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Market round up: Opec wins hedge funds back as bets up before deal

LiveMint logoLiveMint 30-05-2017 Livemint

Hedge funds are giving the Organization of the Petroleum Exporting Countries (Opec) some credit again. Following four weeks of growing pessimism, bets on rising West Texas Intermediate prices jumped the most this year just as Saudi Arabia and Russia were mustering support for the production cut deal they struck in Vienna last week, shows US Commodity Futures Trading Commission data. What happens to US stockpiles will be key to sustaining the enthusiasm, and the Saudis know that. In addition to prolonging a historical deal with allies, the kingdom plans to reduce exports to the world’s biggest consumer.

Policy rates on hold for 2017, says Nomura

As the recovery in economic growth gains traction despite the blow of demonetisation, the odds that the Reserve Bank of India (RBI) will keep policy rates unchanged for a longer period have increased. Lead economic indicators suggest that rural demand has bounced back, external demand is conducive and the slowdown in services is largely due to transitory factors, Japanese brokerage firm Nomura Securities said in a note. Based on its proprietary indices, Nomura forecasts that gross domestic product growth for April-June of FY18 would be 7.2% but thereafter recover sharply to 7.5% in the second half of the fiscal year. The Nomura RBI Policy Signal Index, which tracks policy decisions, moderated to -0.1 in May from 0 in April. Historically, values between -0.2 and +0.2 correspond to a neutral zone (on hold).

Overseas capital to drive investments in renewables

Overseas investors will continue to drive investments in the Indian renewable sector, the Institute for Energy Economics and Financial Analysis (IEEFA) said in a note. The research firm anticipates a majority of the $200-300 billion that is likely to be invested in India’s renewable capacity additions in the coming decade to be supported by overseas capital. The investments will be driven by the global investors’ preference for clean energy technologies. A 2015 study by fund management consultant Mercer found that the inevitable rise in the consideration of climate risks in investment decisions will increase the flow of investment from polluting sectors and towards clean technology such as renewable energy, IEEFA said in a note. “Impacts of this trend will be felt in India going forward,” it added.

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