Markets continue to trade in green in afternoon session

Indian equity benchmarks continued their firm trade in the afternoon session on account of sustained buying activities by both funds and retail investors and on firming trend in Asian markets, on the back of stronger-than-expected US jobs report released on Friday. Further, the Goods and Services Tax (GST) Bill, which was passed by the Rajya Sabha on 3 August, 2016 is going to be introduced in the Lok Sabha for discussion and voting, also aided to the sentiment. Traders were getting some support with a joint study by Confederation of Indian Industry (CII) and the Indian Banks' Association (IBA) stating that the overall financial conditions index in India rose 28 per cent sequentially to 61.1 in the first quarter of 2016-17 from 47.8 in the previous quarter of 2015-16, indicating healthy improvement.

On the global front, Asian market were trading in green after strong U.S. jobs data reassured investors  the world's largest economy still is growing and boosted American stocks. Back home, Sectorally, Oil & Gas, Realty, PSU, Metal and Consumer Durables counters were the major pillars of markets’ strength, while Capital Goods counter was the only laggard among the rest. In scrip specific development, oil refiner Hindustan Petroleum Corp rose 2.3 percent after the central bank on Friday raised the limit for foreign shareholding in the company to up to 40 percent from 24 percent. But Union Bank of India fell 5 percent after the state-run lender's first-quarter profit plunged 68 percent on higher bad loans.

The BSE Sensex is currently trading at 28154.79, up by 76.44 points or 0.27% after trading in a range of 28134.99 and 28226.38. There were 20 stocks advancing against 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index was up by 0.62%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.00%, Realty up by 0.86%, PSU up by 0.68%, Metal up by 0.61% and Consumer Durables up by 0.55%, while Capital Goods down by 0.09% was the lone losing index on BSE.

The top gainers on the Sensex were Lupin up by 1.76%, Reliance Industries up by 1.50%, Dr. Reddys Lab up by 1.05%, Wipro up by 0.99% and Bajaj Auto up by 0.88%. On the flip side, Bharti Airtel down by 1.61%, Sun Pharma Inds. down by 1.22%, Tata Steel down by 0.76%, NTPC down by 0.68% and Larsen & Toubro down by 0.51% were the top losers.

Meanwhile, government may cut gas price for producers by 20 percent in October, when it is scheduled for its next review. This will be the fourth consecutive reduction since the implementation of the domestic gas pricing formula approved by the NDA- government in October 2014 that calculates the rate on a volume weighted average of rates in gas surplus nations of the US, Canada and Russia, based on the 12-month trailing average price with a lag of three months.

Price of natural gas paid to producers like state-owned ONGC and RIL will likely fall to $ 2.45 per million British thermal unit (mmbtu) with effect from October 1 as opposed to $ 3.06 presently on gross calorific value (GCV) basis. On a net-calorific value (NCV) basis, the new gas price is likely to be $ 2.7 from October 1. The reduction in natural gas prices would mean lower raw material cost for compressed natural gas (CNG) and natural gas piped to households (PNG) and would translate into reduction in retail prices.

On October 1, 2015 price of natural gas was lowered to $3.82 per mmBtu from $4.66. The cap for April 1 to September 30 was $ 6.61 per mmBtu on GCV basis and $ 7.3 on NCV basis. The price cut on 1 October, 2016 will put further pressure on finances of upstream producers who do not find the current rate incentivising enough to invest more in oil and gas hunt. The cap price based on alternative fuels for undeveloped gas finds in difficult areas like deep sea will also fall to around $5.2-5.3 per mmBtu from $6.61 currently.

The price of gas has declined by around 39 per cent since the implementation of the gas pricing formula in October 2014. The government had earlier this year approved marketing and pricing freedom for all undeveloped discoveries lying in difficult areas subject to a cap.

The CNX Nifty is currently trading at 8704.90, up by 21.75 points or 0.25% after trading in a range of 8697.60 and 8723.50. There were 33 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were BPCL up by 4.39%, Hindalco up by 4.38%, BHEL up by 2.65%, Bosch up by 1.74% and Lupin up by 1.73%. On the flip side, Idea Cellular down by 3.11%, Bharti Airtel down by 1.81%, Bharti Infratel down by 1.39%, Sun Pharma Inds. down by 1.16% and Ambuja Cement down by 1.07% were the top losers.

The Asian markets were trading in green, FTSE Bursa Malaysia KLCI increased 1.76 points or 0.11% to 1,665.80, KOSPI Index increased 13.18 points or 0.65% to 2,031.12, Shanghai Composite increased 14.55 points or 0.49% to 2,991.25, Jakarta Composite increased 20.33 points or 0.38% to 5,440.58, Taiwan Weighted increased 58.14 points or 0.64% to 9,150.26, Hang Seng increased 262.23 points or 1.18% to 22,408.32 and Nikkei 225 increased 396.12 points or 2.44% to 16,650.57.