Benchmarks make positive start buoyed by firm global cues

Indian equity benchmarks, after declining five straight sessions, have made a positive opening and are trading in fine fettle in early deals on Wednesday buoyed by firm global cues. The US markets made a good comeback and ended firmly higher overnight on report that US trade deficit narrowed by much more than anticipated in the month of November. Moreover, most of the Asian markets were trading in the green at this point of time taking cues from the US markets and some of the indices are up by about a percent in early deals ahead of the release of Federal Reserve minutes.

Back home, some support came in after Finance Minister P Chidambaram has asked taxmen to step up collections in view of fiscal deficit threatening to exceed the target. Stocks related to gold and jewellery space viz. Rajesh Exports, Shree Ganesh Jewellery, Gitanjali Gems, PCJeweller etc. edged higher, as the Planning Commission member Saumitra Chaudhuri has pitched for relaxation in curbs on gold imports citing improved current account deficit. Gold imports fell to 19.3 tonnes in November from a high of 162 tonnes in May in the wake of a series of curbs by both the government and the RBI.

On the sectoral front, software witnessed the maximum gains in trade followed by technology and healthcare, while capital goods, fast moving consumer goods and banking remained the top losers on the BSE sectoral space. The broader indices too were trading with traction, while the market breadth on the BSE was positive; there were 857 shares on the gaining side against 364 shares on the losing side while 48 shares remain unchanged.

The BSE Sensex opened at 20767.42; about 74 points higher compared to its previous closing of 20693.24, and touched a high and a low of 20779.54 and 20688.18 respectively. The index is currently trading at 20737.73, up by 44.49 points or 0.21%. There were 19 stocks advancing against 11 declines on the index.

The overall market breadth has made a strong start with 67.53% stocks advancing against 28.69% declines. The broader indices too were trading in green; the BSE Mid cap index up was by 0.48% and Small cap gained 0.66%. 

The top gaining sectoral indices on the BSE were, IT up by 0.91%, Teck up by 0.80%, Healthcare up by 0.71%, Consumer Durables up by 0.54% and Oil & Gas up by 0.47%, while Capital Goods down by 0.18%, FMCG down by 0.16% and Bankex down by 0.03% were the top losers on the sectoral index.

The top gainers on the Sensex were Sun Pharma up by 2.08%, TCS up by 1.49%, Hindalco Industries up by 1.16%, Cipla up by 1.01% and Coal India up by 1.00%. On the flip side, BHEL was down by 1.12%, Axis Bank was down by 1.04%, SSLT was down by 0.95%, Maruti Suzuki was down by 0.57% and ITC was down by 0.47% were the top losers on the Sensex.

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 opened at 6,178.05; about 15 points higher as compared to its previous closing of 6,162.25, and has touched a high and a low of 6,189.35 and 6,160.35 respectively. The index is currently trading at 6,177.50, up by 15.25 points or 0.25%. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were Sun Pharmaceuticals up by 2.15%, Cairn up by 1.58%, NMDC up by 1.54%, TCS up by 1.52% and HCL Tech up by 1.48%. On the flip side, Axis Bank down by 1.15%, BHEL down by 0.76%, Grasim down by 0.71%, SSLT down by 0.67% and ITC down by 0.47% were the top losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng rose 173.51 points or 0.76% to 22,886.29, KLSE Composite increased 10.43 points or 0.57% to 1,835.54, Nikkei 225 surged 199.63 points or 1.26% to 16,014.00, Straits Times added 20.31 points or 0.65% to 3,141.19, Seoul Composite edged higher 0.14 points or 0.01% to 1,959.58 and Taiwan Weighted was up by 57.00 points or 0.67% to 8,569.30.

On the flip side, Shanghai Composite declined 8.04 points or 0.39% to 2,039.27 and Jakarta Composite was down by 9.31 points or 0.24% to 4,166.50.