Indian equity markets continue to trade weak over the last two hours of trade on back of heavy selling activity witnessed across industry heavyweights. Auto and Oil and gas stocks witnessed maximum selling pressure.
Energy stocks are trading weak led by Cairn India and GAIL India. According to a leading financial daily, Bharat Petroleum Corporation Ltd. (BPCL) is planning to form a joint venture with UK-based LP Chemicals for petrochemical business. The joint venture will invest about Rs 50 bn in the project and have a 70:30 debt equity ratio. BPCL will hold 49% in the venture, while the British company will be holding a majority 51%. LP Chemicals, headquartered in Winsford off Cheshire, manufactures and distributes laboratory chemicals and veterinary chemicals to customer specification. BPCL plans to spend Rs 400 bn in the next five years to set up a petrochemical plant at the Kochi refinery to produce niche products, expand the capacity of existing refineries, gas marketing and exploration and production.
Food stocks are trading weak led by Sterling Biotech and Wadala Commodities. As per a leading daily, ITC is planning to increase prices of some of its food products. This is a step by the FMCG company towards protecting its profit margins from continuous fall in rupee. We may note here that rupee has fallen 19% against the dollar in the past year. Although prices of edible oil imported from Indonesia and Malaysia which is used for making cookies, instant noodles and pasta have dropped by 11%, ITC could not benefit because of rupee depreciation.