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Sensex closes 1.8% down for the week
Fri, 20 Jun Closing

With fears of rise in crude oil prices and deficient monsoons, the Indian benchmark indices dragged lower today and closed on a pessimistic note. While the stocks of ratings agencies gathered momentum, pharma and auto stocks lost steam today. Both the BSE Mid Cap and the BSE Small Cap indices underperformed and were down by 0.4% and 0.7% respectively. The BSE Sensex closed lower by 96 points. The NSE-Nifty too was seen down by 29 points.

On the global front, most of the Asian indices have closed the day on a weak note. Whereas, the European indices have opened on a mixed note. The rupee was trading at Rs 60.19 to the dollar at the time of writing.

Barring CRISIL Ltd, both rating agencies ICRA Ltd and Care Ratings have closed the day on an optimistic note. According to a leading daily, the stock of rating agency ICRA Limited has witnessed upbeat momentum today and touched life-time highs on account of its promoter company, Moody's increasing its equity stake in the company to over 50%. The promoters had held 28.51% stake in the company. But in February 2014, they made an open offer and collectively increased their share in ICRA Ltd. This comes as a big positive for the company as the benefits derived from the parent company's support could help scale up the businesses of ICRA. Moreover, the company has to cope up with certain near-term challenges such as intense competition from other rating agencies, reputation related risks, ability to retain and attract quality manpower, increasing share of small-ticket business and adverse change in regulations.

Energy sector stocks have closed the day on a mixed note. While IOC and BPCL were reportedly the biggest losers, Petronet LNG and Castrol India have closed the day on a firm note.

As per a leading daily, a Goldman Sachs report states that India's energy imports bill is expected to spike to US$ 230 bn by FY23 from the current US$ 120 bn. The higher energy consumption would be driven by economic growth, greater industrialization and urbanization. But India is experiencing energy deficit as the country does not produce enough to meet its needs. India has a fifth of world population, but has mere a 30th of its energy. The report suggests that switching from oil to natural gas and improving conservation can reduce the energy imports of the country considerably. It is said that revival of reforms in the energy sector can reduce India's import bill by US$ 40 bn by FY23. And this in turn can help containing the current account deficit of the country. This will help stabilize rupee over the medium term. The report has also stated the energy conservation measures such as reducing transmission and distribution losses, using more energy efficient appliances and stricter emission standards for vehicles.

Is the energy deficit one of the biggest threats to the Indian economy? Share your views on Equitymaster Club

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Feb 22, 2018 03:37 PM