Energy weighs down Indian stock markets

Tue, 10 Apr 09:30 am

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Asian stock markets have opened the day on a mixed note. On one hand, markets in Taiwan (up 0.6%), Singapore (up 0.3%) and Japan (up 0.3%) are witnessing buying interest. On the other hand, markets in Hong Kong (down 1.1%) and China (down 0.9%) are facing selling pressure. The Indian stock markets have opened the day on a weak note as well. Stocks in the energy and power sectors are the major losers.

The BSE-Sensex is down by around 21 points (0.7%), while the NSE-Nifty is down by around 8 points (0.2%). Mid and small cap stocks are trading in the negative zone as well, with the BSE Mid cap and BSE Small cap indices down by around 0.7% and 0.1% respectively. The rupee is trading at Rs 51.15 to the US dollar.

Mining stocks have opened the day on a mixed note with Sesa Goa and Coal India Ltd trading in the red while Ashapura Minechem and Metals and Minerals Trading Corporation of India Ltd. (MMTC) trading in the green. Following a presidential directive, the Board of Directors of India's largest coal supplier, Coal India Ltd (CIL), plan to meet next week to pass the fuel supply agreement (FSA). CIL would have to sign the FSA with the power producers at 80% trigger levels. This means that it has to ensure that it honours at least 80% of its supply commitments to the power producers. The presidential directive has asked the Board of Directors of CIL to decide the penalty amount in case of a default. Citing the interest of minority shareholders, the Board has stated that they would try and keep the penalty to a minimum. CIL also plans to sign FSA with power companies that have signed power purchase agreements with the distribution companies for 20 years.

Auto stocks have opened the day in the red with stocks of Hero MotoCorp, Ashok Leyland and Maruti Suzuki leading the pack of losers. The country's largest two wheeler manufacturer, Hero Motocorp is going through major troubles. The workers of two critical component makers that cater to the company's largest plant at Haridwar have been on strike for the past two weeks. However, Hero Motocorp has claimed that these strikes have not impacted their production in any way. The workers at the ancillaries have been demanded wages that are similar to that earned by workers in other states. The strike is currently by the permanent workers which constitute nearly half of the workforce in these companies.