Benchmarks trade lower in early deals

Indian equity indices have made a cautious start and are trading tad below their neutral lines on the back of feeble cues from other Asian markets. Regional counters were trading mostly in red at this point of time as investors remained wary ahead of the key US jobs report due later today that may clarify whether the Federal Reserve could start tapering its stimulus programme in coming weeks. Though, the US markets made a good bounce back overnight, the trade remained volatile ahead of monthly jobs report.

Back home, sentiments also remain dampened after foreign institutional investors (FIIs) sold shares worth a net Rs 270.47 crore on June 6, 2013. Banking stocks also remained lower after the Finance Minister asked banks to lower interest rates in an effort to drive growth and pass on rate-cut benefits to retail and corporate borrowers. Additionally, telecom stocks like, Reliance Communication, Bharti Airtel and Idea Cellular edged lower on reports that there will be another round of spectrum auction in August. However, the losses remain capped as some support to the markets came in from Financial Services Secretary’s statement that domestic economy is likely to kick-start towards revival in the next 3 to 6 months as a large number of the 215 stalled projects are expected to start rolling.

On the sectoral front, realty witnessed the maximum gain in trade followed by healthcare and software, while fast moving consumer goods, auto and bankex remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks, while the market breadth on the BSE was negative; there were 742 shares on the gaining side against 438 shares on the losing side while 74 shares remain unchanged.

The BSE Sensex opened at 19,522.31; about 2 points higher compared to its previous closing of 19,519.49, and has touched a high and a low of 19,522.31 and 19,424.97 respectively.

The index is currently trading at 19,497.98, down by 21.51 points or 0.11%. There were 14 stocks advancing against 15 declines, while one stock remains unchanged on the index.

The overall market breadth has made a strong start with 59.17% stocks advancing against 34.93% declines. The broader indices were trading in green; the BSE Mid cap indices up by 0.55% and Small cap indices up by 0.63%. 

The top gaining sectoral indices on the BSE were, Realty up by 0.89%, Health Care up by 0.61%, IT up by 0.32%, Consumer Durables up by 0.32% and Oil & Gas up by 0.24% while, FMCG down by 0.22%, Auto down by 0.19%, Bankex down by 0.18%, Capital Goods down by 0.10% and Metal down by 0.09% were the only losers on the sectoral index.

The top gainers on the Sensex were Dr Reddys Lab up by 1.53%, Tata Power up by 0.91%, Hero MotoCorp up by 0.82%, BHEL up by 0.68% and SBI up by 0.62%.

On the flip side, Maruti Suzuki was down by 2.26%, ITC was down by 0.66%, NTPC was down by 0.66%, Cipla was down by 0.61% and L&T was down by 0.61% were the top losers on the Sensex.

Meanwhile, the Petroleum Ministry in a note to the Cabinet Committee on Economic Affairs (CCEA) has proposed to price natural gas produced domestically as per a complex international hub and imported LNG based formula suggested by the Rangarajan Committee. As per the proposal, natural gas prices will increase by at least 60 per cent, resulting in more than doubling of electricity tariff for consumers and may hit power sector by Rs 46,360 crore per annum. 

As per the formula suggested by Rangarajan committee, the price of natural gas comes to $6.775 per million British thermal unit as against the current rate of $4.2 per mmBtu. 

The ministry has also proposed the revision in gas prices every quarter, by which electricity tariffs for consumers, would change once every three months. The revised rates would apply to state-owned gas producers immediately, while, for private gas producer like Reliance Industries it would be applicable from next due date or from April 1, 2014.

Further, the ministry note state that the variable cost of generating electricity at the 2014 gas prices would be around Rs 5.40 per kilowatt hour (per unit), taking the total cost of generation to around Rs 6.40 per unit. Presently, the cost of electricity generation at delivered price of $6.93 per mmBtu for RIL’s KG-D6 gas (base price plus taxes and transportation), comes to Rs 2.93 per unit.

Meanwhile, the power ministry is of the view that base price of domestic gas beyond $5 per mmBtu was unviable for power sector; generating electricity at Rs 6.40 per unit is not viable. Currently, India’s has 18,000 MW of gas-based power plant, 30 per cent of which are stranded for want of fuel. Another 1000 MW gas based power plants are at advanced stage of commissioning. 

The CNX Nifty opened at 5,900.05; about 21 points lower as compared to its previous closing of 5,921.40, and has touched a high and a low of 5,914.10 and 5,886.60 respectively.

The index is currently trading at 5,907.25, down by 14.15 points or 0.24%. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were Lupin up by 1.51%, BPCL up by 1.29%, Dr Reddy's Laboratories up by 1.15%, Reliance Infrastructure up by 0.94% and Tata Power up by 0.68%.

On the flip side, Maruti Suzuki down by 2.52%, UltraTech Cement down by 1.55%, Kotak Mahindra Bank down by 0.98%, Ambuja Cements down by 0.97% and ITC down by 0.96%, were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 17.37 points or 0.77% to 2,224.74, Hang Seng tumbled 288.74 points or 1.32% to 21,549.69, Jakarta Composite crumbled 97.80 points or 1.96% to 4,903.42, Nikkei 225 dropped 221.83 points or 1.72% to 12,682.19, Straits Times dipped 9.11 points or 0.29% to 3,184.40, KOSPI Composite contracted 28.87 points or 1.47% to 1,930.32 and Taiwan Weighted was down by 1.17 points or 0.01% to 8,094.97.

On the flip side, KLSE Composite was up by 4.38 points or 0.25% to 1,773.98.