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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.
A standoff between two member countries of the OPEC+ has pushed oil prices, already on the boil, up further and Brent crude rose to a three-year high on Monday. A meeting scheduled for Monday to decide on production increases has been put off indefinitely.
The standoff has led to uncertainty on whether oil output will increase from August. OPEC+ was due to announce an increase of 400,000 barrels per day from August, and a similar increase every month till December. Saudi Arabia also wanted the deal to be extended till the end of 2022 as the present production arrangement ends in April 2022. This would have prevented output from spiking after the agreement ended. But the UAE objected to this increase and wanted its baseline used to determine output cuts to be increased.
Essentially, a revised baseline would have allowed it to produce more, but that would not be acceptable to others as their share of output would decline if they stick to their commitments. For now, output stays where it was and oil prices are trending up. That will give more legs to fuel inflation for some more time and worry policymakers. But then, once a solution is found, peace may return.
On the brighter side, our Economic Recovery Tracker shows that July has begun on a healthy note, with all the weekly trackers flashing green. The gradual easing of restrictions in several states is showing up in mobility, consumer sentiment, unemployment and even in retail sales of automobiles. While this may seem at variance with the glum PMI readings, maybe the uptrend will reflect in the July monthly data. The stock markets appear to be buying the optimistic view and are up today as well.
A reason for this bullishness could be that earnings of companies may come in much ahead of the market’s expectation, because of higher demand for products and services. Do read our research team’s take on how this could support a melt-up in markets. It also notes that markets can run ahead of upward business cycles, but then they also peak in the same fashion. So beware.
One constituent of the economy that has a finger on the pulse of business is not very enthusiastic about the recovery. Bankers believe that economy, productivity and wages will decline post-pandemic and the scars will be visible in the long run, too. But then this survey was done when the second wave was its peak and bankers lend to a much wider base than just listed companies. So opinions could differ.
In the Green Pivot today, a new series devoted to the shift to green technology, the spotlight is on Amara Raja Batteries and its intended transition to new energy and mobility businesses. But investors are worried it’s taking on too much as the capital investments required can be substantial. Do read.
More investing insights from our research team
Pre-earnings business updates of HDFC Bank, CSB Bank hold out hope
Godrej Consumer: Double-digit revenue growth for June 2021 quarter
Bharat Dynamics: Execution and profitability improving
What else are we reading today?
The implications of China banning the Didi app
With US troops gone, Afghanistan is a disaster waiting to happen
During the 1991 economic crisis, I asked an astrologer about India’s future: Shankar Sharma
A $140bn asset sale: the investors cashing in on Big Oil’s push to net zero (Republished from the FT)
Technical Picks: Bank of Baroda, Bank of Baroda, Marksans and NMDC (These are published every trading day before markets open and can be read on the app)
Ravi Ananthanarayanan
Moneycontrol Pro
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