Benchmarks trim losses; trade with a cut of around 0.25%

The Indian markets despite coming off the lows of the day were trading with a cut of around quarter of a percent in noon deals as sentiments remained dampened after India's merchandise exports contracted for the eighth month running in July, registering a 10.3 per cent drop over last year. The trade deficit widened to $12.8 billion in July from $10.8 billion in June. Depreciation in Indian rupee too weighed down sentiments. The rupee slipped 23 paise to 65.22 against the greenback due to appreciation of the American currency overseas. However, losses remained capped with Prime Minister Narendra Modi promising to continue the war on prices to bring rates further down as a measure to boost economy and provide relief to the common man. Some support also came on report that foreign institutional investors were net buyers to the tune of Rs 404 crore on Friday, as per provisional stock exchange data.

Firm opening in European counters too helped domestic markets to trim some of their losses. CAC, DAX and FTSE all were trading with a gain of over half a percent in early deals. However, Asian markets were trading mostly in red at this point of time, though Chinese and Japanese benchmarks edged higher. Back home, PSU banks remained on buyers’ radar after the government launched a revamp plan, which includes Rs. 20,000 crore capital infusions. On the sectoral front, consumer durables, public sector undertaking and banking witnessed the maximum gain in trade, while oil and gas, software and capital goods remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was evenly divided; there were 1,282 shares on the gaining side against 1,226 shares on the losing side while 95 shares remain unchanged.

The BSE Sensex is currently trading at 28006.85, down by 60.46 points or 0.22% after trading in a range of 27739.13 and 28095.97. There were 12 stocks advancing against 17 stocks declining on the index while 1 stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.45%, while Small cap index up by 0.30%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.36%, PSU up by 1.14%, Bankex up by 0.72%, Metal up by 0.61% and Healthcare up by 0.19%, while Oil & Gas down by 0.84%, IT down by 0.58%, Capital Goods down by 0.51%, Realty down by 0.48% and TECK down by 0.43% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.27%, Tata Steel up by 2.26%, Sun Pharma up by 2.01%, GAIL India up by 1.23% and Coal India up by 0.68%. On the flip side, Cipla down by 3.57%, ONGC down by 2.27%, Hindalco down by 1.98%, Vedanta down by 1.40% and Reliance Industries down by 1.26% were the top losers.

Meanwhile, domestic prices of natural gas may fall below $4.2 per unit from October 1 as international prices to which they are benchmarked have come down. This move could lead to lower piped cooking gas and CNG prices. Power plants which use gas a fuel and fertilizer units, which use it as an input would also benefit. Further, the cut will impact the revenue of producers like ONGC and Reliance Industries. This price cut will be the second reduction in rates since April 1.

Last year in October, government announced a new pricing formula which led to rates rising by about 33% to $5.61 per million British thermal unit (mmBtu) for a period up to March 31, 2015 from the long-standing price of $4.2, by using prevailing price in gas surplus nations like the US, Russia and Canada. As per the system the domestic natural gas price is to be revised every six months by using weighted average or rates prevalent in gas-surplus economies of US/Mexico, Canada and Russia.

From April 2015, the rates, on net calorific value (NCV) basis, dropped to $5.05 per mmBtu for six month period. According to the average price at the international hubs the rate is likely to be $4.16 or $4.17 per mmBtu on NCV basis from October 1. On gross calorific value (GCV) basis, the rate will be about $ 3.8 per mmBtu as compared to $4.66 currently.

Domestic gas price is calculated by using weighted average price at Henry Hub of US, National Balancing Point of UK, rates in Alberta (Canada) and Russia with a lag of one quarter. Earlier the rates for April 1 to September 30 period were based on average price at the international hubs during January to December 2014. Further, October 1, 2015 to March 31, 2016 rate will be based on average of prices during July 1, 2014 to June 30, 2015.

The CNX Nifty is currently trading at 8496.90, down by 21.65 points or 0.25% after trading in a range of 8428.05 and 8530.60. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 13.94%, PNB up by 4.60%, SBI up by 4.21%, Tata Steel up by 2.21% and Sun Pharma up by 2.15%. On the flip side, Cipla down by 3.52%, ONGC down by 2.14%, Hindalco down by 1.99%, Zee Entertainment down by 1.48% and Ambuja Cement down by 1.46% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 169.79 points or 0.71% to 23,821.24, Taiwan Weighted declined 92.22 points or 1.11% to 8,213.42, Straits Times shed 23.74 points or 0.76% to 3,090.51, FTSE Bursa Malaysia KLCI dropped 23.43 points or 1.47% to 1,573.39 and KOSPI Index was down by 14.94 points or 0.75% to 1,968.52.

On the flip side, Shanghai Composite rose 25.57 points or 0.64% to 3,990.90 and Nikkei 225 was up by 100.81 points or 0.49% to 20,620.26.

European Markets were trading in green; Germany’s DAX gained 0.82%, France’s CAC surged 0.98% and UK’s FTSE was up by 0.58%.