Indian equity indices continued its weak trade hovering near the neutral line on pessimistic note due to the recent surge in international crude oil prices that have been a cause of concern for the investors. Market participants were seen piling up the positions in Consumer Durables, Capital Goods and Metal while, selling was witnessed in Bankex, Health Care and PSU sector. Providing some relief to Idea Cellular, telecom tribunal Telecom Disputes Settlement and Appellate Tribunal (TDSAT) restrained DoT from enforcing Rs 250 crore penalty on it for alleged violation of rules with regard to five over-lapping licenses of Spice Communications. The TDSAT bench, headed by its Chairman Justice S B Sinha, restrained the Department of Telecom from enforcing the penalty. Also, stocks like HDFC Bank, Gujarat FluoroChemicals, VIP Industries, Blue Dart, Zydus Wellness and MidValley Entertainment hit new high. JSW Steel has reported a 9% growth in its crude steel production for Q1 FY2012 at 1.71 million tonnes. The production of flat rolled products increased by 9% at 1.19 million tonnes for June 2011. The production of long rolled products increased by 12% to 0.35 million tonnes in June 2011. On the global front, Asian markets were trading in red barring KLSE Composite, Nikkei 225, Seoul Composite and Taiwan Weighted, while the European markets were trading in red on a lackluster note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,650 and 18,800 levels, respectively. The market breadth on the BSE was almost equal in the ratio of 1390:1358 while, 108 scrips remained unchanged.
Moreover, PSU Oil Marketing Companies (OMCs)like BPCL, HPCL and IOC were down due to rise in crude oil prices, which will increase under-recoveries of OMCs on domestic sale of diesel, LPG and kerosene at controlled prices while Aviation stocks like Jet Airways, Kingfisher Airlines and SpiceJet too were hit due to rise in crude prices since aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for aviation company and prices of fuel are directly linked to crude oil prices. Also, the chocolaty deal between Godrej Consumers and Hershey's has reached expiry. The two companies have called off their India joint venture and the US-based chocolate and confectionery major will sell its 51% stake in JV to Godrej and now the Indian FMCG company is looking at other acquisition while the auditors of the SKS Microfinance have 'identified' 156 cases of alleged cash embezzlement by some of its employees who have conned the firm to the tune of Rs 1.60 crore during FY 11.
The BSE Sensex is currently trading at 18,734.42 down by 10.14 points or 0.05% after trading as high as 18,823.45 and as low as 18,682.60. There were 13 stocks advancing against 17 declines on the index.
The broader indices were trading on a positive note; the BSE Mid cap and Small cap indices advanced by 0.02% and 0.21% respectively.
On the BSE sectoral space, Consumer Durables up 1.74%, Capital Goods up 0.87%, Metal up 0.30%, FMCG up 0.20% and Realty up 0.14% were the major gainers, while Bankex down 0.89%, Health Care down 0.43%, PSU down 0.33%, Oil & Gas down 0.21% and Power down 0.06% were the major loser on the index.
The top gainers on the Sensex were L&T up by 1.38%, Tata Motors up by 0.85%, HDFC up by 0.80%, Hindalco up 0.78% and ITC up 0.66%. On the flip side, RCOM down by 2.06%, ICICI Bank down by 1.64%, ONGC down 1.38%, Tata Power down 1.35% and Hero Honda down 1.17% were the major losers on the index.
Meanwhile, the power tariffs are expected to follow the path of fuels prices, after fuel price hike, pressure is mounting for an increase in power tariffs. A recent discussion between the power ministry, central and state regulators and distribution utilities point to situation where power utilities have to increase the tariffs in order to sustain the supply of power.
As per the status report on power distribution prepared by power ministry, the total loss of the India's 110 power utilities, comprising 37 purely distribution firms, are estimated at Rs 86, 136 crore. If the prices remained at the present level, the loss of power utilities is expected to reach Rs 116,089 crore by 2014-15. The power utilities loss is expected to be much higher, after including the subsidies provided by the state governments. The government owned lender, Power Finance Corporation reckoned subsidies to be around 19% or Rs 29, 665 of the public sector firms in 2008-09. Subsidies have considerably increased from past few years; it increased by around 14% or Rs 19,518 in 2007-08 and 11% or Rs 13,590 crore in 2006-07.
This demonstrates that the states are giving extra subsidies both in absolute terms as well as percentage of revenue. However, the power firms are facing cash flow problems since the percentage of the subsidy that is actually released by the cash-strapped state governments has been declining over the years. In 2008-09, for example, Rs 29,665 crore was booked as subsidy by the utilities. They, however, received only 61% of this amount -Rs 18,388 crore, leaving a gap of Rs 11,277 crore.
Because of this, the power utilities are forced to take short-term loans on higher interest rate to meet their operational expenses. And some time state regulators don't give permission to power utilities to include interest in cost, as a results power utilizes carry huge loss. The total outstanding of the utilities in 2008-09 is estimated at Rs 56,627 crore, while their debt stands at Rs 1,33,013 crore. Around 22 utilities are having negative net worth and just 17 utilities are in positive net worth, whereas only 10 utilities are in surplus.
Currently, even after subsidy, there are 50 paise mismatches between cost and selling price of power, power utilities are charging on an average Rs 2.91/ unit, whereas their cost of supply is Rs 3.41/unit. The state governments' reluctance to give permission to raise the tariffs as the increased tariffs would make situation more worsen. Since 2010, only 16 states had revised tariffs, and like Delhi, Assam and Karnataka has not increased tariffs from 2009.
