Markets continue weak trade in afternoon session

Indian equity benchmarks extended their early losses and reached to intra-day low levels in afternoon session amid concerns that the US Federal Reserve may taper quantitative easing earlier than expected. Further, weak Asian cues and the depreciating rupee also added to the pessimistic sentiments. All indices on BSE were trading in red with bankex remaining top loser down by around 1.51% followed by consumer durables and consumer goods stocks. On stock specific movement, Gail India and Maruti Suzuki were trading up by over 0.60%, while, Sun Pharma, SSLT and HDFC were down by over 1.80% on BSE. Among other stocks, Reliance stock was down by around 1% on BSE as the government has slapped an additional penalty of $792 million on Reliance Industries for producing less than targeted natural gas from its eastern offshore KG-D6 block.

On Global front, Asian markets were trading in red with Shanghai Composite down by 0.83%, Taiwan Weighted down by 1.28% as global investors remain concerned over the US Fed tapering. Back home, the NSE Nifty and BSE Sensex were trading down their psychological 6,100 and 20,500 levels respectively. The market breadth on BSE was negative, out of 2,071 stocks traded, 754 stocks advanced, while 1,176 stocks declined on the BSE.    

The BSE Sensex is currently trading at 20,404.73 down by 230.40 points or 1.12% after trading in a range of 20,579.26 and 20,369.07. There were 6 stocks advancing against only 24 declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.31%, while Small cap index down by 0.33%.

The losing sectoral indices on the BSE were Bankex down by 1.51%, Consumer Durables down by 1.46%, Capital Goods down by 1.21%, Realty down by 1.17% and FMCG down by 1.05%. While, there were no gaining indices on BSE.

The top gainers on the Sensex were Gail India up by 0.95%, Maruti Suzuki up by 0.68%, Hindalco Inds up by 0.41%, Coal India up by 0.40% and Hero Moto Corp up by 0.11%. On the flip side, Sun Pharma down by 2.29%, SSLT down by 1.93%, HDFC down by 1.87%, ITC down by 1.84% and NTPC down by 1.82%.

Meanwhile, Oil Minister Veerappa Moily has said that diesel prices will be deregulated in six months with gradual increase in prices. Ruling out a steep increase as it would stoke inflation, V Moily has said that the government will increase diesel prices by 50 paise every month. Currently, state owned retailers control 95 percent of the petrol pump sales and sell diesel at government-fixed rates, which are way lower than the cost of production.

The move is also aimed to contain the fuel subsidy bill which has become the major reason for high fiscal deficit of the country. Earlier, in January the government had allowed state-run oil marketing companies to increase diesel rates by 50 paise every month until pump prices are aligned with market rates. After this initiative the under-recoveries (losses on diesel sales) had come down to Rs 2.50 litre but soared to around Rs 9.28 per litre owing to the rupee depreciation.

With the international diesel rates at $122 per barrel and the rupee at 63 per dollar, the government will have to raise the prices by Rs 10 per litre in the next six month in order to completely deregulate diesel and link it to market rates. Meanwhile, at present rates it will take 19 months to clear all losses on diesel sales.

India imports about 75 percent of petroleum products requirement and has an import bill of around $160 billion for petroleum and natural gas alone. Oil ministry has also formulated a roadmap for cutting India's dependence on fuel imports. As per the ministry’s roadmap, India’s imports will be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves. Presently, only 0.93 million sq km area in India is under exploration and production activities in 19 basins as compared to total estimated sedimentary area of 3.14 million square km, comprising 26 sedimentary basins.

The CNX Nifty is currently trading at 6,052.45 down by 70.45 points or 1.15% after trading in a range of 6,097.35 and 6,038.30. There were 7 stocks advancing against 43 declining on the index.

The top gainers of the Nifty were Gail India up by 0.85%, Maruti Suzuki up by 0.83%, Hindalco Inds up by 0.70%, Coal India up by 0.46% and Hero Moto Corp up by 0.32%. On the flip side, Axis Bank down by 2.96%, PNB down by 2.52%, Sun Pharma down by 2.34%, JP Associates down by 2.28% and Bank of Baroda down by 2.21% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite down by 0.83%, Taiwan Weighted down by 1.28%, Seoul Composite down by 1.17%, KLSE Composite down by 0.38%, Straits Times down by 0.38%, Jakarta Composite down by 0.81% and Hang Seng down by 0.29%. While, Nikkei 225 up by 1.96%