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Stock markets down before RBI policy
Thu, 16 Jun 09:30 am

Asian stock markets have opened the day in the red. Stock markets in South Korea (down 1.7%), Indonesia (down 1%), Hong Kong (down 1.5%), China (down 0.7%) and Japan (down 0.8%) are trading in the red. The Indian stock markets have opened the day on a weak note. Stocks in the realty and banking space are leading the losses. However, FMCG is trading marginally in the green.

The BSE-Sensex is trading down by 85 points (0.5%) and the NSE-Nifty is down by around 28 points (0.5%). Midcap and small cap stocks are trading in the red as well, with the BSE Midcap and BSE Small cap indices down by 0.5% and 0.2% respectively. The rupee is trading at 44.81 to the US dollar.

Oil & Gas stocks have opened the day on a firm note with ONGC and Reliance Industries trading in the red. The petroleum ministry is in the process to clear the Reliance Industries (RIL)-BP deal. It may take 6 to 8 weeks for the clearance. If cleared, BP will hold a 30% stake in RIL's oil and gas assets in India. This includes the finds in the Krishna-Godavari basin as well. The officials said that the approval will be given after a compliance check is done after studying the fine prints of the contract. It will also suggest the contract changes wherever required for the 23 oil blocks to bring BP as a partner. The security clearance from the Union home ministry is in place. A no-objection certificate (NOC) is also issued. This deal of RIL-BP is worth US $7.2 bn.

Finance stocks have opened the day on a weak note with IDFC and Sundaram finance trading in the red. Shriram Transport Finance, one of India's largest non-banking finance companies, is planning to raise Rs 5 bn through debentures. There will be a greenshoe option of Rs 5 bn. This means that if the investor demand is strong, then additional debentures will be raised. The tenure of the bond is expected to be about 3-5 years. The company will decide the coupon rate after Reserve Bank of India's (RBI) quarterly policy review meeting, which is scheduled to be held today. However, according to some company officials, the coupon rate is expected to be in the range of 11% to 12%. The company is awaiting certain regulatory approvals for the issue. This issue which is expected to be launched by the end of June, 2011 will mostly target retail investors with 80% reserved for this segment.

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