Volatility ruled the roost in early trade as the key benchmark indices cut initial losses triggered by mostly lower Asian stocks. The barometer index, the S&P BSE Sensex regained the psychological 22,000 level after falling below that level in early trade. The 50-unit CNX Nifty turned positive after initial fall. The S&P BSE Sensex was down 11.02 points or 0.05%, up 127.59 points from the day's low and off 1.13 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
ONGC and Reliance Industries (RIL) dropped as the Election Commission has reportedly ordered deferment of an increase in gas prices that was to take effect from 1 April 2014. GAIL (India) edged lower despite signing a Memorandum of Understanding (MoU) with Chubu Electric Power Co., Inc., Japan (Chubu) on 21 March 2014. Jaiprakash Associates (JAL) rose after the company after market hours on Monday, 24 March 2014 said that the Board of Directors of the company on Monday, 24 March 2014 approved signing of Share Purchase Agreement with Dalmia Cement (Bharat) for sale of 74% stake in the paid-up equity share capital of Bokaro Jaypee Cement (BoJCL).
Asian stocks were mostly lower as data showed a slowdown in US manufacturing and investors weighed the prospect of a recession in Russia.
Foreign institutional investors (FIIs) bought shares worth a net Rs 1465.62 crore on Monday, 24 March 2014, as per provisional data from the stock exchanges.
Indian stocks may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near-month March 2014 series to April 2014 series. The near-month March 2014 F&O contracts expire on Thursday, 27 March 2014.
At 9:25 IST, the S&P BSE Sensex was down 11.02 points or 0.05% to 22,044.46. The index lost 138.61 points at the day's low of 21,916.87 in early trade. The index fell 9.89 points at the day's high of 22,045.59 in early trade.
The CNX Nifty was up 5.60 points or 0.09% to 6,589.10. The index hit a high of 6,589.80 in intraday trade. The index hit a low of 6,544.85 in intraday trade.
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The market breadth, indicating the overall health of the market, was strong. On BSE, 701 shares gained and 383 shares fell. A total of 51 shares were unchanged.
The BSE Mid-Cap index rose 25.94 points or 0.38% to 6,826.86 and the BSE Small-Cap index rose 18.56 points or 0.27% to 6,860.47. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 121 crore by 09:20 IST.
Among the 30-share Sensex pack, 16 stocks declined and rest of them gained.
HDFC Bank (up 1.2%), HDFC (up 1.03%) and ITC (up 0.94%) edged higher from the Sensex pack.
ONGC (down 3.83%) and Reliance Industries (RIL) (down 2.83%) dropped as the Election Commission has reportedly ordered deferment of an increase in gas prices that was to take effect from 1 April 2014.
Reliance Industries (RIL) after market hours on Monday, 24 March 2014 said that a number of misconceptions have been floating around the issue of gas price hike. One such misconception is that the Government will increase fertilizer prices immediately, with the increase in gas price. It is alleged that this shall lead to increase in prices of all food grains produced by the farmers. In clarification, RIL said that close to 40% of gas consumed in the country is imported in the form of LNG. Current price of LNG imported in the country is around $18 per MMBTU. Even at domestic gas price of $8 per MMBTU, imported LNG will be costlier by at least $10 per MMBTU, i.e. it will cost more than double the price paid to domestic gas producers.
The moot point is why those who are raising the issue about higher domestic gas price are quiet about increased profits that international gas companies will be making by supplying gas to India at much higher prices, RIL said. Are these vested interests aligned with those of the international gas companies?, RIL added.
RIL said that fertilizer prices are set by the government and not on the basis of cost of fertilizer production. About 75% of domestic gas is being produced by public sector companies. As per media reports, ONGC alone will benefit to the tune of Rs 16000 crore following the price hike. Government's income will also increase due to higher royalty and taxes. The increased income to the Government will be much higher than additional subsidy that it will have to shell out for the fertilizer sector. Thus, the Government will have no reason to pass on increased gas price to farmers, RIL said.