The S&P CNX Nifty is currently trading at 5,624.15, lower by 7.95 points or 0.14% after trading as high as 5,655.40 and as low as 5,610.75. There were 17 stocks advancing against 32 declines while 1 stock remained unchanged on the index.
The European markets were trading in red with, France's CAC 40 down 0.32%, Germany's DAX shed 0.16% and London's FTSE fell 0.40%.
Moreover, PSU Oil Marketing Companies (OMCs)like BPCL, HPCL and IOC were down due to rise in crude oil prices, which will increase under-recoveries of OMCs on domestic sale of diesel, LPG and kerosene at controlled prices while Aviation stocks like Jet Airways, Kingfisher Airlines and SpiceJet too were hit due to rise in crude prices since aviation turbine fuel, or jet fuel constitutes more than 50% of operating cost for aviation company and prices of fuel are directly linked to crude oil prices. Also, the chocolaty deal between Godrej Consumers and Hershey's has reached expiry. The two companies have called off their India joint venture and the US-based chocolate and confectionery major will sell its 51% stake in JV to Godrej and now the Indian FMCG company is looking at other acquisition while the auditors of the SKS Microfinance have 'identified' 156 cases of alleged cash embezzlement by some of its employees who have conned the firm to the tune of Rs 1.60 crore during FY 11.
The BSE Sensex is currently trading at 18,734.42 down by 10.14 points or 0.05% after trading as high as 18,823.45 and as low as 18,682.60. There were 13 stocks advancing against 17 declines on the index.
The broader indices were trading on a positive note; the BSE Mid cap and Small cap indices advanced by 0.02% and 0.21% respectively.
On the BSE sectoral space, Consumer Durables up 1.74%, Capital Goods up 0.87%, Metal up 0.30%, FMCG up 0.20% and Realty up 0.14% were the major gainers, while Bankex down 0.89%, Health Care down 0.43%, PSU down 0.33%, Oil & Gas down 0.21% and Power down 0.06% were the major loser on the index.
The top gainers on the Sensex were L&T up by 1.38%, Tata Motors up by 0.85%, HDFC up by 0.80%, Hindalco up 0.78% and ITC up 0.66%. On the flip side, RCOM down by 2.06%, ICICI Bank down by 1.64%, ONGC down 1.38%, Tata Power down 1.35% and Hero Honda down 1.17% were the major losers on the index.
Meanwhile, the power tariffs are expected to follow the path of fuels prices, after fuel price hike, pressure is mounting for an increase in power tariffs. A recent discussion between the power ministry, central and state regulators and distribution utilities point to situation where power utilities have to increase the tariffs in order to sustain the supply of power.
As per the status report on power distribution prepared by power ministry, the total loss of the India's 110 power utilities, comprising 37 purely distribution firms, are estimated at Rs 86, 136 crore. If the prices remained at the present level, the loss of power utilities is expected to reach Rs 116,089 crore by 2014-15. The power utilities loss is expected to be much higher, after including the subsidies provided by the state governments. The government owned lender, Power Finance Corporation reckoned subsidies to be around 19% or Rs 29, 665 of the public sector firms in 2008-09. Subsidies have considerably increased from past few years; it increased by around 14% or Rs 19,518 in 2007-08 and 11% or Rs 13,590 crore in 2006-07.
This demonstrates that the states are giving extra subsidies both in absolute terms as well as percentage of revenue. However, the power firms are facing cash flow problems since the percentage of the subsidy that is actually released by the cash-strapped state governments has been declining over the years. In 2008-09, for example, Rs 29,665 crore was booked as subsidy by the utilities. They, however, received only 61% of this amount -Rs 18,388 crore, leaving a gap of Rs 11,277 crore.
Because of this, the power utilities are forced to take short-term loans on higher interest rate to meet their operational expenses. And some time state regulators don't give permission to power utilities to include interest in cost, as a results power utilizes carry huge loss. The total outstanding of the utilities in 2008-09 is estimated at Rs 56,627 crore, while their debt stands at Rs 1,33,013 crore. Around 22 utilities are having negative net worth and just 17 utilities are in positive net worth, whereas only 10 utilities are in surplus.
Currently, even after subsidy, there are 50 paise mismatches between cost and selling price of power, power utilities are charging on an average Rs 2.91/ unit, whereas their cost of supply is Rs 3.41/unit. The state governments' reluctance to give permission to raise the tariffs as the increased tariffs would make situation more worsen. Since 2010, only 16 states had revised tariffs, and like Delhi, Assam and Karnataka has not increased tariffs from 2009.
The S&P CNX Nifty is currently trading at 5,624.15, lower by 7.95 points or 0.14% after trading as high as 5,655.40 and as low as 5,610.75. There were 17 stocks advancing against 32 declines while 1 stock remained unchanged on the index.
The top gainers of the Nifty were Sesa Goa up by 2.21%, L&T up by 1.31%, Tata Motors up by 1.18%, HDFC up by 1.10% and Hindalco up by 1.10%. On the other side, Dr. Reddy down by 2.83%, RCOM down by 2.26%, Reliance Capital down by 1.97%, BPCL down by 1.93% and ICICI Bank down 1.66% were the major losers on the index.
Asian markets are exhibiting mixed trends as KLSE Composite inched up 0.60%, Nikkei 225 surged 1.10%, Seoul Composite climbed 0.44% and Taiwan Weighted advanced 0.46%. On the flipside, Shanghai Composite slipped 0.21%, Hang Seng shed 1.01%, Jakarta Composite sank 0.39% and Straits Times down by 0.36%. The European markets were trading in red with, France's CAC 40 down 0.32%, Germany's DAX shed 0.16% and London's FTSE fell 0.40%.
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