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Sensex Finishes on a Dull Note; Metal Stocks Worst Performers
Thu, 1 Dec Closing

Indian share markets finished the trading session on a flat note with negative bias amid weak European markets. At the closing bell, the BSE Sensex stood lower by 93 points, while the NSE Nifty finished down by 32 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished down by 1.1% and 0.6% respectively. Losses were largely seen in metal and power stocks.

Asian markets finished broadly higher today with shares in Japan leading the region. The Nikkei 225 is up 1.12% while China's Shanghai Composite is up 0.72% and Hong Kong's Hang Seng is up 0.39%. European markets were slightly lower in early trade as investors focused on political developments in Italy with shares in Germany off the most. The DAX is down 0.74% while London's FTSE 100 is off 0.66% and France's CAC 40 is lower by 0.58%.

The rupee was trading at 68.37 against the US$ in the afternoon session. Oil prices were trading at US$ 49.75 at the time of writing.

According to an article in The Economic Times, National Aluminum Company (Nalco) will benefit from the rising alumina price. Global alumina benchmark price has risen around 14% over the past month and 30% in three months. This should boost the company's December quarter results.

Alumina is used in the production of aluminum. The sharp rise in alumina price can be attributed to low inventories, especially in China. Restarting of aluminum smelters, which have been shut due to low demand, along with rising aluminum prices has increased demand for alumina.

Alumina price may reportedly rise by another 17-23% in 2017 as more Chinese aluminum smelters become operational. The deficit in alumina is expected to increase to 4.8 million tonnes (MT) in FY17 and over 6 MT in FY18 reflecting a possible supply shortage of 10%.

Aluminum Producction in China since the start of the year
weakening rupee against the dollar is expected to improve the company's export realization.

In the June quarter, the company's alumina business reported operating profit (EBIT) of Rs 2.15 billion while the aluminum business posted operating loss of Rs 1.06 billion. With rising prices of both the commodities, the coming quarters are expected to be better.

Nalco's share price finished the trading day down by 1.7% on the BSE.

According to a report released by Fitch Ratings, India's petroleum product consumption will remain strong at around 5-6% in 2017 but the profitability in the oil and gas exploration and production segment will remain weak.

Fitch expected the operating environment to remain challenging for Indian upstream companies in 2017 at its oil- price assumption of US$ 45 per barrel, and low natural-gas prices. most domestic gas fields are likely to make losses in 2017. However, at this price level, India's fuel subsidy requirement will also remain low, which is positive for the state-owned oil companies.

Fitch stated that at the current gas price of US$ 2.50 per million British thermal unit in India, Oil India Limited can only recover the cash costs of bringing the gas to the surface, but not the production levies, taxes, and sunk costs.

Fitch, however, said it expects upstream oil companies to continue investing in their current portfolio to maintain production and improve efficiency. On fuel consumption, it said India will see a strong growth of around 5-6% in 2017. Gross refining margins (GRM) of all Indian oil refiners are expected to narrow in 2017, while remaining stronger than the historical levels prior to FY16.

Oil & Gas stocks finished on a negative note despite OPEC representatives reaching a landmark deal to reduce oil output with HPCL and MRPL leading the losses.

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