With regard to power sector, RIL clarified that gas produced by the company is not being used presently by any power producer in the country. In any case, only 5% of power produced in India is produced from gas and the remaining 95% is produced by coal, hydel and nuclear power plants. Thus, this propaganda that gas price hike will increase power tariffs dramatically is misplaced. Therefore, the issue about power and fertilizer rates going up due to increase in gas prices is only a political stunt devoid of facts, RIL said.
Meanwhile, ONGC said it will take up Additional Development of its Vasai East Field in Arabian Sea at a total estimated capital cost of Rs 2476.82 crore. The project, scheduled to be completed by December 2018, will result in incremental Oil production of 1.83 Million Metric Tonnes (MMT) and incremental Gas production of 1.971 Billion Cubic Metres (BCM) by 2030.
The company's board, in its meeting held on 24th March 2014, accorded approval to the project. This project will improve the Recovery factor of Vasai East field with infill wells towards north & south side of the field with two well platforms VSEB and VSEC and utilizing existing surface facilities at process platform of BPA and BCPA-2with minor modifications.
The oil and gas fields of ONGC on Arabian Sea are over 40 years vintage. ONGC, now recognized as one of the best brownfield managers in the Exploration and Production world, has increased its recovery factor to over 40 per cent by aggressive redevelopment efforts since 2001.
Meanwhile, the board of ONGC also approved a second interim dividend of Rupees 4.25 per equity share, i.e. 85% on the equity share of Rs 5 each for the financial year ending March 2014.
Further, the company's board also took note of the notification of one discovery at its well NW-B173A-8 in South and East Bassein PML of Western Offshore basin as a new prospect. The well was drilled to a depth of 2132 metres. Upon production testing, the interval 1475-1480 metres and 1481.5-1490 metres in Mukta formation produced oil at 2246 BOPD and gas at 70997 m3/day through1/2 choke. The discovery will add to the reserves and production potential of the field B-173A. With this, total new discoveries of ONGC during the year 2013.14 adds to fourteen, ONGC said in a statement.
GAIL (India) slipped 1.26%. GAIL (India) announced after market hours on Monday, 24 March 2014, that it has signed a Memorandum of Understanding (MoU) with Chubu Electric Power Co., Inc., Japan (Chubu) on 21 March 2014. Under the MoU, GAIL and Chubu shall mainly explore possibilities for collaboration in the area of joint LNG procurement. Besides, the two companies will also seek to collaborate on shipping optimization, GAIL (India) said in a statement.
Chubu and GAIL are, both, large LNG importers having considerable synergy between their LNG business profiles. It is assessed that with GAIL joining hands with Chubu for jointly pursuing LNG procurement and other allied business opportunities, such a collaboration shall augment GAIL's efforts to aggressively source LNG volumes on competitive terms and would be a win-win proposition for both companies, GAIL (India) said.
GAIL's latest move is also in sync with the company's recent efforts in establishing and promoting Asia LNG Forum, a sort of Asian LNG buyers' club. GAIL is also actively working towards establishing a regional gas trading hub for Asia as well as an Asian gas index.
This MoU with Chubu is yet another effort by GAIL towards bridging the gap in demand supply of natural gas in the Indian market, GAIL (India) said. This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure, reserving liquefaction tolling capacity in overseas projects and augmenting transmission capacity significantly over the next few years. GAIL will continue to make efforts to tie-up affordable LNG in its portfolio to meet the rapidly growing energy demand of the Indian market.
Chubu is one of the largest importers of LNG in Japan, and has significant presence across gas value chain including upstream assets, liquefaction capacity and regas capacity.
Jaiprakash Associates (JAL) rose 1.73% after market hours on Monday, 24 March 2014 said that the Board of Directors of the company on Monday, 24 March 2014 approved signing of Share Purchase Agreement with Dalmia Cement (Bharat) for sale of 74% stake (9.89 crore equity shares owned by it) in the paid-up equity share capital of Bokaro Jaypee Cement (BoJCL) [a joint venture between JAL and Steel Authority of India (SAIL)] to Dalmia Cement (Bharat) or any of its Associates / Affiliates. The above stake sale is subject to the approval of SAIL and such other approvals, as may be necessary from lenders of BoJCL and concerned authorities. The consideration for the transaction works out to approximately Rs 69.74 per share (against its cost of Rs. 18.57 per share), JAL said.
