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Shares of gas producers slide

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Capital Market
Last Updated : Jun 20 2014 | 12:01 AM IST

Key benchmark indices recovered from the day's low in afternoon trade as European stocks rose in early trade there. The barometer index, the S&P BSE Sensex, was down 125.74 points or 0.50%, up 51 points from the day's low and off 305 points from the day's high. The market breadth indicating the overall health of the market was negative. Macroeconomic worries weighed on sentiment on the domestic bourses as crude oil prices rose.

Shares of PSU OMCs and state-run upstream oil firms dropped after international crude oil prices firmed up. Another trigger for the slide in the shares of ONGC and Oil India was reports that oil ministry has proposed that gas price hike should be restricted to incremental production rather than the entire production. Those reports also weighed on the shares of another gas producer Reliance Industries.

At 13:15 IST, the S&P BSE Sensex was down 125.74 points or 0.50% to 25,120.51. The index lost 176.59 points at the day's low of 25,069.66 in early afternoon trade, its lowest level since 16 June 2014. The index jumped 179.60 points at the day's high of 25,425.85 in early trade.

The CNX Nifty was down 43.05 points or 0.57% to 7,515.15. The index hit a low of 7,502.55 in intraday trade, its lowest level since 16 June 2014. The index hit a high of 7,606.45 in intraday trade.

The market breadth indicating the overall health of the market was negative. On BSE, 1,581 shares declined and 1,131 shares gained. A total of 109 shares were unchanged.

The BSE Mid-Cap index was off 50.56 points or 0.56% at 8,984.69, underperforming the Sensex. The BSE Small-Cap index was off 26.51 points or 0.27% at 9847.13, outperforming the Sensex.

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Among the 30-share Sensex pack, 15 stocks declined and the rest of them gained. Maruti Suzuki India (down 2.63%), Coal India (down 1.87%), GAIL (India) (down 1.37%), Hindalco Industries (down 0.9%), HDFC Bank (down 0.83%), ICICI Bank (down 0.8%), State Bank of India (down 0.8%), Tata Steel (down 0.68%) and Sun Pharmaceuticals Industries (down 0.55%), edged lower from the Sensex pack.

Wipro (up 1.46%), Infosys (up 1.44%), Tata Motors (up 1.01%), TCS (up 0.97%), ITC (up 0.66%), Bharat Heavy Electricals (up 0.62%), NTPC (up 0.56%) and Bajaj Auto (up 0.49%), edged higher from the Sensex pack.

Shares of PSU OMCs dropped after international crude oil prices firmed up. HPCL (down 3.44%), BPCL (down 2.76%) and Indian Oil Corporation (down 2.5%), edged lower.

Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

Shares of state-run upsteam oil firms dropped on concerns their subsidy burden will rise along with increase in crude oil prices. ONGC was off 5.2% at Rs 419.95. Oil India was off 4% at Rs 574.40. ONGC and Oil India share part of the under-recoveries of state-run oil refining-cum-marketing firms (PSU OMCs ) arising from the government-imposed price caps on prices three key fuels -- diesel, LPG for domestic use and kerosene sold through the public distribution system.

ONGC and Oil India also slipped after media reports suggested that the petroleum ministry has proposed that higher gas price as per the Rangarajan formula could be allowed only for incremental production over and above the current levels. This is an alternative to applying the formula unconditionally from 1 July 2014. Restricting the higher price to additional output, the ministry feels, would incentivise production while also protecting the interests of consuming industries like power and fertilisers, said media report.

Private sector oil major Reliance Industries was down 2.10% to Rs 1,044.45. The stock hit a high of Rs 1,076 and a low of Rs 1,039.10.

Key benchmark indices edged higher in early trade as Asian stocks rose after the US Federal Reserve on Wednesday, 18 June 2014, after a monetary policy review said a highly accommodative stance of monetary policy remains appropriate at this juncture. Volatility struck the bourses in morning trade as the key benchmark indices retreated from intraday high hit in early trade only to regain strength later. The 50-unit CNX Nifty regained positive zone soon after reversing intraday gain to briefly turn negative. Volatility continued in mid-morning trade as the key benchmark indices regained positive zone after hitting fresh intraday low in negative zone. Key benchmark indices extended fall and hit fresh intraday low in early afternoon trade. Key benchmark indices recovered from the day's low in afternoon trade as European stocks rose in early trade there.

Brent crude rose as investors worried about exports from Iraq as militant violence in the country continues. Brent crude futures for August delivery were up 38 cents at $114.64 a barrel.

Increase in oil prices has triggered macroeconomic worries for India which imports majority of its crude oil requirements. Increase in crude oil prices have raised concerns of increase in fuel price inflation and increase in India's current account deficit and fiscal deficit.

In the foreign exchange market, the rupee edged higher against the dollar after the US Federal Reserve signalled that interest rates will stay low for a while yet. The partially convertible rupee was hovering at 60.04, compared with its close of 60.39/40 on Wednesday, 18 June 2014.

European shares edged higher in early trade on Thursday, 19 June 2014, as investor sentiment received a boost from the Federal Reserve which said the US economy is rebounding and that US interest rates would stay low for some time. Key benchmark indices in UK, France and Germany were up 0.71% to 0.81%.

Asian markets edged higher on Thursday, 19 June 2014, on the optimism of Wall Street after the US Federal Reserve gave a positive assessment of the world's largest economy and committed to retaining its accommodative monetary policy. Key benchmark indices in Taiwan, South Korea and Japan rose by 0.13% to 1.62%. Key benchmark indices in Singapore, Hong Kong, Indonesia and China fell by 0.02% to 1.55%.

Chinese Premier Li Keqiang vowed that his nation's economy will not suffer a so-called "hard landing," a report said.

Trading in US index futures indicated a flat opening of US stocks on Thursday, 19 June 2014. US stocks rallied on Wednesday, 18 June 2014, gaining the most in four weeks, after the Federal Reserve chief signaled no hurry to raise rates.

The Federal Reserve said growth is bouncing back and the job market is improving as it continued to reduce the monthly pace of asset purchases. The Federal Open Market Committee trimmed bond-buying by $10 billion for a fifth straight meeting, to $35 billion, keeping it on pace to end the program late this year.

In a statement, the Federal Open Market Committee (FOMC) said that if the incoming information broadly supports the committee's expectation of ongoing improvement in US labor market conditions and inflation moving back toward its longer-run objective, the committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the committee's decisions about their pace will remain contingent on the committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. To support continued progress toward maximum employment and price stability, a highly accommodative stance of monetary policy remains appropriate at this juncture, the FOMC said. In determining how long to maintain the current zero to 1/4 percent target range for the federal funds rate, the committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2% inflation, the FOMC said. The committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the committee's 2% longer-run goal, and provided that longer-term inflation expectations remain well anchored.

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First Published: Jun 19 2014 | 1:17 PM IST

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