Petrol price cut, GAAR clarity cheers D-Street; Sensex sneaks past the 17300 level

Indian equity markets added additional gains to their kitty as Street cheered the reduction of petrol price. In a relief to inflation-battered common man, petrol price was on Thursday cut by Rs 2.46 per litre, the second reduction this month. The reduction in rates follows a Rs 2.02 a litre cut in prices from June 3. Further, sanguine global leads, after Euro zone leaders agreed on Friday to take emergency action to bring down Italy's and Spain's spiralling borrowing costs and to create a single supervisory body for euro zone banks by the end of this year, also boosted the demand of risky asset class. 30 scrip sensitive index, Sensex, after bundling up hatrick of points, was trading above the 17300 psychological level, while the widely followed 50 share index, Nifty, too gaining close to century of points, trading above the 5150 crucial level. The broader indices too built onto early gains.

Investor’s at Dalal Street also had one more reason to rejoice except for petrol price cut, which was the new draft guidelines on the general anti-avoidance rules (GAAR) announced late night yesterday. According to the guidelines, the tax evasion rule will be invoked only in those cases where foreign investors have opted to take the benefit of tax avoidance treaties. The rules would not apply retrospectively and will be triggered only above a certain income threshold. Buying witnessed was across the board, however, stocks from Capital Goods, Bankex and Power counters were among the best performers on the BSE Sectoral chart. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1545:622, while 93 shares remained unchanged.

The BSE Sensex, after touching a high and low of 17,348.06 and 17,134.61 respectively,  is currently trading at 17,314.92, up by 324.16 points or 1.91%. All the 30 stocks on Sensex were on the advancing side.

The broader indices too amassed additional gains; the BSE Mid cap and Small cap indices spurted by 1.03% and 0.95% respectively.

All the 13 sectoral indices on BSE were on the gaining side, however, the top gaining sectoral indices were, Capital Goods (CG) up by 2.73%, Bankex up by 2.30%, Power up by 2.25%, Auto up by 2.05% and FMCG up by 2.00%.
Since all the stocks were on advancing side, there were no losers, however, the top gainers on the Sensex were Sun Pharma up by 3.27%, Maruti Suzuki up by 3.26%, L&T up by 3.20%, ICICI Bank up by 3.15% and Mahindra & Mahindra up by 3.13%.

Meanwhile, according to the recent data released by the Petroleum & Natural Gas Ministry, the production of crude oil in India registered a trivial increase of 0.5% in May to 3.25 million tonnes. May month’s crude oil output at 3.25 million metric tonnes, which is equal to 768,200 barrels a day, rose marginally from 3.23 million tonnes in the same month last year period, but failed to surpass the government’s forecast of 3.33 million tonnes.

Moreover, the production of natural gas in the country prolonged its receding trend in May for the 18th month in a row, underscoring the fact that India is struggling to keep up production at its ageing assets. In May, natural gas production plummeted by 10.8 percent to 3.70 billion cubic meters from last year’s May month figure of 4.14 billion cubic meters, largely on account of sharp decline in gas production by major Reliance Industries from the D6 block in the Krishna-Godavari Basin. However, the numbers managed to surpass the government’s forecast of 3.45 billion cubic meters.

The gap between India’s total domestic gas production of about 115 mmscmd and gas demand of about 165 mmscmd, is met through imports. Asia’s third largest India economy, which meets more than 75 percent of its energy needs through imports, has been taking serious efforts in order to boost domestic production as India’s rising import bill has adversely impacted the nation’s current account deficit and has also stocked inflationary pressures.

However, the declining potential of sedimentary basins and ageing and depleting fields have emerged as major roadblocks for the way of India’s aim to boost domestic energy production. India, the world's fourth largest oil importer, saw its dependence on crude oil and gas imports expand as domestic refiners imported 5.8 percent more crude oil in May year-on-year at 14.586 million tonnes from 13.784 million tonnes in the same period last a year earlier, taking the refining capacity of the country to nearly 215 million tonnes.

The S&P CNX Nifty is currently trading at 5,243.50, higher by 94.35 points or 1.83%. The index has touched a high and low of 5,253.40 and 5,189.00 respectively. There were 48 stocks advancing against only 2 declines on the index.

The top gainers of the Nifty were Sun Pharma up by 3.41%, Tata Power up by 3.34%, ICICI Bank up by 3.02%, BHEL up by 3.01% and Maruti Suzuki up by 2.87%. On the flip side, Cairn down by 6% and BPCL down by 0.53% remained the few losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite climbed 0.71%, Hang Seng Index jumped 2.02%, Jakarta Composite surged 1.38%, KLSE Composite advanced 0.49%, Nikkei 225 accumulated 1.43%, Straits Times Index soared 1.53%, KOSPI Composite Index garnered 1.48% and Taiwan Weighted amassed 1.35%.