Benchmarks slip deep in red; Sensex down 227 points

The Indian equity markets extended early losses and currently moving deeper into the red on the back of sustained selling in several front line stocks. The investors were on selling spree, concerned about US and Europe debt worries, while declining industrial growth back home and falling margins were contributing to the weakness. Sensex down by 227 points from its previous close, while Nifty slipped by 66 points. On sectoral front, all sectors were trading in negative territory. Oil, power and banking stocks were mostly trading notably lower. Automobile, metal and information technology stocks too were trading weak. Capital goods and FMCG stocks, which opened on a slightly positive note, are drifting lower on selling pressure. Heavyweights like Reliance Industries and BHEL dropped 2.5-3.5% each. On the global, Asian markets were continuing to reel under selling pressure on account of ongoing euro zone and US debt worries. Back home, the market breadth favoring the negative trend; there were 537 shares on the gaining side against 1,961 shares on the losing side while 76 shares remained unchanged.

The BSE Sensex is currently trading at 16,143.73, down by 227.78 points or 1.39%. The index has touched a high and low of 16,297.03 and 16,126.65 respectively. There were 7 stocks advancing against 23 declining ones on the index.

The broader indices unlike frontline indices had pruned losses; the BSE Mid cap and Small cap indices declined by 0.95% and 0.50% respectively.

There were no gainers on the BSE sectoral space. While, Oil and Gas down by 2.08%, Power down by 1.81%, Bankex down by 1.60%, CD down by 1.57% and Metal down by 1.41% were the top losers on the index.

The top gainers on the Sensex were Maruti Suzuki up by 1.09%, Coal India up by 0.57%, Hindustan Unilever up by 0.17%, Mahindra & Mahindra up by 0.17% and Sun Pharma up by 0.17%.

On the flip side, BHEL was down by 3.53%, Bajaj Auto down by 2.90%, Tata Motors down by 2.88%, NTPC down by 2.67%, and Reliance Industries down by 2.64% were the top losers on the Sensex.

Meanwhile, the ministry of finance has sanctioned an additional Rs 15, 000 crore to partially compensate state-owned Oil Marketing Companies’ losses (OMCs) for selling fuel below market price.

According to a senior oil ministry official, the finance minister has sanctioned an additional compensation of Rs 15,000 crore on November 11 which is over and above Rs 15,000 crore granted for meeting the revenue loss incurred during the first quarter of current fiscal.

The finance ministry has issued the sanction letter and the actual cash would be given to the oil firms once the Parliament approves supplementary demand for grants during the winter session starting from November 22.

During the April-June 2011, the OMCS reported revenue loss of around Rs 43,526 crore on selling diesel, domestic cooking gas and kerosene at the government controlled rates, which are below market price. The oil ministry has soughed for Rs 29,000 crore cash subsidy for April-June 2011 however it had got only Rs 15,000 crore.

Presently, oil marketing firms are losing Rs 11.44 per liter on diesel, Rs 26.94 per liter on kerosene sold via the public distribution system (PDS) and Rs 260.5 per 14.2-kg LPG cylinder supplied to domestic households for cooking purposes. As a result, presently the Oil firms are incurring a daily revenue loss of about Rs 360 crore on sale of three fuels. With this speed, by the end of 2011-12, OMCs are expected to make revenue loss of Rs 130,000 crore.

In the second quarter of 2011-12, the OMCs have registered revenue loss of Rs 21,374 crore, of this one-third or around Rs 7,124 crore would be made by leading firms such as Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL). The ministry of finance was asked to make good the rest Rs 14,250 crore. 

Financial condition of oil companies is very fragile, we have been pleading for higher government compensation to the oil marketing companies,' oil ministry official said. During April-September 2011, OMCs have incurred revenue loss of Rs 64,900 crore, however, government has agreed to give only Rs 30,000 crore.

Oil Ministry official said that the Oil Ministry wanted the upstream share be limited to historic one-third or 33.33% of the total under-recovery or revenue loss. The Finance Ministry, however, wants the contribution by ONGC, OIL and GAIL India to increase to atleast 50%. 'If we can confine the burden (of upstream firms) to 33.33%, we will be lucky,' he added.

The S&P CNX Nifty is currently trading at 4,839.55, lower by 66.25 points or 1.35%. The index has touched a high and low of 4,873.80 and 4,832.55 respectively.  There were 8 stocks advancing against 42 declines on the index.

The top gainers of the Nifty were Maruti Suzuki up by 1.00, Coal India up by 0.72%, Hindustan Unilever up by 0.51%, Dr Reddy up by 0.37% and Cipla up by 0.27%.

On the flip side, SAIL down by 3.87%, Sesa Goa down by 3.38%, BHEL down by 3.18%, Ranbaxy down by 2.93% and Tata Motors down by 2.88% were the major losers on the index.

Asian peers prolonged their somber mood journey; Shanghai Composite slid 0.69%, Hang Seng plunged 1.93%, Jakarta Composite slid 1.48%, KLSE Composite declined 0.99%, Nikkei 225 fell 0.29%, Straits Times surrendered 0.57%, Seoul Composite contracted 0.88% and Taiwan Weighted tanked 2.64%.