The Indian markets have started today's session on a volatile note. The benchmark indices opened above the breakeven mark but soon fell into the negative territory. However, they are showing signs of an upward move currently. Other key Asian markets are trading in the red with Singapore (down 0.4%) leading the pack of losers. However, Japan was up 0.2%. The US markets closed higher by 0.4% yesterday.
Currently in India, heavyweights from the BSE-Sensex are trading weak with metal and telecom stocks bearing the brunt of selling activity. The BSE-Sensex is trading lower by around 24 points, while the NSE-Nifty is down by about 10 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.3% and 0.4% respectively. The rupee is trading at 46.19 to the US dollar.
Energy stocks have opened the day on a mixed note. Gainers here include HPCL and BPCL. However, Reliance Industries is in the red. As per a leading business daily, the Indian government has sought an additional US$ 2.7 m from Reliance Industries towards royalty. Oil and gas producers pay royalty and profit petroleum, a share in the production, to governments which hold the mineral rights. In this case, the government feels the company did not take into account the marketing margin it charges its customers while calculating the dues to the government from April to September last year on gas produced from the KG basin fields. It may be noted that Reliance Industries charges US$ 0.135 per m British thermal units as marketing cost. In our view, while the present demand for US$ 2.7 m on Reliance Industries may seem trivial given the size of the company, it would result in a meaningful amount over the entire life of the field.
Engineering stocks have opened the day on a mixed note. Gainers here include Siemens and Thermax. However, BHEL is in the red. As per a leading business daily, BHEL has singed a memorandum of understanding to form a 50:50 joint venture (JV) company with Toshiba, Japan. The JV will manufacture equipment for power transmission and distribution in India and abroad. It would include products such as transformers, reactors and switchgears. A new plant is likely to be constructed for the purpose. The technology will be supplied by Toshiba. The formalities for the JV are likely to be completed by June this year. In our view, this is a positive development for the company as it will enhance its ability to further tap into the huge opportunity in the sector in India over the next few years.