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Indian Indices Slip into the Red
Tue, 3 May 01:30 pm

After opening the day on a positive note, the Indian indices registered losses and went on to trade in the red. Sectoral indices are trading on a mixed note with stocks from the FMCG and information technology sectors bearing the maximum brunt. Telecom stocks are trading on a positive note.

The BSE Sensex is trading lower by 152 (down 0.6%) and the NSE Nifty is trading down by 18 points (down 0.2%). The BSE Mid Cap index is trading down by 0.5% while the BSE Small Cap index is trading up by 0.3%. Gold prices, per 10 grams, are trading at Rs 30,365 levels. Silver price, per kilogram, is trading at Rs 41,270 levels. Crude oil is trading at Rs 3,003 per barrel. The rupee is trading at 66.25 to the US$.

Stocks in the energy space are trading on a mixed note with Gujarat Gas and Gulf Oil Lubricants leading the gains. As per an article in Economic Times, that the revision in LNG agreement with Qatar has helped bring down cost of importing natural gas to less than US$ 5 per mmBtu (million British thermal unit). This is against the cost of importing of US$ 12 per mmBtu earlier.

Oil minister Dharmendra Pradhan said that India is currently paying less than US$ 5 per mmBtu for 7.5 million tonnes a year of LNG it buys from RasGas of Qatar.

One shall note that India got Qatar to agree to slashing gas price by half to match a slump in global energy rates in December last year. Petronet LNG renegotiated a major deal with its Qatar-based supplier Rasgas in December. The deal was regarding lowering in the costs of gas shipments and avoidance in a US$ 1.5 billion penalty fee for lifting less gas then agreed. On December 30, the contract was reworked which lowered the price of the imported fuel by 50%. The development has helped India save billions of dollars.

The major impact of cheap LNG can be on the fertilizer industry. The decrease in RasGas LNG prices would lead to decrease in subsidy receivables (subscription required) and working capital requirements of these companies. Further, it will lead to a decrease in interest cost due to lower working capital intensity in case of delays in subsidy payments. This can in turn aid their net profitability. The benefit is also said to pass on to gas transmission and marketing companies. With lower prices coming in play, they would boost demand from power and fertiliser units that had avoided taking supplies from Petronet LNG due to higher prices.

To keep a regular tab on the movements in natural gas prices and other commodities, you can read weekly market commentary from the Daily Profit Hunter team. Their weekly commentary tracks the developments in the global economy as well as equity, currency and commodity markets.

Stocks in the automobile space are trading on a mixed note with Tata Motors leading the gains and Force Motors leading the losses.

In another news update it was reported that Tata Motors reported 9.9% YoY growth in sales during the month of April.

Domestic sales of commercial and passenger vehicles rose 11% YoY at 35,978 units during the month. Sales of passenger vehicles in the domestic market last month stood at 11,161 units, up 7.9% YoY. Sales in the passenger car segment grew 5.9% YoY at 9,451 units in April. Exports during the month were flat at 3,785 units compared with April 2015.

In the commercial vehicles segment, the company's domestic sales stood up by 13.3% YoY during the month.

One shall note that FY16 turned out to be a disappointing year for the Indian auto industry. The only segment that managed to grow in double digits was commercial vehicles (CVs). But this was largely led by medium & heavy CVs.

Tata Motors is India's largest automobile company. Presently the stock of the company is trading up by 1.7%.

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Mar 16, 2018 (Close)