Markets trade lower amid subdued Asian cues

After positive close in previous session, domestic equity indices have made a flat start and are trading with cut of over quarter percent in early deals, tracking weak cues from other Asian markets, as investors remain anxious ahead of the key policy decision from US Federal Reserve that is set to commence its two-day meet today. Meanwhile, Bank of Japan (BOJ) maintained a status quo keeping the deposit rates unchanged.  Further, there was some cautiousness in the markets with hailstorms in key farming belts of the country that may lead to the fourth successive crop failure and RBI too may wait to see the actual impact on food and overall retail inflation. The Consumer Price Index (CPI)-based inflation eased to a four-month low of 5.18% in February from 5.69% in January. On the secotal front, most of the sectoral indices on BSE were trading in green, stocks from Realty, Consumer Durables, Capital Goods, Bankex and Auto counters were gaining. On the flip side, stocks from FMCG and TECK counter were the only losers.

In the scrip specific development, SpiceJet was trading higher by over 3% on the BSE after the company announced that counsels of SpiceJet and KAL Airways have agreed before the Delhi High Court that they will jointly approach the regulators, seeking permission to issue warrants. However, Lupin was trading lower by over 4 per cent on Goa facility inspection by USFDA.

On the global front, the US markets closed mixed in low volume trade Monday, mostly shaking off a decline in oil prices ahead of the Federal Reserve's meeting later in the week. Asian markets were trading mostly in red following the mixed cues overnight from Wall Street. Investors are treading cautiously ahead of the outcome of major central banks' monetary policy meetings this week.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,500 and 24,700 levels respectively.  The market breadth on BSE was positive in the ratio of 795: 686 while 72 scrips remained unchanged.

The BSE Sensex is currently trading at 24735.52, down by 68.76 points or 0.28% after trading in a range of 24693.58 and 24840.77. There were 13 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.06%, while Small cap index up by 0.18%.

The top gaining sectoral indices on the BSE were Realty up by 0.69%, Consumer Durables up by 0.57%, Capital Goods up by 0.38%, Bankex up by 0.31% and Auto up by 0.24%, while FMCG down by 0.66% and TECK down by 0.10% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 0.99%, BHEL up by 0.95%, Tata Motors up by 0.74%, ICICI Bank up by 0.72% and Infosys up by 0.69%. On the flip side, Lupin down by 5.00%, Cipla down by 1.67%, HDFC down by 1.66%, Sun Pharma Inds. down by 1.41% and ONGC down by 1.22% were the top losers.

Meanwhile, in what could be a morale booster for the government, after it simplified the future auction process, proposing a revenue sharing model to replace the current profit sharing model in oil and gas sector, the global rating agency Standard & Poor’s Ratings Services has said that the new price formula and calibrated marketing freedom for gas produced from fields in difficult terrain could help attract investments in India’s oil and gas sector.

The rating agency further said that the new policy approvals in hydrocarbon E&P could help bring in transparency and lower administrative complexities in the sector. It expects the pricing formula to almost double the prices of domestic gas from difficult fields to about $ 7 per million British thermal units (mmbtu), from the current $ 3.8 an mmbtu. At present, domestic gas prices are determined by a formula of average gas prices in gas surplus geographies.

S&P, however, said the decisions 'could help attract investments' in the difficult fields but it will take time, as some of the difficult fields are green field projects and many discoveries will need approvals for capital outlays and time to implement. It also said that the new policies are credit positive for Oil and Natural Gas Corp (ONGC) and Reliance Industries (RIL), but meaningful cash flows are a few years away, as the investments in the difficult fields will increase gradually and meaningful production from such fields will take much longer.

Under the new formula, gas prices would be capped at the lowest of the imported cost of fuel oil, landed price of liquefied natural gas (LNG), or weighted average of imported price of coal, fuel oil, and naphtha.These prices will be reset semi-annually and will be applicable for future discoveries and existing discoveries that are yet to start commercial production. In addition, all exploration and production (E&P) activities will require just a single license, and bidders will be free to choose areas for exploration from among the fields up for auction.

The CNX Nifty is currently trading at 7509.55, down by 29.20 points or 0.39% after trading in a range of 7501.65 and 7545.20. There were 18 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were SBI up by 0.99%, BPCL up by 0.86%, ICICI Bank up by 0.72%, Infosys up by 0.67% and Bank Of Baroda up by 0.67%. On the flip side, Lupin down by 5.05%, HCL Tech. down by 2.02%, HDFC down by 1.91%, Cairn India down by 1.68% and Cipla down by 1.60% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 161.89 points or 0.79% to 20,273.45, Taiwan Weighted decreased 106.32 points or 1.22% to 8,641.58, Shanghai Composite decreased 32.21 points or 1.13% to 2,827.29, Jakarta Composite decreased 23.67 points or 0.49% to 4,853.86, FTSE Bursa Malaysia KLCI decreased 4.3 points or 0.25% to 1,696.01 and KOSPI Index decreased 2.51 points or 0.13% to 1,969.76

On the flip side, Nikkei 225 increased 4.71 points or 0.03% to 17,238.46.