The US markets closed on a strong note . Oil moved up by almost 2 % . This improved the sentiments for the commodity stocks .
Asian Markets looks positive for now. In India we may see some rise in oversold commodity stocks like Vedanta , Hindalco and Tata Steel . However these movements should be used only by the day traders to make trading profits .
For the investors these provide good exit points to move out of commodity stocks . Some of the major banks like Standard Chartered Bank are reducing their exposures to commodities and commodity dependent economies.
We have already seen Deutsche bank take major write off in their books for commodity assets. This only reflects the long term deteriorating outlook for the commodity sector.
As this is good news for countries like India , which are net commodity importers. Lower coal prices have helped NTPC to improve its profits .
Low oil prices are good news for Castrol . With strong brand equity they are able to improve their margins .
Thus we have to be on the look out for companies that have pricing power in this market . What are your thoughts on this ?
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