RECOVERY

Stock markets in India, after plunging around a percent in morning trades, have recovered a great deal from the low point of the day with the frontline equity indices trading just below the previous closing levels. The pessimistic global sentiments spilled over local markets in early trades as markets participants largely remained influenced by the disappointing overnight close in US markets which registered their biggest one day fall in the year 2012 on Tuesday amid concerns about European debt crisis resurfacing after borrowing costs for Euro-zone nations rose ahead of the start of first quarter earnings season.  The benchmark indices pared most part of their losses in the last half an hour and are trading with moderate cuts of around one third of a percent in early noon trades. Sentiments in domestic bourses improved following the European markets opening which rebounded a session after witnessing hefty risk aversion. The key gauges are inching closer to the psychological 5,250 (Nifty) and 17,200 (Sensex) levels as investors were seen buying defensive Healthcare stocks while the PSU and IT counters too gained some ground. The PSU oil marketing companies like HPCL, BPCL and IOC traded with good gains on the back of sharp decline in international crude oil prices which plummeted to a near 8-week low. Besides, the stocks from Aviation sector like Kingfisher, SpiceJet and Jet Airways skyrocketed in the session amid reports that foreign airlines might soon be allowed to pick up stakes in Indian carriers. However, investors were seen squaring off hefty positions from the Metal counter while Capital Goods and rate sensitive pockets too bore the brunt of hefty selling pressure.

Moreover, the broader markets traded on a flat note with the small cap index outperforming all its larger peers as it traded with marginal gains. The bourses traded on weak volumes of over Rs 0.5 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1295:1193 while 127 scrips remained unchanged.

The BSE Sensex is currently trading at 17,187.46 down by 56.38 points or 0.33% after trading as high as 17,188.31 and as low as 17,075.89. There were 13 stocks advancing against 17 declines on the index.

The broader indices were trading on a mixed note; the BSE Mid cap index lost 0.20% and Small cap added 0.21%.

On the BSE sectoral space, Healthcare up 0.72%, PSU up 0.15% and IT up 0.05% were the only gainers, while Metal down 1.19%, Capital Goods down 0.74%, Realty down 0.58%, Oil & Gas down 0.57% and Power down 0.47% were the major laggards in the space.

Sun Pharma up 0.61%, NTPC up 0.52%, Coal India up 0.45%, Infosys up 0.44% and ONGC up 0.36% were the major gainers on the Sensex, while Jindal Steel down 2.43%, Sterlite down 2.30%, BHEL down 1.17%, RIL down 1.14% and Tata Steel down 1.14% were the major losers in the index.

Meanwhile, the Petroleum and Natural Gas Regulatory Board (PNGRB) has directed a cut of 64% in the gas tariffs on sale of piped cooking gas to households and CNG to automobiles in the national capital. According to experts, the order will lead to a fall of 10% and 20% in the prices of PNG and CNG respectively. It will also directly impact Indraprastha Gas Ltd (IGL) which is a monopoly supplier in the NCR region.

IGL currently charges a pipeline distribution tariff of Rs. 104.5 per million British thermal units (mBtu) and a compression charge of Rs. 6.66 per kg of gas transported. As per the order, the tariffs have to be reduced to a pipeline distribution tariff of Rs. 38.58 per mBtu and compression charges of Rs. 2.75 per kg. Also, IGL is expected to refund the consumers the excess amount charged since 2008.

The order which is likely to put considerable strain on the finances of the company has been appealed against in the high court. IGL in its defense has stated that it has not been given any opportunity of a personal hearing before passing of the order, despite repeated requests. Hence it has been denied the principle of natural justice. It has also challenged the legality of PNGRB's power to fix rates. However the regulator is of the opinion the decision was based on technical data and that it had been seeking data from IGL for a while now.

IGL is jointly promoted by state-owned GAIL (India) and Bharat Petroleum Corp (BPCL), which together own 45% of the company. GAIL is the biggest gas distributor in India. As per the new tariffs it is expected that IGL could struggle to make even normal gains on the capital it has invested in the business Also the refund could be in excess of Rs 1,000 crore.

Post the order the shares of other gas distribution companies also fell sharply, on fears that a similar directive may be extended to them.

The S&P CNX Nifty is currently trading at 5,222.45, lower by 21.15 points or 0.40% after trading as high as 5,223.00 and as low as 5,190.80. There were 13 stocks advancing against 37 declines on the index.

The top gainers on the Nifty were Ranbaxy up 2%, BPCL up 1.12%, Dr Reddy's up 1.11%, Sun Pharma up 0.92% and Infosys up 0.74%.

ACC down 3.73%, Ambuja Cement down 3.51%, R Infra down 2.90%, JP Associates down 2.87% and Sesa Goa down 2.59% were the major losers on the index.

In the Asian space, Hang Seng plunged 1.10%, Jakarta Composite declined 0.62%, Nikkei 225 sank 0.83%, Straits Times plummeted 1.18%.

On the flipside Shanghai Composite gained 0.13% and Taiwan Weighted up by 0.21% were the only gainers among the Asian pack.

Stock markets in Malaysia remained closed on Wednesday on account of a nationwide holiday for Installation of the Yang Di-Pertuan Agong. The South Korean markets too remained shut on account of Assembly Members Election Day.

The European markets were trading in green as France's CAC 40 gained 0.16%, Germany's DAX advanced 0.79% and Britain's FTSE 100 rose 0.09%.