Markets continue to trade southward; Sensex breaches 24,650 mark

Extending their losses, Indian equity benchmarks are trading with a cut of over half a percent, with frontline gauges breaching their crucial 7,500 (Nifty) and 24,650 (Sensex) levels. Sentiment turned down-beat despite retail inflation falling to a three- month low of 5.18 per cent in February after rising for five months in a row as food prices including vegetables, pulses and fruits became less costly. Depreciation in Indian rupee too dampened sentiments. The rupee depreciated by fifteen paise to trade at 66.26 against the US dollar in noon deals on Tuesday on increased demand for the American currency from importers and banks.

On the global front, Asian equity indices were trading in red at this point of time after the Bank of Japan held policy steady as expected and offered a bleaker view of the country's economy in the face of lingering anxiety over slowing global growth. Closer home, stocks related to gold and jewellary space remained under pressure, as the Finance Minister Arun Jaitley has refused to roll back a 1 per cent excise duty on non-silver ornaments proposed in the Budget. On the other hand, buying witnessed in oil & gas sector counter, as the global rating agency Standard & Poor's 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 BSE Sensex is currently trading at 24625.52, down by 178.76 points or 0.72% after trading in a range of 24600.07 and 24840.77. There were 11 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.54%, while Small cap index down by 0.37%.

The top gaining sectoral indices on the BSE were Bankex up by 0.44%, Realty up by 0.37%, Metal up by 0.36%, Oil & Gas up by 0.34% and Capital Goods up by 0.26%, while Healthcare down by 2.20%, FMCG down by 1.38%, TECK down by 0.80%, IT down by 0.70% and Auto down by 0.34% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.70%, Axis Bank up by 0.96%, Bharti Airtel up by 0.70%, BHEL up by 0.62% and Tata Steel up by 0.54%. On the flip side, Lupin down by 6.21%, HDFC down by 3.37%, ITC down by 2.17%, Cipla down by 1.92% and Sun Pharma down by 1.85% 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 7481.35, down by 57.40 points or 0.76% after trading in a range of 7479.80 and 7545.20. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were PNB up by 1.88%, SBI up by 1.79%, BPCL up by 1.41%, Yes Bank up by 1.35% and Axis Bank up by 1.10%. On the flip side, Lupin down by 6.29%, HDFC down by 3.65%, Zee Entertainment down by 2.88%, ITC down by 2.48% and Wipro down by 1.93% were the top losers.

Asian markets were trading in red; Taiwan Weighted declined 136.72 points or 1.56% to 8,611.18, Hang Seng decreased 123.2 points or 0.6% to 20,312.14, Nikkei 225 shed 116.68 points or 0.68% to 17,117.07, Jakarta Composite fell 28.81 points or 0.59% to 4,848.72, Shanghai Composite slipped 10.21 points or 0.36% to 2,849.29, FTSE Bursa Malaysia KLCI dipped 5.71 points or 0.34% to 1,694.60 and KOSPI Index was down by 2.3 points or 0.12% to 1,969.97.