Post session - Quick review

Logging its first weekly fall in eight, local bourses concluded abysmally lower at the beginning of a new F&O series on Friday, as investors pocketed profits, spooked by the concerns about rising global oil prices and the country's ballooning fiscal deficit, which spruced risk appetite for risky asset calls.  The start of new month F&O series turned out to be yet another disappointing session for the benchmark indices which going through extremely volatile trades eventually snapped the session with a cut of over 0.75% each.

The barometer gauges after protracting their southbound journey for third consecutive session and clocking loss for 3 out of 4 sessions in the holiday truncated week, breached the crucial psychological level of 18000 mark (Sensex) and  5500 mark (Nifty) respectively.  Lenders such as ICICI Bank and HDFC Bank were among the big losers as market expectations for a rate cut in March was tempered by the rally in world oil prices, which could make it difficult for the central bank to ease policy. Brent crude rose above $124 on Friday, on track for a fifth straight weekly gain, as worries over Iranian supply and upbeat US economic data offset concerns that high oil prices could snuff out demand.  Leading mortgage lender Housing Development Finance Corp fell as much as 6.2 percent after Citigroup Inc sold its entire stake in the company for about $1.9 billion.

Meanwhile, positive global cues also failed to uplift the sentiment of trade at Dalal Street, which continued to be dominated by bears, which running berserk over the bourses, led to dismal weekly close. Asian shares spiked to end in green on Friday as traders took heart from economic data on Thursday that painted a brighter picture of the global economic recovery. In the U.S. the four-week moving average for weekly jobless claims fell to its lowest level in nearly four years. Additionally, European shares too mirroring gains on Wall Street and in Asia, rose in early deals with the European Central Bank's likely move to lend a huge amount to banks and recent positive data prompting investors to buy equities ahead of the weekend.

Back on the home turf, gains in the stocks belonging to the Metal, Fast Moving Consumer Goods, TECk, Information Technology counters led to slender recuperation in the wee hours of trade, as the benchmark indices entering the final leg of trade dipped to the low point of the day. However, even bargain buying which emerged in select blue chip stock towards the end of the trade, took benchmark above their day’s low point.

In stocks moving as per news flow, Oracle Financial Services Software spurted over 15% on delisting buzz. Meanwhile, metals and mining stocks like Coal India, Sterlite, Tata Steel, Hindalco, Jindal Steel and SAIL gained 1-2%. In the second line shares, Mangalore Chemicals and Fertilizers shot up 10% on reports that Zuari Industries and Chambal Fertilisers were eyeing UB group's 30.4% stake in the company. United Spirits too rose 2.3%.

On the flip side, stocks from Capital Goods (CG) space along with rate sensitive’s-Realty and Bankex- capitulated to maximum selling pressure, which lured the respective gauges below 1% each. Thus, the 30 share barometer index -Sensex- of Bombay Stock Exchange after offloading over 150 points shied away from the 18000 psychological level. Similarly, 50 share barometer index of National Stock Exchange (NSE)-after declining over 50 points ended sub 5500 mark. The broader indices too finished on a heartrending note, both midcap and smallcap index plunged over 0.50% each. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 1092:1798 while 138 scrips remained unchanged. (Provisional)

The BSE Sensex lost 172.14 points or 0.95% and settled at 17,906.36. The index touched a high and a low of 18,198.15 and 17,848.93 respectively. 13 stocks advanced against 17 declining ones on the index (Provisional)

The BSE Mid-cap index lost 0.64% while Small-cap index was down by 0.67%. (Provisional)

On the BSE Sectoral front, Metal up 1.12%, FMCG up 0.47%, TECk up 0.39%, IT up 0.33% and Consumer Durables up 0.13% were the only gainers while Capital Goods down 2.90%, Realty down 2.40%, Bankex down 2.00%, Oil & Gas down 1.92% and PSU down 1.28% were the top losers.

The top gainers on the Sensex were Sterlite Industries up 3.83%, Tata Power up 2.10%, Coal India up 1.47%, Bharti Airtel up 0.96% and Tata Steel up 0.95%.

On the flip side, HDFC down 3.83%, DLF down 3.44%, L&T down 3.38%, BHEL down 2.80% and SBI down 2.44% were the top losers in the index. (Provisional)

Meanwhile, in view of a sharp drop in output from RIL's eastern offshore KG-D6 block, an Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee is likely to meet today on February 24 to consider changes in the natural gas allocation policy. The panel, which is meeting for the first time in more than 18 months, is also likely to consider the Saumitra Chaudhuri report that has recommended reserving or preferential allotment of domestically produced natural gas only to fertiliser and power plants.

