Benchmarks slips into red; Telecom stocks bleed

The flip-flop of range bound trade of the benchmark equity indices has now entered the red, as listless global cues and a lack of catalysts at home front are keeping investors on the sidelines. However, the trend is expected to remain same as investors await ‘2013/14 budget’-a critical test of whether the government will announce a plan to contain the fiscal and current account deficits. Although, out on intra-day’s low, Sensex is trading below the psychological 19500 level. Similarly, Nifty too, staying in the red zone, is off its 5900 mark. Broader indices, too were witnessing some profit-booking, have relinquished part of their gains.

On one hand, the gains of likely candidates for banking licences, IFCI, Mahindra and Mahindra Financial Services and Shriram transport Finance Company, are being counterbalanced by the fall of telecom stocks, viz Bharti Airtel and Idea Cellular, after wireless broadband airwave holders were allowed to provide voice services by paying additional fee, a move that is seen benefiting 4G licence holder Reliance Industries but leading to more competition in the sector. The overall market breadth on BSE continued to favour advances which thumped declines in the ratio of 1260:1207, while 151 shares remained unchanged.

The BSE Sensex is currently trading at 19489.97, down by 11.11 points or 0.06% after trading in a range of 19531.51 and 19471.19. There were 15 stocks advancing against 14 declines on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap and Small cap index were trading higher by 0.38% and 0.40% respectively.

The top gaining sectoral indices on the BSE were, Information Technology up by 0.63%, Health Care up by 0.53%, Realty up by 0.44%, Auto up by 0.33% and Consumer Durable up by 0.26%. While, Metal down by 0.48%, Capital Goods down by 0.29%, Oil & Gas down by 0.24% and Bankex down by 0.08% were the top losers on the index.

The top gainers on the Sensex were ONGC up by 2.09%, Cipla up by 1.69%, Hindustan Unilever up by 1.34%, NTPC up by 1.06% and Infosys up by 0.84%.

On the flip side, Bharti Airtel down by 2.15%, Gail India down by 1.92%,  Coal India down by 1.30%, Jindal Steel down by 1.24% and RIL down by 1.22% were the top losers on the Sensex.

Meanwhile, to utilize the unconventional hydrocarbon resource to meet the growing energy needs, India will unveil a shale gas exploration policy in a month. Oil Minister M Veerappa Moily said 'we have received comments on the draft shale gas exploration policy that we had floated. We are now in the process of putting out a note for the consideration of the cabinet and hopefully in a month time we will be able to announce the shale gas policy'.

Shale gas or natural gas trapped in sedimentary rocks (shale formations) below the earth's surface is seen as a new alternative to conventional oil and gas for meeting growing energy needs. Shale gas has become an increasingly important source of natural gas in the United States over the past decade, and now interest has spread to potential gas shale’s in Canada, Europe, Asia, and Australia. 

The government is also planning to launch its first auction of shale gas block by 2013-end on terms that are expected to be remarkably different from bid rounds for oil and gas blocks. The Directorate General of Hydrocarbons (DGH), the Oil Ministry's technical arm, has proposed to offer areas for exploration shale gas on royalty and production-linked payments to the government. As per the available data, six basins hold shale gas potential including Cambay (Gujarat) and Assam-Arakan (the North-East) among others.

As per Veerappa Moily, oil ministry is working on a new policy for exploiting gas lying below coal seams, called Coal-Bed Methane. Moily said that he has formed an expert committee under Vijay Kelkar to suggest roadmap for cutting India's dependence on imports to meet its oil needs. India currently imports around 79 percent of its oil needs and the Ministry wants this to be cut to 50 percent by 2020 and by 75 percent in 2025 through intensive exploration and exploitation of untapped reserves.

Moreover, the draft shale gas policy does not permit cost recovery and hence profit sharing as these two features came under criticism by the CAG in its audit report on Reliance Industries' KG-D6 block. As per the DGH's draft policy, the government’s share of production will be net of all statutory dues and will also focus on minimizing the government intervention, removing complications in accounting and incentive for gold plating, which may occur while allowing profit sharing based on cost recovery.

The S&P CNX Nifty is currently trading at 5,892.65, down by 5.55 points or 0.09% after trading in a range of 5,904.15 and 5,887.95. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were ACC up by 2.09%, ONGC up by 1.90%, Ranbaxy up by 1.73%, Cipla up by 1.63% and Siemens up by 1.34%.

On the flip side, GAIL down by 2.22%, Bharti Airtel down by 2.06%, Reliance Infra down by 1.33%, Reliance Industries down by 1.31% and Coal India down by 1.28% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 1.72%, Hang Seng dipped 0.72%, Jakarta Composite decreased 0.34%, KLSE Composite slipped 0.35% and Nikkei 225 was down by 0.31%.

On the flip side, Straits Times rose 0.08%, KOSPI Composite added 0.20% and Taiwan Weighted was up by 0.22%.