Zee Entertainment Enterprises shed 0.14%. Zee Entertainment Enterprises after market hours on Monday, 24 March 2014 said that as per the Scheme of Arrangement approved by Bombay High Court vide order passed on 20 December 2013 and the terms of '6% Cumulative Redeemable Non-Convertible Preference Shares of Re. 1 each' issued by the company as bonus on 6 March 2014, the said Preference Shares shall be entitled to pro rata Dividend at 6% per annum for each financial year. Preference Dividend for the Financial Year ending on 31 March 2014 shall be paid on 15 April 2014 to the shareholders holding Preference Shares as at 31 March 2014. Accordingly, 31 March 2014 has been fixed as Record date for determining the eligibility of Preference Shareholders who would be entitled to prorata payment of Dividend at 6% per annum for the period from the date of allotment i.e. 6 March 2014 till 31 March 2014 (both days inclusive).
Marico rose 0.1%. Marico after market hours on Monday, 24 March 2014 said that Mr. Milind Sarwate, Croup CFO, has decided to move on to pursue opportunities outside the Marico Group. His last working day with the company is 31 March 2014.
Glenmark Pharmaceuticals rose 0.46%. The company before market hours said that it has through its Swiss Subsidiary received $4 million as research fee payment from Forest Laboratories Inc. on a collaboration for the development of novel mPGES-1 inhibitors to treat chronic inflammatory conditions, including pain.
The Reserve Bank of India will announce the First Bi-monthly Monetary Policy Statement, 2014-15 on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
The next major trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will be take place on 16 May 2014. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
Asian stocks were mostly lower as data showed a slowdown in US manufacturing and investors weighed the prospect of a recession in Russia. Key benchmark indices in Hong Kong, Singapore, Japan, Indonesia and South Korea were off by 0.01% to 0.44%. Key benchmark indices in Taiwan and China rose by 0.43% to 0.64%.
Banks warned Russia's economy is at risk of shrinking as the world's leading industrial powers threaten further sanctions to deter it from invading other parts of Ukraine after the annexation of Crimea earlier this month.
Standard & Poor's on Monday, 24 March 2014 cut the credit rating on Brazil's long term bonds to one notch above junk, citing deteriorating government accounts and rising debt, the latest rebuke for a once-highflying economy now struggling to hold on to the investor enthusiasm it inspired just a few years ago.
The ratings agency cut Brazil's sovereign credit rating to triple-B-minus from triple-B, also citing weak economic growth, and said its outlook for Brazil was stable. The downgrade marks a turnaround from 2008, when Brazil's bonds were awarded investment grade status amid the global financial crisis. "It's not that we see policy having unraveled strongly, but we see some slippage," said S&P analyst Lisa Schineller on a conference call. "We're very comfortable with Brazil in the investment grade category."
US stocks bounced off session lows but still finished Monday lower as sell-off in biotechnology companies weighed on indexes on a day light on economic news.
Markit on Monday said its preliminary or flash PMI index tallied 55.5 in March, just slightly below February's nearly four-year high. Any number over 50 signals growth. Particularly welcome was the sustained upturn in hiring, adding to evidence to suggest that firms' retain an upbeat outlook, said Chris Williamson, chief economist at Markit.
The leaders of the G-7 industrialized nations on Monday said they will not participate in the scheduled G-8 summit in Sochi due to Russia's "illegal attempt to annex Crimea." In a statement, the leaders warned that any escalation of the crisis would result in "coordinated sectoral sanctions" that will hurt the Russian economy. The G-7 urged the International Monetary Fund and the Ukrainian government to rapidly reach a deal on conditions for an aid package, which will unlock other international assistance. "We remain united in our commitment to provide strong financial banking to Ukraine," the statement said. The energy ministers of the seven nations will meet to discuss ways to strengthen "collective energy security," the statement said
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
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