Benchmarks continue firm trade in afternoon session

Indian equity benchmarks continue to trade firm in afternoon session amid buying witnessed in frontline blue chip stocks such as Dr Reddy’s Lab, RIL, SSLT and L&T as firm global cues provided support to the investors’ sentiments. Buying was witnessed in all indices of BSE except IT. Capital Goods was the top gainer on BSE up by nearly 1.76% followed by oil and gas and realty both up by over 1.50%. Oil and gas companies stocks were trading higher as Oil Secretary Vivek Rae has said that the Ministry of Petroleum and Natural Gas is working out a policy framework on shale gas exploration under which private domestic oil and gas players would get the right to explore shale gas or oil in their blocks. On Stock specific movement, Dr Reddy’s Lab, RIL and SSLT were trading up by nearly 2% higher, while, Infosys, TCS and Hindustan Unilever were down by over 0.30% on BSE.

Among other stocks, Alstom T&D India was trading higher by over 3% after the company said it is planning to raise up to Rs 294 crore through sale of shares to institutional investors on November 29. Shares of Biocon were trading higher by 1%, extending its previous day’s 3% rally, after the company said it has received approval from the Indian drug regulator to market its bio-similar Trastuzumab developed jointly with Mylan for treating breast cancer. While, Shree Ganesh Jewellery House (India) was locked in lower circuit of 10% at Rs 33.30 on NSE after reporting huge losses of Rs 1,048 crore for Q2 FY14, due to higher expenditure.

On global front, Asian markets were trading in green with Shanghai Composite up by 1.24% and Nikkei 225 up by 1.66%. Shares in Japan firmed up after the yen eased against the US dollar on the back of encouraging economic data from the US. Back home, the NSE Nifty and BSE Sensex were trading up their psychological 6,100 and 20,500 levels respectively. The market breadth on BSE was positive, out of 2,029 stocks traded, 1,189 stocks advanced, while 706 stocks declined on the BSE. 

The BSE Sensex is currently trading at 20,587.64 up by 167.38 points or 0.82% after trading in a range of 20,606.38 and 20,517.97. There were 27 stocks advancing against only 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.92%, while Small cap index up by 0.81%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.76%, Oil and Gas up by 1.55%, Realty up by 1.53%, Auto up by 1.11% and Power up by 1.08%. While, IT down by 0.08% was the only losing indices on BSE.

The top gainers on the Sensex were Dr Reddy’s Lab up by 2.32%, RIL up by 1.99%, SSLT up by 1.98%, L&T up by 1.88% and M&M up by 1.78%. On the flip side, Infosys down by 0.32%, TCS down by 0.15% and Hindustan Unilever down by 0.04%.

Meanwhile, amid rising fears over the increase in natural gas prices to $8.4 per mbtu from April 1, 2014 which is twice the current rate, the cabinet will soon decide putting a cap to limit hike in gas rates. Earlier in June, the government had approved the formula under which all domestically produced gas will be priced at an average of the price prevailing at international gas trading hubs and the actual cost of importing liquid gas (LNG). The natural gas pricing formula will be effective from April 1, 2014 for a period of five years and the prices will be revised on the quarterly basis. Moreover, the price for each quarter will be calculated based on the 12-month trailing average price with a lag of one quarter.

Under the new approved pricing formula, the gas prices will get doubled at $8.40 per million British thermal unit from the current price at $ 4.20 per mbtu and put excessive burden on consumers. Finance Ministry and Power Ministry both asked the cabinet to put cap on gas price hike. The finance ministry is of the view that under this formula the gas producers will reap unlimited gains in case of an upswing in global prices, while on the other hand, Power Ministry feels any price of more than $5 per mbtu will lead to rise in electricity generation costs that would be hard for the consumers to absorb. Further, both the ministries also sought for excluding spot LNG deals from the formula because they are very volatile.

The new price will be uniformly applicable to all public and private sector producers alike. The increase in gas prices will directly benefit these local producers. Further, the move to raise gas prices is expected to benefit the government by around $2.2 billion incremental revenue by way of higher taxes. The government can use high profit share to subsidize gas supply to the core sector. So far, the new gas price formula has not been notified amid disputes over whether Reliance Industries should get the new rates, as it has not been producing as per pre-stated targets from eastern offshore KG-D6 block.

The CNX Nifty is currently trading at 6,106.55 up by 49.45 points or 0.82% after trading in a range of 6,112.95 and 6,090. There were 25 stocks advancing against 5 declining on the index.

The top gainers of the Nifty were JP Associates up by 5.63%, Dr Reddy’s Lab up by 2.23%, Grasim up by 2.21%, SSLT up by 2.20% and IDFC up by 2.18%. On the flip side, Ambuja Cement down by 1.48%, TCS down by 0.27%, Infosys down by 0.27%, Cairn India down by 0.11% and ACC down by 0.05% were the major losers on the index.

The Asian equity indices were trading in green; Shanghai Composite up by 1.24%, Taiwan Weighted up by 0.80%, Hang Seng up by 0.65%, Seoul Composite up by 0.80%, Nikkei 225 up by 1.66%, Straits Times up by 0.58% and KLSE Composite up by 0.28%. While, Jakarta Composite down by 0.02%.