The Indian stock market indices are trading deep in the red currently led by losses in oil & gas stocks. All sector indices except metals are trading below the dotted line. Stocks from oil & gas and technology lead the pack of losers.
The BSE-Sensex is down by 220 points while NSE-Nifty is trading 55 points below yesterday’s closing. The BSE Midcap and BSE Small cap indices are down by around 0.4% and 0.5% respectively. The rupee is trading at 45.10 to the US dollar.
Engineering stocks are trading mixed with Kalpataru Power and AIA Engineering leading the gains. However, Areva T&D and BHEL are trading weak. Havells India is planning to refinance loans worth US$147 m (Rs 6.6 bn) at its Sylvania unit in 2012. Upon refinancing the interest rate is expected to decline by 50% from the current levels of 9%. Refinancing will be through a mix of internal accruals and low cost debt. However, the exact mix has not been decided as yet. It may be noted that Havells bought Germany’s Sylvania in 2007 for US$ 320 m (Rs 14.4 bn) and the loss making unit has been turned around through aggressive restructuring plans. Right now, Sylvania contributes about half of the Havells’ total revenue. In order to further leverage on its premium Sylvania brand, the company is planning to spend Rs 1.2 bn to double its compact fluorescent lamps (CFL) capacity in the next two years.
Energy stocks are trading weak led by a 3.7% decline in the petroleum major Reliance Industries. The weakness in Reliance is because in its reply to the regulator it seems to have said that gas production from the KG Basin block could be lower than estimated. According to provisional budgetary allocations, gas sales from the D1 and D3 fields can be as low as 38 MMSCMD for FY13. This is lower than the current rate of sales from these fields which has dropped to around 43-44 MMSCMD. Reliance replied to the regulator saying that production of natural gas and crude oil could drop even further, unless radical changes can be implemented on the block.
Recently British Petroleum agreed to pay USD 7.2 bn for a 30% stake in 23 out of Reliance’s 30 oil and gas blocks including the gigantic eastern offshore KG-D6 fields. The deal was a big positive for Reliance because British Petroleum is expected to bring technical expertise to ramp up gas production in KG Basin.