The Indian markets have started today's session on a weak note. The benchmark indices opened way below the breakeven mark and have not managed to stem the losses since then. Other key Asian markets are trading in the negative with Japan (down 2.7%) leading the pack of losers. The US markets also closed 2% lower yesterday.
Currently in India, heavyweights from the BSE-Sensex are trading in the red with banking and metal stocks facing the brunt of selling activity. The BSE-Sensex is trading lower by around 257 points, while the NSE-Nifty is down by about 92 points. Selling interest is also being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading lower by 2.1% and 2.6% respectively. The rupee is trading at 46.25 to the US dollar.
Energy stocks have opened the day on a weak note. Losers here include Petronet LNG and MRPL. Oil and gas exploration and production major ONGC announced results yesterday. The company's standalone topline grew by 23% YoY during 3QFY10 on account of higher gross realisations and lower subsidy burden per barrel of crude oil. Subsidy declined from US$ 25 per barrel in 3QFY09 to US$ 19 per barrel this quarter. Operating margin increased to 60% during the quarter from 41% in 3QFY09 as trading of MRPL products have been discontinued. However, other income turned negative during the quarter. The standalone bottomline registered a growth of 23% YoY during 3QFY10 on account of higher operating margins, despite higher depreciation and tax outgo.
Software stocks have opened the day on a weak note. Losers here include Mahindra Satyam and NIIT. As per a leading business daily, Mahindra Satyam has requested the Commerce Ministry for more time to develop the three IT Special Economic Zones (SEZs) in Andhra Pradesh. In fact, 10 other applicants have also sought extension for the SEZs. It may be noted that recently companies had also sought extensions for SEZs in Gujarat. SEZs had caught the fancy of large corporate primarily because of the tax exemptions - 100% for the first five years and 50% for the next five. However they entail massive capital expenditure which becomes a struggle when companies hit a rough patch. In our view, the request for extensions is a clear indication that companies have become much more cautious about their expansion plans after the slowdown.