Key benchmark indices held firm in early afternoon trade on the government's gas and energy sector reforms and on firm Asian stocks. The S&P BSE Sensex was up 354.60 points or 1.88%, up 137.37 points from the day's low and off 20.80 points from the day's low. The market breadth, indicating the overall health of the market, was strong.
ONGC and Reliance Industries (RIL) pared steep initial gains while Oil India reversed initial gains triggered by the government's decision to revise gas pricing to the one based on global trade transactions of gas. Power generation and fertiliser stocks gained after the Finance Minister P Chidambaram on Friday said that the government would consider helping the power and fertiliser industries to cope with the doubling of domestic gas prices from 1 April 2014.
The Cabinet Committee on Economic Affairs (CCEA) on Thursday, 27 June 2013, gave its approval for fixation of price of domestic natural gas according to the recommendations of the committee constituted under the Chairmanship of Dr. C. Rangarajan on Production Sharing Contract (PSC) mechanism in the petroleum industry. In another decision, the government on Thursday approved setting up of a coal regulator in a bid to further liberalize the energy sector and revitalize economic growth.
Key benchmark indices rallied in early trade on the government's gas and energy sector reforms, with market sentiment also lifted by higher Asian stocks. The barometer index, the S&P BSE Sensex, hit over one-week high above the psychological 19,000 mark. Key benchmark indices regained strength after paring gains after an initial surge. Key benchmark indices extended gains to strike fresh intraday high in mid-morning trade. Key benchmark indices held firm in early afternoon trade.
At 12:25 IST, the S&P BSE Sensex was up 354.60 points or 1.88% to 19,230.55. The index jumped 375.40 points at the day's high of 19,251.35 in mid-morning trade, its highest level since 19 June 2013. The index gained 217.23 points at the day's low of 19,093.18 in opening trade.
The CNX Nifty was up 105.50 points or 1.86% to 5,787.85. The index hit a high of 5,794.70 in intraday trade, its highest level since 19 June 2013. The index hit a low of 5,749.50 in intraday trade.
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The market breadth, indicating the overall health of the market, was strong. On BSE, 1,372 shares gained and 754 shares fell. A total of 114 shares were unchanged.
The total turnover on BSE amounted to Rs 873 crore by 12:20 IST on BSE compared to Rs 676 crore by 11:20 IST.
Among the 30-share Sensex pack, 25 stocks gained and only five of them declined.
Power generation and fertiliser stocks gained after the Finance Minister P Chidambaram on Friday said that the government would consider helping the power and fertiliser industries to cope with the doubling of domestic gas prices from 1 April 2014. The power and fertiliser ministries have raised the issue. The government can look at fixing the input costs for these sectors, he said. The issues will be addressed in course of time, Chidambaram said.
Tata Power Company (up 2.09%), Reliance Infrastructure (up 4.12%), CESC (up 1.22%), NTPC (up 1.71%), Reliance Power (up 2.37%) and Adani Power (up 2.49%) edged higher from the power generation pack.
Among fertiliser shares, Rashtriya Chemicals and Fertilizers (up 3.68%), Chambal Fertilisers & Chemicals (up 6.41%), GSFC (up 0.83%), Deepak Fertilisers & Petrochemicals Corporation (up 0.75%) and Coromandel International (up 3.55%) gained.
National Fertilisers (NFL) gained 2.21%. The Cabinet Committee on Economic Affairs (CCEA) today approved the disinvestment of 7.64% paid up equity capital of the NFL that is approximately 3.74 crore shares. The disinvestment will be out of Government of India's (GOI's) shareholding of 97.64%, as per the Securities and Exchanges Board of India (Sebi) rules and regulations in order to make the NFL compliant to public share holding requirements.
Market regulator Securities & Exchange Board of India (Sebi) has mandated minimum public shareholding of 10% for state-run firms by 8 August 2013.
ONGC and Reliance Industries (RIL) pared steep initial gains while Oil India reversed initial gains triggered by the government's decision to revise gas pricing to the one based on global trade transactions of gas.
ONGC was up 2% to Rs 326.95 on high volume of 12.52 lakh shares. The stock surged as much as 10.12% to strike an intraday high of Rs 353 in early trade.
Reliance Industries (RIL) was up 2.67% to Rs 852.62. The stock gained as much as 5.12% at an intraday high of Rs 873.
Oil India fell 3.05% to Rs 555.50. The stock reversed direction after surging as much as 9.08% to high of Rs 625 at the onset of the trading session.
