“Let’s see which one reaches 100 faster: onion or petrol?” This used to be a joke in the times of the UPA Government.
In early 2020, Onions got the opportunity to cross the coveted Rs. 100 per kg mark. In the week gone by, petrol prices got the honour when prices touched Rs. 100 per litre in many Indian cities.
What exactly is the reason for this price rise in oil?
Well, to give you a perspective, almost 50% of the retail petrol price is attributable to various taxes by central and state Governments. The next time you pay Rs. 100 to a petrol pump, be mindful that Rs. 50 is going to the Govt.
To top that, crude oil prices have been on a rise internationally. The increase in crude oil prices coupled with a high tax policy on oil is not good for our pockets.
On a lighter note, when onions touched Rs.100, many middle-class Indians wished they were born in Jain families. Now when petrol prices touch Rs. 100, many of us are thanking the ongoing work from home!
Petrol or onions, we live in a free market. And free markets have both boons and banes.
Talking of free markets, let us come to our domestic stock markets. Has the bull market ended? The answer to this question is anybody’s guess. If you track the company disclosures provided to exchanges, you would notice a change.
The number of ‘clarification sought’ notifications have reduced. What exactly are these notifications? Well, whenever there is an abrupt rise/ fall in the price or volume of a traded security, the exchange raises a query to the company.
The concerned company is asked to certify that none of the company insiders is involved in moving the price. A reduction in the number of these notifications is one indicator of the bull market slowing down.
Nifty 50 started the week at 15270, made a high at 15431, made low at 14898 and finally closed the week at 14981.
The downward movement in high beta sectors such as banking and metals is indicative of profit booking. The relatively defensive sectors namely pharma, FMCG and IT to appear to have cooled off.
If we must divide the market into only two types, I would classify the entire universe into high beta names and defensives. Defensives generally perform well when the broader markets fall.
There is an interesting company that appears to be transitioning from a high beta name to a relatively defensive name. Yes, I am talking about Reliance Industries Ltd.
RIL today consists of three main businesses: Petrochemicals & Refinery, Jio Infocomm, and Reliance Retail.
Most of the massive market cap of RIL is attributed to Reliance Retail and Jio. The contribution of oil-related businesses is declining gradually. In a week when markets have been volatile, RIL provided a bit of stability to the index. Is it time to buy RIL, at least from a trading perspective?
Image: Reliance Industries Ltd | Source: Google Finance
Finally, this week’s talk is incomplete without talking about India’s new liberalized mapping policy. In a nutshell, this new policy allows new players to create and publish their own maps.
Does this mean anybody can create maps now? Not necessarily. The new policy comes with a bit of protectionism and states that only Indian companies that store and display data within India will be allowed to do activities like terrestrial mobile mapping, generating high-resolution maps, street view surveys.
The step taken is appreciated when we speak of ‘Atmanirbhar Bharat’. As per the new policy, a foreign player like Google maps must partner a local player or a local subsidiary to provide services like street view mapping.
Have a good and profitable week ahead.
Data to look for in the coming week
|26-Feb||Bank loan growth||5.9%||–|
|26-Feb||GDP growth YoY Q4||-7.5%||2.9%|