ONGC, Oil India Shares Fall on Gas Price Reduction Buzz

Shares of state-run explorers ONGC and Oil India fell on Wednesday ahead of the announcement of the revised prices for domestically-produced natural gas. ONGC fell as much as 2 per cent, while Oil India declined as much as 3.6 per cent.

Reuters, citing sources, said the government is likely to announce an 18 per cent reduction in natural gas prices. The new prices will be for the October to March period.

Prices of natural gas will be cut to $3.82 per million British thermal units (mmBtu) on gross heat value basis, Reuters said citing sources. On net heat value basis natural gas prices will cost $4.24 per mmBtu compared to $5.18 per mmBtu for the April-September period, it added.

Analysts said the price cut will impact ONGC and Oil India's profitability. A $1/mmBtu price cut will lower ONGC's FY16 earnings per share (EPS) by about 5.5 per cent, while Oil India's EPS will be impacted by 3 per cent, analysts added.

The government had introduced a new gas-pricing formula last November, which linked pricing of locally produced gas with those in the United States, Canada, the United Kingdom and Russia.

As of 12 p.m., ONGC traded 1.08 per cent lower at Rs 224 apiece, and Oil India traded 2.45 per cent lower at Rs 416.75 compared to 0.66 per cent gain in the broader Nifty

Eveready Industries Surges 7% on RBI Nod to Hike FII Investment Limit

Eveready Industries surged as much as 7 per cent on Wednesday on Reserve Bank's decision allowing foreign investors to buy up to 49 per cent in the company under the Portfolio Investment Scheme (PIS).

Traders expect foreign investors to start buying Eveready Industries shares post RBI nod.

As per data on the Bombay Stock Exchange, FIIs held 16.29 per cent in the company as of quarter ended June 2015. FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS.

As of 10.54 a.m., shares of Eveready Industries traded 3.71 per cent higher at Rs 290.80 apiece compared to 0.65 per cent gain in the broader Nifty.

Blue Star Infotech Plunges 20%, Announces Sale of IT Business

Shares of Blue Star Infotech fell nearly 20 per cent to Rs 231 after it announced the sale of its IT business.

Infogain Inc, a portfolio company of private equity player ChrysCapital, with acquire the IT business of Blue Star Infotech and its subsidiaries in USA, UK and Singapore for Rs 180 crore.

Blue Star Infotech will retain the real estate business and some other assets, the fair value of which is expected to be around Rs 96.7 crore, the company said.

Following the completion of Blue Star Infotech's IT business sale, it will be merged with air conditioning and commercial refrigeration major Blue Star Limited, subject to shareholder approval of the respective companies.

Blue Star forayed into the IT space in 1983. In 2000, the Blue Star executed a strategic shift to hive off its IT business into an independent company, Blue Star Infotech.

Shareholders of Blue Star Infotech will be issued 7 equity shares of 7 Blue Star for every 10 shares held. Vir S Advani, executive director and president of Blue Star, told NDTV that the cash proceeds from sale of Blue Star Infotech's IT business will be invested in its core business.

At 11 a.m., shares of Blue Star Infotech were locked at the lower circuit band of 20 per cent while Blue Star shares were 4 per cent higher at Rs 345.30. In comparison, Nifty was 0.67 per cent higher.         

Domestic Gas Prices Lowered by 18%: Report

New Delhi: Locally produced gas in India will cost 18 per cent less during October-March compared with the first half of the current fiscal year, a source with knowledge of the matter said on Wednesday, due to a decline in global prices.

Prices will be cut to $3.82 per million British thermal units (mmBtu) in the second half of this fiscal year on gross heat value basis, the source, who is not authorised to speak to the media, told Reuters.

It will cost about $4.24 mmBtu on a net heat value basis compared with $5.18/mmBtu in April-September, the source said.

The government introduced a new gas-pricing formula last November. The formula links the prices of locally produced gas with those in the United States, Canada, the United Kingdom and Russia. 

Stocks that are in focus today: Hero MotoCorp, Sun Pharma and more

Hero MotoCorp stocks will be in focus as the country's largest two-wheeler maker unveiled two indigenously developed scooters — Duet and Maestro Edge — which will hit the market by the middle of next month.

The BSE Sensex and NSE Nifty opened on a positive note on Wednesday following firm global cues amid a rate cut of 50 bps by the Reserve Bank of India in its monetary policy review on Tuesday. At 9.20 am, Sensex was up 264.63 points at 26,043.29. Similarly, Nifty was up 67.65 points at 7,910.95 during the same time.

Stocks that are likely to be in focus today

Shree Renuka Sugars: The stocks of the company will be in focus after its said that its Brazilian subsidiary filed for bankruptcy protection as its operations were hit by a crash in sugar prices in the last two years.

TCS: The IT major on Tuesday announced a new partnership with a British mutual financial institution for providing a neural automation system which automates and optimises IT operations and processes of an enterprise.

Hero MotoCorp: Country’s largest two-wheeler maker unveiled two indigenously developed scooters — Duet and Maestro Edge — which will hit the market by the middle of next month.

State Bank of India: Country’s largest lender slashed minimum lending or base rate by 0.4 per cent to 9.3 per cent, setting the trend for benign interest rate regime.

Sun Pharma: The drug major has made a tender offer to acquire US-based eyecare firm InSite Vision for $0.35 per share in cash.

NMDC: State-owned NMDC Ltd plans to invest Rs 40,000 crore in the next eight years to reach a target of 100 million tonnes per annum of iron ore production from the current levels of little over 30 MTPA.

Reliance Industries (RIL):  Reliance Jio Infocomm has raised Rs 3,500 crore by issuing non-convertible debentures through private placement.

Eveready: Reserve Bank on Tuesday allowed foreign investors to invest up to 49 per cent stake in Eveready Industries India Ltd under the Portfolio Investment Scheme.

