Key benchmarks manage to keep their head above water in noon deals

Key domestic indices pared most of their initial gains as investors opted to book profit at higher levels. However, the frontline gauges managed to keep their head above water on back of better-than-expected manufacturing activity in India. HSBC Markit Manufacturing PMI rose to a seasonally adjusted annual rate of 54.2, from 53.2 in the preceding month. Global cues too remained supportive as most of the Asian equity indices were trading in the green at this point of time on renewed confidence that major central banks will keep taking simulative steps to support their economies. However, Chinese Shanghai continued to trade lower by over half a percent as the nation’s manufacturing growth slowed.

Back home, sentiments got dampened after the rupee lost 30 paise to Rs 54.66 against the US dollar on the Interbank Foreign Exchange due to appreciation of the American currency against other currencies. On the sectoral front, consumer durables witnessed the maximum gain in trade followed by power and capital goods while, fast moving consumer realty, fast moving consumer goods and healthcare remained the top losers on the BSE sectoral space. The broader indices were witnessing mixed trend while, the overall market breadth on BSE still remains in the favour of declines which have thumped advances in the ratio of 1155: 1346, while 116 shares remained unchanged.

The BSE Sensex is currently trading at 18870.83, up by 9.29 points or 0.05% after trading in a range of 18970.45 and 18820.90. There were 16 stocks advancing against 14 declines on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.07% and Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were, Consumer Durables up by 1.05%, Power up by 1.05%, Capital Goods up by 0.80%, Auto up 0.79% and Metal up by 0.41%, while Realty down by 2.70%, FMCG down by 0.57%, Health Care down by 0.49%, TECk down by 0.23% and Bankex down by 0.04% were the few losers on the BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.25%, Tata Power up by 2.91%, Jindal Steel up by 2.90%, Mahindra & Mahindra up by 1.66% and HDFC up by 1.64%.

On the flip side, Bharti Airtel was down by 2.49%, ITC was down by 1.71%, Hero MotoCorp was down by 1.67%, Sterlite Industries was down by 1.49% and Hindalco Industries was down by 1.41%  were the top losers on the Sensex.

Meanwhile, after listening to the complains of oil firms like BP Plc for artificially low gas rates in the country impeding investments, Finance Minister P Chidambaram, while presenting the Budget for 2013-14, said ‘the natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed’. Presently, domestically produced natural gas is priced at USD 4.2 per million British thermal unit, one-third of the imported cost.

A government appointed committee headed by C Rangarajan, 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. This average comes to about USD 8-8.5 per mmBtu, half-way meeting expectations of companies of being allowed to charged a price equivalent to imported liquefied natural gas (LNG).

Oil Minister M Veerappa Moily has already accepted the recommendations and is moving Cabinet for a formal approval.

Further, finance minister said that the oil and gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts. While, the cost-recovery model of the New Exploration Licensing Policy (NELP) will help the operators to recover all their investment in successful as well as unsuccessful wells from sale of oil and gas before sharing profits with the government.

As per Finance Minister, awarded NELP blocks are currently stalled for defence and other clearances and will be cleared soon. The transition of prices of domestic natural gas to import parity similar to the diesel price reforms will help to build a sustainable gas market in the country.

Chidambaram also said a policy to encourage exploration and production of shale gas will be announced. The government is 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. 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.

While, the oil and gas sector is pleased as the government has expressed the need for a natural gas pricing policy, but got disappointment that Chidambaram has not removed the tax anomaly between branded and unbranded fuel, given that such fuel has been proved to increase engine efficiency and enhance its life, reducing consumption.

The CNX Nifty is currently trading at 5,693.40 down by 0.35 points or 0.01% after trading in a range of 5,728.15 and 5,679.90. There were 24 stocks advancing against 26 declines on the index.

The top gainers of the Nifty were BPCL up by 3.97%, Reliance Infrastructure up by 3.72%, Maruti Suzuki up by 3.44%, Tata Power up by 3.23% and Power Grid up by 3.21%.

On the flip side, DLF down by 5.08%, IDFC down by 3.78%, Bharti Airtel down by 2.29%, CAIRN down by 2.01% and Axis Bank down by 1.66% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Jakarta Composite rose 0.23%, KLSE Composite strengthened 0.04%, Nikkei 225 surged 0.41%, Straits Times added 0.06% and Taiwan Weighted was up by 0.84%.

On the flip side, Shanghai Composite dropped 0.26% and Hang Seng was down by 0.48%.

South Korean markets remained shut for the trade today.