Markets erase early gains

Mon, 18 Apr 01:30 pm

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The benchmark indices in the Indian stock market failed to hold on to early gains due to profit booking and are now trading in the red. Stocks from information technology and realty space are trading weak, while those from consumer durables and auto space are trading firm.

The BSE-Sensex is down by 218 points while NSE-Nifty is trading 66 points below the dotted line. BSE Midcap index is down by 0.6%, while BSE Small cap index is trading flat. The rupee is trading at 44.28 to the US dollar.

Energy stocks are trading mixed with MRPL, Petronet LNG and ONGC are leading the pack of gainers. The stocks of Gujarat State Petronet and BPCL are trading in the red. As per a leading financial daily, the domestic natural gas supply have faced another setback as the gas output from Panna- Mukta and Tapti (PMT) fields has declined by around 30%.The current gas supplies from PMT fields now stand at 50% of the original supply levels at start of 2008. The PMT field is jointly owned by BG Group and RIL with 30% stake each and ONGC with 40% stake. Recently, a fall was reported in Reliance’s production from D-6 field . A further decline will put constrain supplies even more. The news is negative for companies like GAIL which have planned major pipeline capex for gas transmission and Gujarat Gas which is a major consumer of gas from PMT fields. The stock of GAIL is trading in the red.

Most of the PSU banks stocks are trading in the red with UCO Bank and Indian Overseas Bank leading the pack of losers. However, Indian Bank and Canara Bank are trading firm. As per a leading financial daily, the State Bank of India (SBI) may increase its base rate by 25 basis points. It is important to note that the hike in base rate comes before RBI’s annual policy review scheduled for May 3. SBI’s base rate currently stands at 8.25%. This is also the benchmark rate for all loans and is the lowest among most of the banks that have set base rates at 9.5%. The reasons cited for revising the base rate are an overall increase in the costs of funds and to protect the net interest margins (NIMs). The final decision will be taken in asset-liability committee meeting this month. While the banks had resisted a rate hike since RBI’s policy rate hike of 25 bps in mid-March, at the current inflation rate close to 9%, more hikes in policy rates are expected. The stock of SBI was down by 0.6%.