Weak trade persists in noon trade; Rate sensitives drag benchmarks

Domestic bourses continued to trade in red with noticeable selling pressure in auto and realty counters ahead of Reserve Bank of India’s (RBI) third quarter review monetary policy meeting on January 29, 2013. Some pressure also came in from Aviation sector as stocks like Kingfisher, Spicejet and Jet Airways edged lower after the Supreme Court ruled that air travellers should not pay transaction fee and that the aviation regulator should review the wide variation in air fares by airlines. However, the losses remained capped as buying in software stocks provided some strength to the bourses on weak rupee. The rupee was trading at 53.75/76 versus its previous close of 53.6650/6750. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Global cues too remained sluggish as the IMF chief Christine Lagarde  warned of threats ahead and said that the world’s major economies including Europe, the US and Japan need to get their house in order. Moreover, most of the Asian equity indices were trading in the red at this point time amid some gloom over Apple Inc.’s latest earnings and forecast. Meanwhile, South Korea’s economy grew 0.4 percent in the fourth quarter of 2012 on a quarterly basis but, fell short of around 0.8 percent growth that the Bank of Korea had projected as recently as in October, underscoring a delayed global recovery due to persistent uncertainties hobbling the major economies although Japanese shares found fresh impetus from a weaker yen.

Back home, fast moving consumer goods and software remained the only gainers on the BSE sectoral front while, auto, realty and power remained the top losers on the BSE sectoral space. The broader indices too were struggling to get some traction while, the overall market breadth on BSE is in the favour of declines which are outpacing advances in the ratio of 652: 1890, while 120 shares remained unchanged.

The BSE Sensex is currently trading at 19934.93, down by 91.68 points or 0.46% after trading in a range of 20072.28 and 19884.20. There were 9 stocks advancing against 21 declines on the index.

The broader indices succumbed to selling pressure; the BSE Mid cap and Small cap index were trading lower by 1.77% and 1.55% respectively.

The top gaining sectoral indices on the BSE were FMCG up by 0.86% and IT up by 0.66%. While, Auto down by 2.82%, Realty down by 2.76%, Power down by 1.26%, Capital Goods down by 1.04% and Metal down by 0.90% were the top losers on the index.

The top gainers on the Sensex were ONGC up by 1.94%, TCS up by 1.36%, ITC up by 1.33%, Wipro up by 1.02% and Hindustan Unilever up by 0.88%.

On the flip side, Tata Motors was down by 7.02%, Gail India was down by 2.90%, Cipla was down by 2.31%, Sterlite Industries down by 1.91% and Hindalco Industries down by 1.61% were the top losers on the Sensex.

Meanwhile, an Empowered Group of Ministers (EGoM) is expected to approve new policy guidelines for the pricing of natural gas based on the Rangarajan committee report, which was submitted recently. If approved it would more-than-double the price of domestic gas sold by the state owned oil companies along with it would also raise costs for power and fertiliser companies and other natural gas buyers such as city gas distributors.

The Rangarajan committee, which recently submitted its report, recommended pricing of domestically produced natural gas at an average of international hub prices and cost of imported LNG instead of present mechanism of market discovery. Further, the Rangarajan formula is the mean of weighted averages of the producer price of liquefied natural gas imports to India and the price prevalent in Europe, the US and Japan.

At current rates, the price was about $7.4. Though domestic gas prices had been aligned to $4.2 fixed for Reliance Industries (RIL)’ KG-D6 gas in 2007, this time, RIL would have to wait till 2014, when its gas price is due for revision. Moreover, the Rangarajan formula is applicable to all natural gas producers, including government companies for nominated fields and private companies. The new price would be uniformly applicable to all consumers.

Though, the existing contracts for domestic companies would remain unaffected till the expiry of the contract period and the new policy would usher in uniformity in pricing. Further, the new policy would also be applicable to coal bed methane and all other non-conventional gas including shale.

In 2011-12, domestic gas output stood at 154 million standard cubic metres a day (mscmd) and for this year, it is expected to fall as RIL is producing less than 25 mscmd. Presently, gas produced from nominated fields is sold at $2.52 a million British thermal units (mBtu) to certain consumers. 

The S&P CNX Nifty is currently trading at 6,022.60, down by 31.70 points or 0.52% after trading in a range of 6,065.30 and 6,007.85. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were ONGC up by 1.95%, TCS up by 1.45%, ITC up by 1.40%, Hindustan Unilever up by 0.93% and Lupin up by 0.80%.

On the flip side, Tata Motors down by 7.19%, JP Associate down by 3.42%, IDFC down by 2.23%, GAIL down by 2.84% and Ranbaxy Laboratories down by 2.66% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite slipped 0.75%, Hang Seng dipped 0.20%, KOSPI Composite declined 0.80% and Taiwan Weighted was down by 0.62%.

On the flip side, Nikkei 225 surged 1.28% and Straits Times was up by 0.54%.

Stock markets in Indonesia and Malaysia remained close for the trade today.