Benchmarks pare losses; trade continues in red

Indian equities pared losses but continued to trade weak in the late afternoon session on account of selling in frontline counters taking cues from European counterparts. Investors took note of Prime Minister’s Economic Advisory Council Chairman C Rangarajan's statement who expressed a pressing need for intensifying reforms and trimming subsidies adding that if India grew at 8 to 9 percent each year, per capita GDP would rise to $10,000 by 2025, which will also transit India from being a low income to a middle income country. Traders were seen piling positions in Capital Goods, Auto and Health Care stocks while selling was witnessed in Realty, Metal and Oil & Gas sector stocks. In scrip specific development, tyre stocks like Ceat, JK Tyre and Apollo Tyres were trading firm as the key Tokyo Commodity Exchange rubber contract hit a five-week low. Suzlon Energy was trading in green on reports that FCCB holders are likely to come to a settlement soon. Shree Renuka Sugar is trading firm as promoters look to sell stake in holding company.

On the global front, most of the Asian markets were trading in green, while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,200 and 20,800 levels respectively. The market breadth on BSE was negative in the ratio of 1153:1161 while 163 scrips remained unchanged.

The BSE Sensex is currently trading at 20721.51, down by 65.79 points or 0.32% after trading in a range of 20,890.48 and 20637.18. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices continued to trade mixed; the BSE Mid cap index was down by 0.17%, while Small cap index was up by 0.51%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.11%, Auto up by 0.39%, Heath Care up by 0.38% and Consumer Durables up 0.02% while, Realty down by 1.51%, Metal down by 1.09%, Oil & Gas down by 0.95%, PSU down by 0.77% and Bankex down by 0.74% were the top losing indices. 

The top gainers on the Sensex were Maruti Suzuki up by 2.15%, BHEL up by 1.98%, Sun Pharma up by 1.25%, L&T up by 1.23% and Dr. Reddy’s Lab up by 0.99%. On the flip side, Tata Power down by 2.69%, Tata Steel down by 2.24%, Hindalco Industries down by 2.20%, Axis Bank down by 1.94% and Wipro down by 1.65%.

Meanwhile, with an aim to cut India's dependence on imports for meeting its energy needs, India will offer at least 56 oil and gas blocks under the 10th round of NELP auction under completely revamped terms. Tenth round of NELP auction will be the second highest offering of blocks since the advent of NELP in 1997, a common platform for public and private sector companies to bid for the blocks.

As per the government, 10th round of auction is likely to be held on new terms wherein a bidder shall be asked to quote the amount of oil or gas output it is willing to offer to the government from the first day of production. The company offering the highest share of oil or gas produced from the field would get the block. Presently, oil companies are allowed to share the profit with the government only after recovering the entire cost of exploration and production. Meanwhile, many Indian authorities like CAG had criticised this approach on grounds that it encourages companies to increase the capital expenditure and delay the government’s share.

Oil Secretary Vivek Rae has asserted that Oil Ministry also proposed to move to revenue-sharing model from the current production-sharing scheme where there will be no profit petroleum, no cost recovery, no investment multiple. Further, ministry also demanded for production-linked payment regime for NELP-X, which is considered more transparent, requiring less intervention in routine exploration and development activities. Meanwhile, new terms for auction are opposed by some oil and gas players citing that riskier deepwater exploration would be best suited if the government gives guarantee that all sunk costs will be first recovered from any oil or gas produced.

Meanwhile, oil ministry has formulated a roadmap for cutting India's dependence on imports to meet its oil and gas needs. India currently imports around 80 percent of its oil needs and the Ministry wants this to 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 held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million square kilometres, comprising 26 sedimentary basins.

The CNX Nifty is currently trading at 6,171.50, down by 19.95 points or 0.32% after trading in a range of 6,221.50 and 6,144.75. There were 19 stocks advancing against 30 declining on the index while 1 stock remained unchanged on the index.

The top gainers of the Nifty were Maruti up by 2.20%, BHEL up by 2.19%, L&T up by 1.39%, Sun Pharma up by 1.23% and Dr. Reddy’s Lab up by 1.04%. On the flip side, Bank of Baroda down by 2.91%, Tata Power down by 2.32%, Tata Steel down by 2.23%, Hindalco Industries down by 2.11% and Axis Bank down by 2.05% were the major losers on the index.

The Asian equity indices were trading mostly in green; Hang Seng up by 0.13%, Shanghai Composite up by 0.08%, Straits Times up by 0.18%, Seoul Composite up by 0.32%, and Taiwan Weighted up by 0.14%. On the other hand, KLSE Composite down by 0.01%, Jakarta Composite down by 0.44% and Nikkei 225 down by 0.59%.

The European markets were trading in red; France’s CAC 40 was down 0.21%, Germany’s DAX was down 0.05% and UK’s FTSE 100 lost 0.15%.