Falling Crude Oil Prices, Jet Airways Saga, and Top Cues in Focus Today

Thu, 13 Jun Pre-Open

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On Wednesday, Indian share markets snapped their 3-day winning streak and ended their trading session on a negative note.

The BSE Sensex closed lower by 194 points to end the day at 37,757. Maruti Suzuki and Kotak Mahindra bank were among the top losers.

While the broader NSE Nifty ended down by 59 points to end at 11,906.

Among BSE sectoral indices, realty stocks fell the most by 1.9%, followed by telecom stocks and capital goods stocks.

Speaking of Indian markets, notably, Indian markets have been on the rise since the Narendra Modi-led coalition won a massive mandate to form the government for the second consecutive time.

In May, the benchmark Sensex rose 1.8%. In the year so far, Sensex has gained over 10%.

So, by the next elections in 2024, will Sensex touch 1,00,000 mark?

Does Sensex 1,00,000 sound outrageous from where we are right now?

Even Sensex 40,000 would have seemed the same from around 5,000 levels in May 2004.

History indicates a healthy rise in Sensex post elections. In the three elections prior to this, we have seen a government come back to power, and change hands but the Sensex has moved one way i.e. upwards.

And now, with a stable government at the centre, the pace might pick up.

Co-head of research, Tanushree Banerjee believes there are 50 irreversible trends that will the push Sensex to 1,00,000.

And these 50 trends look set to play out soon. The ride might have already begun looking at the stock market's reaction to the election results.

But it is still early days. And the time to hop on to the ride is right now!

Top Stocks in Focus Today

From the banking sector, Yes Bank share price will be in focus today.

Stock of the lender witnessed selling pressure yesterday after the rating agency Moody's placed the bank's ratings under review for a downgrade. The agency placed Yes Bank's ratings under review for a downgrade citing its large exposure to debt-laden nonbanking financial companies (NBFC) and the possibility that the bank's loans under watch list could slip into non-performing assets (NPAs).

From the finance sector, Indiabulls Housing Finance share price will be in focus today as the company continued to shrink yesterday following allegations of siphoning off Rs 980 billion of public money.

The stock had hit a 52-week low of Rs 576.4 on Tuesday after the report and ended the session falling 8%. The company has lost Rs 70 billion so far.

From the Commodity Space...

Crude oil witnessed selling pressure yesterday. Oil prices fell over 1% on the back of a weaker oil demand outlook and a rise in US crude inventories despite growing expectations of ongoing OPEC-led supply cuts.

The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude oil production in a monthly report released yesterday.

The EIA lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd. It wound back its forecast for 2019 US crude production to 12.32 million bpd. This is 140,000 bpd less than the May forecast.

Apart from the above, a surprise increase in US crude stockpiles also kept oil prices under pressure.

According to data from the American Petroleum Institute (API), US crude inventories rose by 4.9 million barrels in the week ended June 7 to 482.8 million barrels. That compared with analysts' expectations for a decrease of 481,000 barrels.

Also, ongoing trade tensions between the United States and China, the world's two biggest oil consumers, weighed on prices. US President Donald Trump said on Tuesday he was holding up a trade deal with China.

The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) is going to take place at the end of June and market participants are eyeing whether the world's major oil producers would prolong their supply cuts.

How this pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Jet Airways' Woes...

In the news from the aviation space, the pilots' union of cash strapped Jet Airways will file a plea against the grounded airline at the National Company Law Tribunal (NCLT) for non-payment of salaries and not providing a provision for gratuity payment to its staff.

The union counted about 1,100 of the airline's 1,600 pilots as its members before the grounding of the carrier. Reports state that the airline hasn't paid salaries since January and also haven't made any provisions for gratuity.

Two operational creditors of Jet Airways, Shaman Wheels Pvt. Ltd and Gaggar Enterprises Pvt. Ltd, had filed separate insolvency pleas against the airline earlier this week at the NCLT, Mumbai, for recovery of their dues.

Reports state that in case Jet does not end up being liquidated and insolvency is resolved then the new investor who bails out Jet would need to take on the liability including salaries.

In any case, if Jet Airways is admitted to the National Company Law Tribunal, under bankruptcy resolution lenders may recover only a fraction of the Rs 84 billion the airline owes them.

The total liabilities of the airline, including unpaid salaries and vendor dues, are nearly Rs 150 billion. Yesterday, it was reported that the Hinduja Group and Etihad Airways may not proceed with plans to resurrect the airline.

Shares of the company fell as much as 15% yesterday to hit an all-time low of Rs 106 on back of the above news.

It would be interesting to watch out how things pan out for Jet. Meanwhile, we will keep you updated on all the developments.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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