Benchmarks continue weak trade; Realty, Metal drag

Indian equity benchmarks continued their weak trade in the late afternoon session on account of selling in frontline blue chip counters taking cues from European counterparts. The sentiments were on pessimistic note after the WPI snapped a three-month easing trend which would give the Reserve Bank of India (RBI) less scope to support the economy amid fresh signs of slowdown. The annual rate of inflation, based on monthly WPI, edged higher to 5.70%, from multi month low at 4.68% (provisional) in month of February, 2014, as compared to 5.65% during the corresponding month of the previous year. Traders were seen piling positions in IT and TECK stocks while selling was witnessed in Realty, Metal and Bankex sector stocks. In scrip specific development, Yes Bank was trading under pressure after foreign brokerage firm downgraded the stock to underweight from overweight, saying absolute valuations are not that attractive in the context of slowing earnings. Clariant Chemicals (India) was trading firm after the company signed an agreement to sell land in Thane for Rs 1,154.25 crore. 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 6,750 and 22,500 levels respectively. The market breadth on BSE was negative in the ratio of 1190:1421 while 126 scrips remained unchanged. The BSE Sensex is currently trading at 22454.91, down by 174.05 points or 0.77% after trading in a range of 22737.31 and 22416.24. There were 7 stocks advancing against 23 stocks declining on the index. The broader indices too completely succumbed to selling pressure; the BSE Mid cap index was down by 0.21%, while Small cap index down by 0.16%. The gaining sectoral indices on the BSE were IT up by 2.07% and TECK up by 1.61% while, Realty down by 2.06%, Metal down by 1.95%, Bankex down by 1.69%, Auto down by 1.59% and Consumer Durables down by 0.92% were the losing indices on BSE.    The top gainers on the Sensex were Wipro up by 3.44%, TCS up by 3.25%, Infosys up by 1.50%, Bharti Airtel up by 1.32% and Dr. Reddy’s Lab up by 0.75%. On the flip side, HDFC down by 3.73%, Hindalco Industries down by 3.31%, Axis Bank down by 2.76%, Tata Motors down by 2.42% and SSLT down by 2.14%. Meanwhile, with an aim to accelerate exploration and production of oil and gas in the country for enhancing energy security, Oil Ministry has introduced a proposal to simplify exploration norms. The Ministry’s draft note seeks to revise the policy guidelines for exploration in the mining lease area after the expiry of the exploration period. Further, the draft also proposes to recognise such exploration activity for the purpose of cost recovery as well. Currently, production-sharing contract between the oil exploration company and the Government does not recognize such activities for the purpose of cost recovery. The proposal was circulated amid concerns about some clauses in the existing policy which has been restricting investments in the industry. If Ministry’s proposal is accepted, it would be beneficial to a lot of domestic players such as Reliance Industries and Cairn as they can search for hydrocarbons without any hassles and even after expiry of the exploration period. As per the proposal, cost recovery will be provided to contractors after resultant discovery is proved commercially and techno-economically viable with requisite computation of cash flows and profit. Further, the draft also proposed existing contractors to continue to apply for development and production relating to such discoveries. However, the approval for further exploration, development and production will not confer any right on the contractors for further extension in the tenure of the contract, except as provided. Further, the contractors will also be permitted to develop and monetise existing discoveries in the mining lease area which have not been monetized or developed earlier. The draft also noted that the contractors will have to get the Management Committee’s approval for quarterly allocation of cost petroleum and profit petroleum. Till now, the Government has signed 254 PSCs under nine rounds of the New Exploration Licensing Policy (NELP). Meanwhile, Oil Ministry has formulated a roadmap for cutting India's dependence on imports to meet its oil 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 6,726.95, down by 49.35 points or 0.73% after trading in a range of 6,813.40 and 6,711.75. There were 12 stocks advancing against 38 declining stocks on the index. The top gainers of the Nifty were Mcdowell up by 11.76%, Wipro up by 3.59%, TCS up by 3.35%, Infosys up by 1.54% and Bharti Airtel up by 1.29%. On the flip side, DLF down by 4.14%, Jindal Steel down by 3.75%, Hindalco down by 3.73%, HDFC down by 3.59% and Axis Bank down by 2.82% were the major losers on the index. Asian equity indices were trading mostly in green; Nikkei 225 up by 0.62%, Taiwan Weighted up by 0.67%, Straits Times was up by 0.85% and Jakarta Composite up by 0.04% while, Shanghai Composite down by 1.40% and Hang Seng down by 1.60% were the losers. The European markets were trading in red; France’s CAC 40 was down 0.25%, Germany’s DAX lost 0.66% and UK’s FTSE 100 declined 0.16%.