Fresh spell of sell-off by funds, triggered by political worries and rising crude oil prices are weighing on the local bourses. The trading sentiments turned weak due to political worries after a key ally of the government, Dravida Munnetra Kazagham (DMK), decided to withdraw support from the government and its ministers will meet the Prime Minister today and will hand over their resignation letters. On the same time the crude prices surpassed $106 to reach the highest price in 2 and half years as a counter-offensive by Libya's Muammar Gaddafi against rebels intensified concerns that a civil war is brewing in Africa's largest holder of oil reserves. Asian stocks were trading weak as higher oil prices continued to hurt sentiment, while the resignation of Japan's foreign minister added to the gloom in Tokyo.US Future indices too were indicating some weak spells in the screen trade.
Back home, the equity space was completely hammered out of shape, however, stocks from Auto, Realty and Banking counter were battered severely on the BSE Sectoral front and were suffering a cut of over 1% each. None of the sectoral indices was in green, however, one market heavy weight stock--Infosys-- is showing resilience among the 30 share pack--Sensex, while Cairn India is the only stock up on the widely followed 50 share index --Nifty--on NSE. Infosys surged on the report that the BPO unit of the company, expects a nearly 20 per cent growth in revenues in the next fiscal, driven by the banking, financial services and insurance (BFSI) sector. While Cairn India is also showcasing resilience as the government may consider giving approval to the London-listed mining group Vedanta Resources' $9.6 bn acquisition of Cairn India this week.
Both the barometer indices are witnessing immense weakness in the mid morning session and were down by over 209 points(Sensex) and 90 points (Nifty) respectively. The broader indices are too clobbered out of shape with a cut of 1.64% (Midcap Index) and 1.41% (Smallcap Index) respectively. The overall markets breadth on BSE was in the favour of declines which thrashed advances in the ratio of 1559:638, while, 67 shares remained unchanged.
The BSE Sensex is currently trading at 18,195.36, down by 291.09 points or 1.57%. The index has touched a high of 18,361.65 and a low of 18,151.73 respectively. All the stocks were trading in the negative terrain on the index.
The broader indices too were bleeding; the BSE Mid cap and Small cap indices lost 1.64% and 1.41% respectively.
All sectoral indices on the BSE were trading down; Auto down by 2.39 %, Realty down by 2.28%, Bankex down by 1.87%, Metal down by 1.67% and Capital Goods down by 1.63% were the major losers on the index.
Tata Motors down by 3.29%, RCom down by 3.22%, M&M down by 3.15%, Maruti Suzuki down by 2.75%, and Jindal Steel down by 2.62% were the top losers on the index, while Infosys up by 0.02% was the only gainer on the index.
Meanwhile, the government on March 4, 2011 sought Parliament's nod for the sanction of an additional Rs 79,590 crore to meet extra expenses related to fuel and fertilizer subsidies in the current fiscal. Out of the total demand of Rs 79,590 crore, the net cash outgo on meeting the extra expenses in the current fiscal would be Rs 68,918 crore. The remaining amount would be met through savings in other heads of expenses and enhanced recoveries.
Besides fertilizer subsidy of Rs 8,000 crore, the main heads for which there will be net cash outgo are petroleum subsidy of Rs 21,000 crore, food subsidy of Rs 3,972.46 crore, Defense pension of Rs 9,000 crore, short-term loan of Rs 5,000 crore to Food Corporation of India, recapitalization of public sector banks involving an amount of Rs 3,187 crore and central sales tax (CST)/VAT revenue loss compensation to States of Rs 3,354.13 crore.
Earlier, the Union Budget for 2010-11 had originally allocated Rs 49,980.73 crore towards fertilizer subsidy, which was later raised to Rs 54,976.68 crore according to the revised estimates presented by the Finance Minister, Pranab Mukherjee, in his latest Budget. However, in the third batch of supplementary demand for grants tabled by S.S.Palanimanickam, Minister of State for Finance, in the Lok Sabha on Friday, the industry has been provided another Rs 8,000 crore - that would take the total fertilizer subsidy bill for this fiscal to almost Rs 63,000 crore. The entire amount of Rs 8000 crore would go to phosphatic, potassic and complex fertilizer firms. Out of which, Rs 4,350 crore is proposed to go towards reimbursing the importers of decontrolled fertilizers, the remaining Rs 3,650 crore would be provided to the indigenous producers. The latest allocation for fertilizer subsidy will ensure that there are no pending dues to be rolled over to the next fiscal.
The S&P CNX Nifty is currently trading at 5,447.80, down by 90.95 points or 1.64%.The index has touched a high of 5,491.25 and a low of 5,436.10 respectively. There was just 1 stock advancing against 49 declines on the index.
The only gainer of the Nifty was Cairn India up by 0.90%.
The top losers of the index were Tata Motors down by 3.76%, Sun Pharmaceuticals down by 3.65%, Reliance Communication down by 3.22%, M&M down by 3.19 % and Axis Bank down by 3.12%.
State-run Oil and Natural Gas Corp (ONGC) will lose the coveted Navaratna status and the accompanying financial autonomy ahead of its Rs 11,500 crore share sale scheduled next month as the government plans to withdraw both of its directors on the ONGC board to meet the capital market regulator SEBI's listing norm of having equal number of functional and independent directors.
According to the norms, a Navaratna board can exercise its limitless powers only when it has government-nominated directors on board. Upon withdrawal of such directors, ONGC will have to seek nod of the Public Investment Board (PIB) for any spending of over Rs 100 crore as only companies with Navaratna status can invest up to Rs 1000 crore or 15% of their net worth on a single project without seeking government approval. In a year, these companies can spend up to 30% of their net worth not exceeding Rs. 1000 crore and also have the freedom to enter joint ventures, form alliances and float subsidiaries abroad.
ONGC has six functional directors, besides the chairman. It also has two government-appointed nominee directors, taking the total strength of functional/promoter directors to nine. Against this, it has four independent directors and needs in total five to meet the SEBI's listing norm.
Asian markets were trading mostly in the red; Shanghai Composite was up by 1.59%, Jakarta Composite rose 0.27% and Straits Times was tad up by 0.09%.
On the flip side, Hang Seng shed 0.15%, KLSE Composite declined 0.58%, Nikkei 225 gave up 2.05%, Seoul Composite reduced 1.03% and Taiwan Weighted slid 0.72%.
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