Asian Shares Stabilise, Japan's Nikkei Leads Gains

Tokyo: Most Asian stock markets steadied on Wednesday after sliding to 3-year lows but a weak outlook for commodities and persistent concerns about China's economy discouraged most buyers.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trade after plumbing its lowest since June 2012 on Tuesday on fears that China's slowdown would curb its huge appetite for commodities and resources.

The index was on track for a 19 per cent loss for the quarter, its worst loss in four years.

"Global equities are closing in on their worst quarter since 2011, with a number of factors fuelling fears in an already jittery market, including weak global growth, driven by deceleration in emerging markets, particularly China," strategists at Barclays wrote.

"We recommend overweight positions in Japanese and European equities."

South Korea's Kospi dropped 1 per cent while Australian shares gained 0.3 per cent.

Japan's Nikkei brushed aside an unexpected drop in the country's industrial output and gained 1.6 per cent. It was still poised for a 14 percent drop over the quarter, its deepest since 2010.

Asian stocks took an early positive lead from Wall Street, which ended slightly higher overnight as the U.S. bourses took a breather, with the latest round of China fears that gripped global markets petering out for the moment.

Investors also felt relief as shares of mining and trading giant Glencore gained more than 10 per cent overnight.

Hitting risk sentiment, Glencore shares fell to a record low at the start of the week on concerns over the company's ability to withstand a prolonged decline in prices of metals.

Benchmark three-month copper on the London Metal Exchange rose 0.1 per cent to $4,970 a tonne, though the rise did not do much to move the metal away from a six-year low of $4,855 hit in August.

Prices of other industrial metals like aluminium and zinc also halted their recent routs overnight.

Commodities and the global financial markets still face a major test of nerves on Thursday, when the closely-watched Chinese Purchasing Managers' Index (PMI) is likely to show the country's factory sector shrank for the second month in a row in September.

Commodity currencies languished while the U.S. dollar stood tall. The Canadian dollar stood near an 11-year low of C$1.3463 per dollar struck overnight.

South Africa's rand managed to bounce modestly but was still in reach of a record low of 14.16 per dollar touched on Tuesday.

The greenback, meanwhile, stood little changed at 119.86 yen. The euro was steady at $1.1253.

Nifty Likely to Extend Gains; DLF, Dewan Housing Finance in Focus

The Nifty recovered over 3 per cent from its intraday lows and ended 47.6 points higher on Tuesday after the RBI reduced repo rates by 50 basis points. Derivative data suggests that Nifty is likely to extend gains.

The October Nifty future added 3.5 lakh shares in open interest (outstanding positions) and the premium increased to 32.55 points against 29.8 points earlier, clearly suggesting addition of bullish bets in the Nifty futures.

Similarly, open interest in the 7,600, 7,700 and 7,800 puts have increased substantially, which suggests that traders don't expect Nifty to fall below 7,800 in the near future. However, on the upside 8,000 level is likely to act as a strong resistance as the 8,000 strike Nifty call has further added 8.3 lakh shares in open interest.

Overall 45.1 lakh shares have been added to Nifty put open interest while 43 lakh shares got added to call open interest pushing the Nifty put-call-ratio (PCR) to 0.91 from 0.9 earlier. PCR is an indicator of market sentiment. A PCR of more than 1 indicates positive outlook about the market.

The India VIX or the volatility index fell 0.45 per cent to end at 21.57 as premiums on out-of-the-money options (options having zero intrinsic value) decreased as the uncertainty regarding RBI rate decision is behind us now.

Among individual stocks DLF, Dewan Housing Finance, Apollo Hospitals are expected to gain further as huge long positions have been added to these stocks. On the other hand Aditya Birla Nuvo, Arvind saw addition of bearish bets.

Rajan Rally Set to Continue, Sensex Poised to Open Higher

BSE Sensex and Nifty are likely to open higher, tracking mostly higher Asian markets. The SGX CNX NIFTY was up 0.44 per cent to 7,885.50, indicating a higher start for Indian markets.

Here Are Top 10 Developments:

1) Analysts say that the bigger-than-expected rate cut from Reserve Bank of India chief Raghuram Rajan has turned the sentiment in domestic markets positive in the short term.

2) However, Indian markets are likely to see selling pressure at higher levels, say analysts. 8050 to 8100 levels are likely to be the resistance level for Nifty, they say.

3) Bihar (state) elections and upcoming results season will make investors cautious in the near term, analysts say.

4) Selling pressure from foreign investors is also likely to keep a cap on gains. Foreign investors have so far this month have sold (net) nearly Rs 6,000 crore worth of Indian equities.

5) Rate sensitive banking, auto and realty stocks are likely to be in also in focus today after the RBI's rate cut. These stocks had outperformed the markets yesterday, buoyed by the rate cut.

6) Metal and oil & gas stocks are also likely to see some value-buying today after their recent selloff. Prices of copper, which is seen as a benchmark for commodity demand, ticked higher in domestic markets yesterday.

7) The value of the rupee would also closely watched. The rupee ended at 65.96/dollar on Tuesday against its previous close of 66.04.

8) Most Asian stock markets were steady on Wednesday after sliding to 3-year lows but a weak outlook for commodities and persistent concerns about China's economy discouraged most buyers.

9) Japan's Nikkei was up 1.8 per cent while China's Shanghai Composite rose 0.40 per cent.

10) US stocks ended higher after a volatile session on Tuesday as concerns about the health of the global economy kept investors cautious after more than a month of turbulence. The Dow Jones industrial average rose 0.3 per cent to end with 16,049.13 points and the S&P 500 gained 0.12 per cent to 1,884.09. The Nasdaq Composite dropped 0.59 percent to 4,517.32.