MARKETS TRADE FIRM

The Indian equity markets trading firm but with much volatility ahead of the RBI's credit policy. Investors sentiment strengthened to a significant extent on government's decision to clear some crucial infrastructure plans and open up avenues for more inflow of foreign direct investments into the country. On sectoral front, Oil stocks are up sharply following a hike in petrol prices. Power, capital goods, realty, metal and automobile stocks too were mostly trading higher. Bank stocks opened on a high note, but have given up some gains subsequently on RBI's monetary policy review. Information technology stocks have shed some early gains. Pharma and FMCG sectors witness stock specific activity. While consumer durables stocks were trading weak. ONGC has gained nearly 6% as petrol price hike is expected to help reduce the subsidy sharing burden of state-run firm, which is sharing under recoveries of oil marketing companies on selling diesel and cooking fuel at government set prices. On the global front, all Asian markets were trading in green. Back home, the market breadth favoring the positive trend; there were 1,264 shares on the gaining side against 1,143 shares on the losing side while 124 shares remained unchanged.
Meanwhile RBI has hiked Repo Rate by 25 basis points to 8.25% while Reverse Repo Rate stands adjusted at 7.25%. RBI says that inflation is high, generalized and much above comfort zone and cannot dismiss food inflation as temporary phenomenon.
The BSE Sensex is currently trading at 17,023.39, up by 146.85 points or 0.87%. The index has touched a high and low of 17,083.29 and 16,964.62 respectively.  There were 22 stocks advancing against just 8 declining ones on the index.
The broader indices too were trading higher in the trade; the BSE Mid cap and Small cap indices up by 0.12% and 0.14% respectively.
The top gaining sectoral indices on the BSE were PSU up by 1.54%, Auto up by 1.25%, Oil and Gas up by 1.17%, Metal up by 1.09% and CG up by 0.89%. While, CD down by 0.08% was the only losing sectoral index on the BSE.
The top gainers on the Sensex were ONGC up by 5.73%, Tata Motors up by 4.96%, Sterlite Industries up by 2.85%, NTPC up by 2.59% and Tata Power up by 2.47%.
On the flip side, Jaiprakash Association down by 1.00%, Bharti Airtel down by 0.70%, HUL down by 0.56%, Infosys down by 0.55% and Reliance down by 0.21% were the top losers on the Sensex.
Meanwhile, the government owned oil marketing companies on September 15, raised the petrol prices for the second time in the current financial year. The Indian Oil Corp raised petrol prices by Rs 3.14 per litre and Hindustan Petroleum Corp (HPCL) by Rs 3.16 per litre in Delhi. After the recent hike, the petrol at IOC outlets will cost around Rs 66.84 a litre in Delhi, Rs 71.92 in Mumbai, Rs 71.82 in Kolkata and Rs 70.82 in Chennai.
Along with the petrol prices, OMCs has also increased the Aviation Turbine Fuel (ATF) prices by 2.5%. After the hike, ATF price in Delhi stood at Rs 57,689 per kilolitre (KL) up by 2.5% or Rs 1,429 per KL. Jet fuel accounts for 40% of airlines operating cost.
These hike in the prices of petrol and ATF are in line with increasing international oil prices and depreciation in Indian Rupee. The stated-owned OMCs were losing around Rs 2.61 on every litre of petrol or Rs 15 crore per day on sale of petrol after adding local taxes. At these rates, OMCs in the first five months of current financial year have made revenue loss of around Rs 2,450 crore.
Along with the revenue loss on sale of petrol, which was decontrolled in June 2010, OMCs are also losing Rs 263 crore every day on selling diesel, domestic LPG and kerosene below the market price. OMCs are making revenue loss of Rs 6.05 on every litre of diesel, Rs 23.25 on every litre of kerosene and Rs 267 per 14.2-kg LPG cylinder. Along with these revenue losses, due to depreciation in rupee, OMCs are expecting to make Rs 9,000 crore loss on import of crude oil.
Earlier in May this year, OMCs hiked petrol prices by Rs 5 per litre. This recent hike in petrol prices is likely to make inflation scenario worse, as it accounts for 1.09% of the wholesale price index. The headline inflation for month of August surged to 9.78% from 9.22% in July.
Following the hike in petrol prices, an empowered group of ministers (EGoM) on fuel headed by Finance Minister Pranab Mukherjee is scheduled to meet on September 16. During the meeting the EGoM may cap the number of subsidized LPG cylinders (Rs 395.35) to a household at 4-6 in a year, beyond which consumers will have to pay the market price of Rs 666 per cylinder.

As per the calculation, each 14.2 KG LPG cylinder normally lasts a household for 45 to 60 days, which comes to maximum six cylinders in a year. However, as per the record of LPG distribution public sector distributers' large numbers of households are taking as many as 20 to 30 cylinders per household in a year. By this step, the government is looking to reduce the revenue losses of OMCs, which they occur for selling LPG below the market price. Currently OMCs are making revenue loss of Rs 63 crore per day. 

The S&P CNX Nifty is currently trading at 5,111.50, higher by 35.80 points or 0.71%. The index has touched a high and low of 5,131.65 and 5,092.65 respectively. There were 34 stocks advancing against 14 declines on the index and 2 remained unchanged.
The top gainers of the Nifty were ONGC up by 5.53%, Tata Motors up by 5.06%, Sterlite Industries up by 2.77%, Tata Power up by 2.46% and NTPC up by 2.46%.
On the flip side, HCL Tech down by 1.08%, JP Associate down by 1.07%, RCom down by 0.71%, Infosys down by 0.70% and Kotak Bank down by 0.68% were the major losers on the index.
All the Asian equity indices were trading in the green; Shanghai Composite was up by 0.19%, Hang Seng up by 1.99%, Jakarta Composite was up by 0.95%, Nikkei 225 up by 0.62%, Straits Times up by 1.20%, Seoul Composite was up by 3.87% and Taiwan Weighted up by 2.60%.