Issues that are expected to come up for discussion in the EGoM are the requirement of 13.22 mmcmd of gas for urea plant beyond 15.7 mmcmd, which has already been allocated from KG-D6, the requirement of 31.81 mmcmd gas for 14 power plants with a total capacity of 7,219.5 MW (that are to be commissioned in the Eleventh Five-Year Plan period ending March 31), the quantum of marketing margin charged by RIL on sale of KG-D6 and the Oil Ministry's decision to ask the Petroleum & Natural Gas Regulatory Board (PNGRB) to regulate the marketing margins. 

The power ministry’s proposal to ask RIL to sign an agreement to supply 2.16 mmcmd of gas to NTPC may also figure in the EGoM meeting. RIL had not signed the pact for supply of 2.74 mmcmd of gas out of the 4.46 mmcmd allocated to five power projects. Gas output from KG-D6 has fallen to about 35 million cubic meters per day after touching a peak of 60 mmcmd in March 2010, prompting the ministry to suggest changes in the allocation policy.

Further suggestions made by the oil ministry on fuel/gas allocations are also likely to be discussed by the Ministerial panel. The oil ministry has proposed to halt gas supplies to power producers that do not sell electricity at regulated tariffs. It has also recommended cancellation of gas allocation to those merchant power plants in Andhra Pradesh that currently sell electricity above the tariff determined by the regulator. The ministry has also proposed allocating gas to only urea fertiliser plants in the future. On the other hand, it has suggested stopping fuel supply to phosphates and potassium fertiliser producers.

The Association of Oil and Gas Operators (AOGO), whose members also includes BP plc of UK, Cairn, BG Group and BHP Billiton, has written to Pulok Chatterji, Principal Secretary to the Prime Minister, saying the recommendation contradicts the contractual commitments of the Government made in the Production Sharing Contracts (PSC) and New Exploration Licensing Policy (NELP)' for market discovery of price of gas. Once gas is reserved for certain sectors, they are not likely to quote optimal price for gas and instead would under price the scarce fuel. Pre-allocation of gas, AOGO said, 'distorts demand supply equation and eliminates the possibility of discovering free market price of gas.'

'Discovery of free market price of gas is a fundamental feature of PSC signed under NELP... there has been a huge escalation in costs for developing oil and gas fields over the last few years. An incorrectly specified domestic gas price will retard domestic gas development,' it added. Reliance Industries has also opposed pre-allocation of the scarce fuel saying it distorts demand-supply equation and eliminates possibility of discovering free market price of gas.

India VIX, a gauge for market’s short term expectation of volatility gained 2.01% at 24.82 from its previous close of 24.33 on Thursday. (Provisional)

The S&P CNX Nifty lost 58.45 points or 1.07% to settle at 5,424.85. The index touched high and low of 5,521.40 and 5,405.90 respectively. 15 stocks advanced against 35 declining ones on the index. (Provisional)

The top gainers on the Nifty were Sterlite Industries up 3.78%, Tata Power up 2.15%, Coal India up 1.46%, Power Grid up 1.38% and Jindal Steel up 1.20%.

On the other hand, IDFC down 4.48%, DLF down 3.66%, Reliance Infrastructure down 3.63%, HDFC down 3.62% and Kotak Bank down 3.30% were the top losers. (Provisional)

The European markets were trading in green, with France's CAC 40 up 0.69%, Germany's DAX up 0.80% and Britain’s FTSE 100 up 0.05%.

Stocks in the Asian region ended mostly in the positive terrain on the last trading day of the week on the back of solid US data which boosted investors’ sentiment, but gains remained capped over concerns that rising oil prices could deal a further blow to the fragile euro zone economy and moves to take profits after recent rallies. Oil extended gains on heightening concerns about escalating tension between Iran and the West and risks of oil supply disruptions.

Meanwhile, Chinese shares ended up 1.3 percent, recording their sixth-straight weekly gains this week, with the property sector strong on renewed speculation that sales could be supported by anticipated reforms in household registration policy. While, Japanese Nikkei share average broke above 9,600 to its highest closing level in seven months and brought the month’s rally to 9.6 percent, keeping it on track for its best February performance in two decades. In addition, South Korean shares finished higher on Friday, with foreign buying resuming following positive US data.