Markets crash on political worries; overlooks repo rate-cut by RBI

Following a positive opening, Indian equity markets slipped into red sharply after DMK decided to snap ties with the ruling UPA government, over the Sri Lankan issue. The DMK, which has 18 members in the Lok Sabha and five of its MPs in Prime Minister Manmohan Singh's council of Ministers, wants a resolution adopted in parliament declaring there was genocide of Tamils in Sri Lanka. The Sensex trading near day's low down by 309.93 points, while Nifty fell by 89.35 points. However, Finance Minister P Chidambaram assured that the government has absolute majority in the House, in order to console the nervous market. Meanwhile, the Reserve Bank of India (RBI) cut its key lending rate at the monetary policy review by 25 basis points, which also failed to boost market sentiments. The central bank kept cash reserve ratio, the portion of deposits banks need to park with RBI, unchanged at 4%. In currency markets, rupee depreciated against greenback amid increasing dollar demand from oil importers. On sectoral front, all sectors were trading in red.

On the global front, Asian stocks recovered from Monday’s steep fall after EU leaders gave Cyprus more flexibility over a planned bank levy, but investors remained cautious over a bailout plan for Cyprus and its potential fallout. Back home, the market breadth was favoring negative trend; there were 1,713 shares on the losing side against 640 shares on the gaining side while 128 shares remain unchanged.

The BSE Sensex is currently trading at 18,983.95, down by 309.25 points or 1.60% after trading in a range of 19,378.61 and 18,939.47. There were 5 stocks advancing against 25 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.44% and Small cap index was down by 1.33%.

There was no gainer on the BSE sectoral space while, PSU down by 2.62%, Oil & Gas down by 2.57%, Metal down by 2.51%, Realty down by 2.14% and Bankex down by 2.09% were the top losers on the BSE.

The top gainers on the Sensex were Sun Pharma up by 1.23%, Gail India up by 1.00%, Wipro up by 0.68%, Bajaj Auto up by 0.38%, and ITC up by 0.23%.

On the flip side, ONGC was down by 5.15%, Jindal Steel was down by 3.65%, Coal India was down by 3.29% , BHEL was down by 3.08% and Hero MotoCorp was down by 2.85% were the top losers on the Sensex.

Meanwhile, a committee has been set up by the Petroleum Ministry to boost the domestic production of oil and gas and help India to achieve energy security by 2030. This committee is headed by the former Finance secretary Vijay Kelkar.

The panel will submit its recommendations in six months and will consider various options like enhancing domestic production of oil and gas from the unconventional energy sources, institutional mechanism for appraisal of Indian sedimentary basins to the extent of 75% by 2015 and 100% by 2025. Recommendations will also consider diplomatic and political initiatives, to import gas and other oil products across neighboring countries. Emphasis would be on building trans-national gas pipelines.

The main aim of the panel will be focus to recommend steps to explore better opportunities in unconventional energy resources like shale gas and carbon sequestration under sea. Presently, India is a partner with the US and several other countries to exploit under-sea hydrocarbon deposits, through carbon sequestration technologies for which worldwide research is underway through pilot projects.    

India, the world’s fourth largest energy consuming nation, over 80 per cent of domestic energy requirem­ents are met through import of oil and gas products, while, the idea is to scale it down to 50 per cent or lower in 17 years. The country trails the US, China and Russia, accounting for 4.4% of global energy consumption. India’s energy demand is expected to more than double by 2035, from present around 700 million tonnes of oil equivalent M T to around 1,500 M T.

The CNX Nifty is currently trading at 5,745.90 down by 89.35 points or 1.53% after trading in a range of 5,863.60 and 5,724.30. There were 7 stocks advancing against 43 declines on the index.

The top gainers of the Nifty were Sun Pharmaceuticals up by 1.18%, Gail up by 1.10%, Wipro up by 0.62%, ITC up by 0.43% and Ranbaxy up by 0.35%.

On the flip side, ONGC down by 5.24%, BPCL down by 4.11%, Jindal Steel down by 3.61%, Coal India down by 3.18% and Sesa Goa down by 3.15% were the major losers on the index.

Most Asian equity indices were trading in green; Shanghai Composite rose 0.20%, Hang Seng down 0.22%, Jakarta Composite surged 0.58%, KLSE Composite increased 0.34%, Nikkei 225 zoomed 2.03%, Straits Times added 0.64%, KOSPI Composite soared 0.53% and Taiwan Weighted was up by 0.35%.