The oil ministry today, 28 June 2013, said that that the Cabinet Committee on Economic Affairs (CCEA) has approved fixation of price of domestic natural gas according to the recommendations of the committee constituted under the Chairmanship of Dr. C. Rangarajan on Production Sharing Contract (PSC) mechanism in the petroleum industry. The approved recommendations known as the Natural Gas Pricing Guidelines, 2013 will remain valid for five years. On the one hand these guidelines will help incentivize investment in the Indian upstream sector, so that production reaches optimum levels and all exploitable reserves are put to production expeditiously. At the same time these guidelines will ensure that producers do not cartelize because of the huge unmet demand. This will protect consumer interests, the oil ministry said in a statement.
The approved policy derives from global trade transactions of gas, the competitive price of gas at the global level by combining two methods. First, the netback price of Indian LNG term imports (excluding spot imports) at the wellhead of the exporting countries will be estimated. Such a netback weighted average price will be interpreted as the arm's length competitive price applicable for India. The second method of searching for a competitive price for India will be to take the weighted average of pricing prevailing at trading points of transactions. For this, the hub price at the Henry Hub in the US (for North America), the price at the National Balancing Point of the UK (for Europe) and the netback price at the sources of supply for Japan will be taken. Finally, the simple average of the prices arrived at through the aforementioned two methods will be taken. Such an overall average of global prices, derived on the basis of netback and hub/balancing point principles, will be taken as the economically appropriate estimate of the arm's length competitive prices applicable for India, the oil ministry said.
These guidelines will be applicable from 1 April 2014 to all domestically produced gas. However, the guidelines will not be applicable in respect of gas for which prices have been fixed contractually for a certain period of time, till the end of such period. These guidelines will also not be applicable where the contract provides a specific formula.
The present gas pricing policy under the New Exploration Licensing Policy (NELP) had been approved by the Government for five years beginning April 2009. This pricing policy will be due for revision with effect from April 2014.
Yes Bank rose 1.6%. The Cabinet Committee on Economic Affairs has approved to the proposal of Yes Bank to increase foreign equity participation upto 60% through a qualified Institutional Placement (QIP) of its equity shares to eligible non-residents and/or issue of Global Depository Receipts (GDRs) to eligible non-resident investors, as recommended by the Foreign Investment Promotion Board (FIPB). The approval would result in foreign investment amounting to Rs 2650 crore approximately being received in the country, the finance ministry said in a statement.
Hindustan Construction Company rose 4.16% to Rs 10.76 after the company after trading hours on Thursday, 27 June 2013, said it has approved preferential allotment of 3.92 crore convertible warrants to two promoter companies viz. Hincon Holdings and Hincon Finance at a price of Rs 16.32 per warrant (including a premium of Rs 15.32) aggregating Rs 64 crore.
Asian stocks edged higher on Friday, 28 June 2013, tracking an overnight rise in global equities on easing fears of an early end to US monetary stimulus. Key benchmark indices in Hong Kong, Indonesia, Taiwan, Singapore and South Korea were up 1.16% to 2.26%. China's Shanghai Composite shed 0.09%.
In Japan, the Nikkei 225 index jumped 3.51% as a weakened yen combined with upbeat industrial-production data to lift sentiment.
Japan's industrial production showed a surprise jump in May, while retail sales for the same month also gained, though the largest retailers saw a decline. Industrial output rose 2% during the last month, the Ministry of Economy, Trade and Industry said Friday, accelerating from a 0.9% gain in April.
German retail sales were better than expected in May, as consumers returned to the shops after being kept away for months by the cold and rainy weather, data from the Federal Statistics Office showed Friday.
Retail sales in May increased 0.8% from April, following three consecutive months of declines, beating economists' forecasts of a 0.3% drop in sales. The data are inflation-adjusted and also consider calendar effects.
Trading in US index futures indicated that the Dow could gain 27 points at the opening bell on Friday, 28 June 2013. US stocks surged for a third session on Thursday on upbeat economic data and reiterations from Federal Reserve officials that monetary policy depends on the economic outlook. In a speech on Thursday, Federal Reserve Bank of New York President William Dudley played down the possibility that rate hikes are in the cards anytime soon. Atlanta Fed President Dennis Lockhart said that the markets had mistaken Bernanke's framework for tapering central-bank asset purchases, and reiterated the Fed's approach would be flexible, and based on economic conditions. On Wednesday, Fed Bank of Richmond President Jeffrey Lacker said he believes the economic recovery will remain lackluster for a few more years.
The US Department of Labor reported the number of Americans filing for state unemployment benefits fell by 9,000 to 346,000 last week. The National Association of Realtors reported that pending home sales jumped to a six-year high in May.
Federal Reserve Chairman Ben Bernanke on 19 June 2013 said that the central bank may taper the pace of its bond purchases, currently set at $85 billion a month, as early as this year if the economy continues to improve in line with its forecasts.
Data on Wednesday had gross domestic product expanding at a less-than-estimated 1.8% annualized pace in the first quarter, bolstering the view that the Fed would continue the rate of its quantitative easing until late this year or early in 2014.
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