The Indian markets have started today's session on a negative note. The benchmark indices opened at the breakeven mark but soon slipped into the red. They have not managed to pare their losses since then. Other key Asian markets are in the red with Japan (down 0.8%) leading the pack of losers. The US markets remained closed yesterday.
Currently in India, heavyweights from the BSE-Sensex are trading weak with metal and banking majors facing the brunt of selling activity. The BSE-Sensex is trading lower by around 68 points, while the NSE-Nifty is down by about 23 points. However, buying interest is being witnessed among mid and small cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 0.2% and 0.3% each. The rupee is trading at 46.47 to the US dollar.
Steel stocks have opened the day on a negative note. Losers here include Sesa Goa and NMDC. As per a leading business daily, Posco will invest Rs 35 bn in a 0.5 m tonne special steel facility in a JV with SAIL near the latter's plant at Bokaro, Jharkhand. This will be the second plant for the JV after the 3 m tonne integrated steel plant with an investment of about Rs 150 bn. The second plant will make cold rolled grain-oriented (CRGO) electrical steel sheet, used for making boilers of power plants and other electrical motors, transformers and generators. This grade of steel is not manufactured in India and is imported by power equipment makers from US, Japan, China and Germany. Globally, only 7 to 8 steel companies, including Posco, have the technology to produce CRGO. The JV will also set up a 0.3 m tonne cold rolled non-oriented (CRNO) steel plant in Maharashtra. Posco may hold 51% stake in the JV. It may be noted that it make sense for the South Korean steel giant to team up with SAIL as its proposed project in Orissa is repeatedly getting delayed over land acquisition and iron ore mining lease related issues.
Energy stocks have opened the day on a positive note. Gainers here include Castrol and Gujarat gas. ONGC announced its FY10 results. The company reported a standalone topline decline of 4% YoY during FY10 on account of lower volumes, despite higher net realisations per barrel of crude oil. Its subsidy burden during FY10 was Rs 116 bn as compared to Rs 282 bn in FY09. The gross realisation from crude oil was US$ 72 per barrel during the year, as compared to US$ 86 per barrel during FY09. However, subsidy per barrel fell during FY10 to US$ 16 per barrel from US$ 38 per barrel during last year. Its operating margin expanded to 61% during the year from 49% in FY09 as trading of MRPL products have been discontinued. Other income declined by 47% during the year. The company's standalone bottomline registered a growth of 4% YoY during FY10 on account of higher operating margins, despite higher depreciation and tax outgo.