Benchmarks extend losses; Realty, Oil & Gas drag

Indian equity markets extend losses and continued their weak trade in late afternoon session on account of selling in frontline blue chip counters. The sentiments were under pressure after India’s merchandise exports contracted for the eighth month running in July, registering a 10.3 percent drop over last year. The trade deficit widened to $12.8 billion in July from $10.8 billion in June. Investors were also cautious after the weather department stated that India’s monsoon rainfall deficit has widened to 10% as a strengthening El Nino weather pattern trimmed rainfall, raising fears of the first drought in six years. Traders were seen piling position in Consumer Durables, PSU and Metal stocks while selling was witnessed in Realty, Oil & Gas and Capital Goods sector stocks. In scrip specific development, Nestle India was trading under pressure after the top consumer court accepted the government’s Rs 640-crore suit against the company for its alleged unfair trade practices pertaining to Maggi instant noodles and posted the next date of hearing for September 30.

On the global front, the Asian markets traded mostly in red, while the European markets were trading mostly on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,500 and 28,000 levels respectively. The market breadth on BSE was negative in the ratio of 1309:1351 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 27914.04, down by 153.27 points or 0.55% after trading in a range of 27739.13 and 28095.97. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index up by 0.22%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.39%, PSU up by 1.15%, Metal up by 0.67% and Bankex up by 0.66%, while Realty down by 1.34%, Oil & Gas down by 0.90%, Capital Goods down by 0.88%, TECK down by 0.43% and IT down by 0.42% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.40%, Tata Steel up by 2.05%, GAIL India up by 1.61%, Sun Pharma up by 1.11% and Tata Motors up by 0.89%.

On the flip side, Cipla down by 4.30%, Hindalco down by 2.47%, Vedanta down by 2.15%, ONGC down by 2.05% and Reliance Industries down by 1.76% 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 8486.00, down by 32.55 points or 0.38% 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 14.53%, SBI up by 4.62%, PNB up by 4.00%, Tata Steel up by 1.89% and GAIL India up by 1.88%.

On the flip side, Cipla down by 4.27%, Hindalco down by 2.31%, Zee Entertainment down by 2.26%, ONGC down by 2.09% and Vedanta down by 1.96% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 176.38 points or 0.74% to 23,814.65, Taiwan Weighted decreased 92.22 points or 1.11% to 8,213.42, Straits Times decreased 42.43 points or 1.36% to 3,071.82, FTSE Bursa Malaysia KLCI decreased 22.93 points or 1.44% to 1,573.89 and KOSPI Index decreased 14.94 points or 0.75% to 1,968.52.

On the other hand, Shanghai Composite increased 28.33 points or 0.71% to 3,993.67 and Nikkei 225 increased 100.81 points or 0.49% to 20,620.26.
Jakarta Stock Exchange is closed down on account of ‘Independence Day’ holiday.

The European markets were trading mostly in green; France’s CAC increased 12.78 points or 0.26% to 4,969.25, Germany’s DAX increased 27.37 points or 0.25% to 11,012.51 while UK’s FTSE 100 decreased 8.98 points or 0.14% to 6,541.76.