Markets continue to trade lower as Iraq conflict pushes oil prices higher

Indian equity benchmarks continued to trade in the red as investors remained concerned over Iraqi turmoil. Brent crude surged above $113 per barrel on Wednesday as heavy fighting in Iraq shut the country's biggest refinery and led to the withdrawal of staff by foreign oil firms, stoking worries about exports from the key oil producer. Back home, sentiments also remained dampened after Indian rupee touched a low of 60.43 to the dollar compared with its previous close of 60.03/04 and the 10-year benchmark bond yield rose by 6 basis points on the day to 8.66 percent.

However, benchmarks managed to pare some of their losses and recovered by over half a percent tracking positive trend in European counters where CAC, DAX and FTSE all were trading higher in early deals. Though, Asian markets were exhibiting mixed trend. Back home, some support came in from report that foreign portfolio investors (FPIs) bought shares worth a net Rs 48.02 crore on June 17, 2014, as per provisional data from the stock exchanges.

On the sectoral front, healthcare remained the lone gainer in trade, while realty, oil and gas and power remained the top losers on the BSE sectoral space. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 1241 shares on the gaining side against 1643 shares on the losing side while 98 shares remain unchanged.

The BSE Sensex is currently trading at 25326.50, down by 194.69 points or 0.76% after trading in a range of 25114.30 and 25609.28. There were 8 stocks advancing against 22 stocks declining on the index.   

The broader indices were trading in red; the BSE Mid cap index was down by 0.35%, while Small cap index down by 0.22%.   

Amidst across the board selling pressure, Realty down by 1.64%, Oil & Gas down by 0.98%, Power down by 0.96%, Consumer Durables down by 0.96% and Auto down by 0.85%  were the top losing indices on BSE. While, Healthcare up by 0.45% was the lone gaining sectoral indices on BSE.

The top gainers on the Sensex were Cipla up by 3.92%, Hindalco up by 1.75%, Gail India up by 1.28%, Dr Reddys Lab up by 1.22% and Axis Bank up by 1.06%. On the flip side, TCS down by 2.05%, NTPC down by 1.62%, Tata Steel down by 1.58%, Hero MotoCorp down by 1.56% and HDFC Bank down by 1.51% were the top losers.  

Meanwhile, with an aim to enhance the infrastructure development in the country, the government is considering a special public-private partnership (PPP) platform to renegotiate already bid projects under PPP mode.

Allowing renegotiation after a project is bid out has emerged as a key challenge in most infrastructure sectors and the government is likely to set a resolution panel soon in line with global practices. Most countries have a provision for renegotiation of contracts under the PPP mode. On the other hand, the renegotiation of contracts under the PPP mode has been done very selectively in India. The move is likely to provide impetus to the big infrastructure products which are implemented under the PPP mode.

The development of the infrastructure sector is most critical prerequisite to boost the economic growth of any country. Infrastructure sector primarily comprises of power, ports, railways, roads, irrigation, water supply and airports. At present, Indian economy is struggling with slowdown and growth and prevailing economic downturn can be attributed partly to global factors and mainly to slow reforms and delays in implementation of projects in the country. Meanwhile, to boost the infrastructure sector, India's government has proposed an investment of $1 trillion for the infrastructure sector during the 12th Five Year Plan, with 50 percent of the funds coming from the private sector.

The CNX Nifty is currently trading at 7583.4, down by 48.30 points or 0.63% after trading in a range of 7515.50 and 7663.00. There were 17 stocks advancing against 32 stocks declining on the index.   

The top gainers on Nifty were CIPLA up by 3.96%, Kotak Bank up by 2.53%, Mcdowell-N up by 1.8%, Hindalco Industries up by 1.75% and GAIL up by 1.46%. On the flip side, BPCL down by 3.56%, TCS down by 2.19%, NMDC down by 2.18%, IDFC down by 2.05% and NTPC down by 1.87%, were the top losers.   

Asian equity indices were trading mixed; Straits Times up by 0.14%, Nikkei 225 up by 0.93% and Taiwan Weighted advanced 0.43%. While, Hang Seng down by 0.09%, Jakarta Stock Index down by 0.49% and Shanghai Composite down by 0.43% were the only losers on the index.

European markets were trading positive; with Germany’s DAX rising by 0.09%, France’s CAC 40 gaining by 0.15% and   FTSE 100 trading higher by 0.32%