Realty, power stocks weigh on markets

Tue, 5 Jul 01:30 pm

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Indian stock markets continued to trade in the red over the last two hours. Stocks from the realty, power, and oil & gas are the main losers while those from the auto and software space are trading firm.

The BSE-Sensex is trading down by 88 points while NSE-Nifty is trading 28 points below the dotted line. The BSE Midcap index is down by 0.3% while the BSE Small cap index is up by 1.0%. The rupee is trading at 44.47 to the US dollar.

Energy stocks are currently trading mixed with Castrol India, BPCL and HPCL leading the pack of gainers. However, Cairn India and Reliance Industries are trading weak. As per a leading financial daily, the government is setting stage for the ONGC follow-on-offer (FPO). The government may announce an oil subsidy formula before the corporation files its red herring prospectus (RHP). The expected date for filing RHP is July 11. The lack of clarity on sharing subsidies has been the sticking point for the corporation. In last six to seven years, it has been carried out on an adhoc basis, varying in the range of 28% to 45%. However, investors would wish for a clear subsidy sharing mechanism for the FPO to be subscribed well. Both the Finance and Petroleum ministries have been holding several meetings to work on a formula. As per the industry sources, the formula is likely to depend on crude oil prices. The new mechanism will benefit not just ONGC, but other stakeholders including government, downstream oil companies and consumers. The stock of the company is trading weak.

Engineering stocks are trading mixed as well led by Bharat Earth Movers Ltd (BEML), Voltamp Transformers and Havells India. Bharat Heavy Electricals Ltd (BHEL) and Crompton Greaves are trading in the red. As per a leading financial daily, the shares of BHEL tumbled close to 3% on the bourses post the news that Union Cabinet may approve the disinvestment of a 5% stake in the state-run power equipment major in the coming week. The company's board had approved the proposal to offload 5% of government's stake in the company as a part of the Centre's Rs 400 bn worth disinvestment program. Besides, its plan to float a non banking finance company (NBFC) has been delayed as the board members have asked consultancy firm CRISIL to incorporate some changes before finalizing the contours of the NBFC proposal. The revised report is expected to be reconsidered by the board again in next 1 to 2 months. BHEL's venture to create NBFC was meant to better utilize its cash surplus, especially in terms of financing infrastructure projects.