Barring China (down 0.6%), all the other major Asian stock markets have opened the day on a positive note. Markets in Taiwan (up 1.7%), Korea (up 1.3%) and Indonesia (up 1.3%) are leading the gains in the region. The Indian stock markets have opened the day on a high note as well. Stocks in the realty and capital goods space are the major gainers.
The BSE-Sensex is up by around 253 points (1.4%), while the NSE-Nifty is up by around 83 points (1.1%). Mid cap and small cap stocks are trading in the positive zone as well, with the BSE Mid cap and the BSE Small cap indices up by about 1.5% and 1.3% respectively. The rupee is trading at Rs 48.88 to the US dollar.
Engineering stocks have opened the day on a positive note with Sanghvi Movers, Havells India and Bharat Heavy Electricals (BHEL) leading the gains. As per a leading financial daily, the Tamil Nadu Electricity Board (TNEB) has decided to cancel the Udangudi Power Project (1600 (2x800) mega watt Super Critical Thermal Power Project) in Tamil Nadu that was awarded to BHEL. The project was worth Rs 80 bn and was cancelled on account of a delay for four years. As per the State Government, the project was delayed to Union Environment Ministry not granting permission due to non availability of long term coal linkage for the project and BHEL not showing much cooperation either. As per the Memorandum of Understanding (MoU), TNEB and BHEL were to hold 26 % each in the company while the remaining was to be held by the private partner and a financial institution which were supporting the project. However, no stake was picked by private players till May 11. Now, TNEB has decided to take care of the project on its own. Because of this, the project will get mega power status and will be given tax incentives, thus bringing down the project cost. The coal requirements will be met through imports.
Energy stocks have opened the day on a positive note as well with Oil and Natural Gas Corporation Ltd. (ONGC), Reliance Industries Limited (RIL) and Gujarat State Petroleum Corporation leading the pack of gainers. As per a leading financial daily, state run oil refiners are expected to cut down crude oil imports from Iran as it is facing US sanctions. However, the refineries are citing diversification as the official reason for the move to avoid offending significant oil supplier such as Iran. The shift is now suggested to relatively cheaper new grade of crude oil from Africa and Latin America which can improve gross refining margins for the complex refineries. The sourcing from Iran has already declined significantly from 22 million tonnes in 2008-09 to 13.1 million tonnes in the current fiscal and is expected to see further decline. In India,Mangalore Refineries and Petrochemicals Ltd. (MRPL) is the biggest buyer of Iranian crude but is now eyeing supplies from in Africa and Latin America on a long term basis.