe have surfaced.

Irrespective of who blew up the pipeline, the world will end up picking the tab.

Though Russia was not sending any gas through the pipeline, there was a hope that peace talks will result in the resumption of gas supply and lower energy prices. The blast has scotched those hopes.

For Russia, it will take months to repair and re-commission the pipelines and resume gas supplies.

The tremors of the gas line explosion will last for a long time as energy prices will continue to remain high. Countries, especially European countries, will be chasing the same suppliers of natural gas who were supplying it to India, China, and other emerging countries, thus keeping prices high.

The hangover of this blast will last longer as economic activity will continue to be disrupted in a high energy price scenario.

Inflation, even before the blast, had experts worried. Manas Chakravarty writes about the OECD report on the economic outlook saying annual inflation in 2023 will remain well above central bank targets almost everywhere.

The news of the blast comes just ahead of the MPC meeting which will make RBI’s job tougher. Gaurav Kapur feels that MPC is set to raise rates by 50 bps, shift its stance to neutral and bolster support for the rupee. He also points out that external risks have increased since the August meeting and the pressure on the rupee will weigh heavily on their deliberations.​

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MPC | RBI must avoid its Volcker moment

A strong dollar takes the shine out of gold

Hindalco’s copper business to give a helping hand

Cautiously optimistic on markets

Electric two-wheelers are becoming a long-term choice: Ather Energy CEO Tarun Mehta

Growth drivers are falling in place for HAL’s aircraft manufacturing unit

Time for the bond market to take one for the rupee

The PLI schemes should be designed to take India to the edge of the technology frontier

Is Britain now in a full-blown economic crisis? (republished from the FT)

Why the strength of the dollar matters (republished from the FT)

Real Estate | Construction sites cannot remain death traps for workers

Technical Picks: Crude oilMahanagar GasEscortsTata Steel and Max Ventures (These are published every trading day before markets open and can be read on the app).

Shishir AsthanaMoneycontrol Pro
Shishir Asthana