Weak regional cues drag benchmarks lower in early deals

Pressurized by weak regional cues, Indian equity benchmarks are trading lower in early deals on Friday. Moreover, investors remained cautious with Finance minister P Chidambaram asking financial sector regulators to put in place all possible measures to avoid any adverse impact on India from the US scaling back its stimulus programme, which he expects "sooner or later". Sentiments also remained down-beat ahead of the RBI’s policy announcement next week after the FM’s caution. However, losses remained capped as some support came in from the statement of Prime Minister’s key economic advisory council chairman C Rangarajan, who while rejecting the IMF and World Bank’s pessimistic projections, has exuded confidence that the growth would be around 5.5 percent in the current fiscal.

On the global front, the US markets ended higher overnight on the back of some upbeat earnings announcements, while buying interest was generated by the report showing Chinese manufacturing growth hit a seven-month high. Moreover, the drop in US initial jobless claims last week too aided the sentiments. However, all the Asian equity benchmarks were trading in the negative terrain in early deals on Friday as investors remained concerned amid uncertainty about the near-term outlook for the markets following the recent uptrend.

Back home, on the sectoral front, software witnessed the maximum gain in trade followed by technology and fast moving consumer goods, while capital goods, auto and metal remained the top losers on the BSE sectoral space. The broader indices, however, were out performing benchmarks, while the market breadth on the BSE was positive; there were 744 shares on the gaining side against 540 shares on the losing side while 54 shares remain unchanged.

The BSE Sensex opened at 20725.52; flat as compared to its previous closing of 20725.43, and has touched a high and a low of 20733.82 and 20645.00 respectively. The index is currently trading at 20705.54, down by 19.89 points or 0.10%. There were 9 stocks advancing against 21 declines on the index.

The overall market breadth has made a strong start with 55.61% stocks advancing against 40.36% declines. The broader indices were trading in green; the BSE Mid cap up by 0.26% and Small cap indices up by 0.28%. 

The top gaining sectoral indices on the BSE were, IT up by 0.82%, Teck up by 0.50% and FMCG up by 0.19%, while Capital Goods down by 1.07%, Auto down by 0.97%, Metal down by 0.65%, Realty down by 0.50% and PSU down by 0.45% were the top losers on the sectoral index.

The top gainers on the Sensex were Wipro up by 2.06%, TCS up by 1.36%, SSLT up by 1.28%, ICICI Bank up by 0.66% and Infosys up by 0.55%. On the flip side, Hindalco Industries was down by 3.10%,  Tata Steel was down by 1.84%, Bharti Airtel was down by 1.63%, Sun Pharma was down by 1.59% and Mahindra & Mahindra was down by 1.58% were the top losers on the Sensex.

Meanwhile, in a major development, Petroleum Ministry has allowed private upstream companies like Reliance Industries and Cairn India to start producing oil and gas from discoveries even before securing approval for field investment plans. To enable monetization of the finds contained with an already producing area, Oil Minister M Veerappa Moily approved 5-page guidelines for production and development of oil and gas discoveries.

As per the guidelines approved, each company will be allowed the option to submit an integrated development plan (IDP) encompassing multiple new discoveries. Presently, every discovery is treated as a separate factory and operators are required to first get approval for commercial viability and then seek approval for an investment plan, called a field development plan (FDP).

However, now the Ministry has permitted submission of declaration of commerciality (DOC) and FDP/IDP together by subsuming DOC within the FDP/IDP. Further while, the cases with single discovery will be termed as FDP and cases of multiple discoveries will be termed as IDP.

Thus, with these new guidelines, the contractor, for early monetisation of new discoveries in a mining lease (or producing) areas, may be allowed by the Management Committee (MC) to produce hydrocarbons from the notified new discoveries, pending approval of FDP/IDP. However, this will be subjected to condition that the contract has taken approval of the MC for the annual work programme, budget and program quantity for such new discoveries. Additionally, recovery of all costs associated with new recoveries pending approval of FDP/IDP, despite their inclusion in the annual work program and budget, will not be permitted.

The CNX Nifty opened at 6,154.00; about 10 points lower as compared to its previous closing of 6,164.35, and has touched a high and a low of 6,160.40 and 6,133.85 respectively. The index is currently trading at 6,153.90, down by 10.45 points or 0.17%. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were HCL Tech up by 2.61%, Wipro up by 2.26%, Ranbaxy up by 1.33%, TCS up by 1.31% and SSLT up by 0.93%. On the flip side, Hindalco down by 3.23%, NMDC down by 2.47%, Cairn down by 2.25%, Sun Pharmaceuticals down by 1.80% and M&M down by 1.61% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite declined 20.82 points or 0.96% to 2,143.50, Hang Seng dropped 121.89 points or 0.53% to 22,713.93, Jakarta Composite dipped 9.90 points or 0.22% to 4,584.94, KLSE Composite slipped 4.44 points or 0.24% to 1,814.49, Nikkei 225 tumbled 275.28 points or 1.90% to 14,211.13, Straits Times decreased 4.49 points or 0.14% to 3,213.46, Seoul Composite contracted 17.83 points or 0.87% to 2,028.86 and Taiwan Weighted was down by 74.94 points or 0.89% to 8,338.78.