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Indian Indices Open in Deep Red
Thu, 7 Jan 09:30 am

Major Asian stock markets have opened the day on a dismal note. Trading in China is halted after the index tanked more than 7%, triggering a circuit breaker. Other Asian Markets have also taken a beating. Stock markets in Hong Kong and Japan are trading down by 2.4% and 2% respectively. Stock indices in Europe and US too ended their previous session on a negative note. The rupee is trading at 66.71 per US$.

Indian stock markets too have opened the day on negative note owing to weak global cues. The BSE Sensex is trading lower by 329 points (down 1.3%) and NSE Nifty is trading lower by 100 points (down 1.3%). Both BSE Mid Cap and BSE Small Cap are trading lower by 1.2% and 1.5% respectively. Sectoral indices have opened the day on a negative note with stocks from automobile,metal and banking sector witnessing maximum selling pressure.

As per an article in leading financial daily, government would prepone the implementation of Bharat Stage-VI emission standards by a year to April 2020. The decision comes a day after Supreme Court refused to lift the ban on diesel vehicles above 2,000cc capacity. Currently, India is implementing BS-IV emission standard. Government has decided to skip the BS-V emission standard and move on directly to the BS-VI. Upgradation to BS-VI will lead to reduction of particulate matter by 80% in addition to reduction of nitrogen oxide level by 83%.This will help significantly to reduce the pollution levels.

Reportedly, adoption of new emission standard will also lead to increases in the prices of vehicles. An estimated increase of Rs 1 lakh for diesel vehicles and Rs 20,000 for petrol vehicles is expected with the switch to BS-VI standard. Appropriate modifications in the engine will have to be carried out by the automobile companies to make them suitable for the BS-VI emission standard. Auto firms, part makers and oil refiners will have to spend anything between Rs 700 to Rs 900 billion in order to be compliant with the BS-VI standard.

Auto majors have raised apprehensions regarding this government order and stated that it would neither be technically possible nor advisable to skip BS-V or advance the onset of BS-VI, before the earlier schedule of 2023.

As per an article in leading financial daily, iron-ore prices rebounded 13% to US$ 43.11 per tonne as compared to US$ 38.3 per tonne on 11 December 2015. The iron-ore prices had depreciated to seven year lows in December 2015. However, prices surged upwards on account of bargain hunting by traders and small steel mills.

Iron-ore producers have cut output globally. However, impact of the same is yet to be witnessed in the prices. Further, iron-ore producers are sitting on a huge pile of stock. States like Odisha and Jharkhand are sitting on an inventory of 128 million tonnes of iron-ore stock.

It is likely that huge piles of stocks coupled with subdued demand from steel manufacturers will not allow iron prices to move up for long.

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Feb 16, 2018 (Close)