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Sensex Opens Flat; Oil & gas Stocks Lead
Wed, 5 Jul 09:30 am

Asian stock markets are mixed today. The Shanghai Composite is up 0.28%, while the Hang Seng is up 0.24%. The Nikkei 225 is trading is lower by 0.52%. European stocks fell marginally on Tuesday amid geopolitical tensions.

Meanwhile, Indian share markets have opened the day on a flat note. The BSE Sensex is trading higher by 12 points and the NSE Nifty is trading higher by 3 points. S&P BSE Mid Cap and S&P BSE Small Cap are trading up by 0.1% and 0.2% respectively.

Sectoral indices opened the day on a mixed note with energy stocks and power stocks leading the gains. While FMCG stocks and information technology stocks opened the day in the red. The rupee is trading at 64.82 against the US$.

Cement stocks opened the day on a mixed note with India Cements and JK Lakshmi Cement leading the losses. As per an article in a leading financial daily, Ultratech Cement has reduced prices of its products by 2-3%, extending the benefits of tax reduction under the GST regime.

The company has started supply of batches on new rates from 1 July from its warehouses, when the new tax structure came into force.

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Cement has been taxed at 28% under the GST as compared to 30% to 31% in the previous system of taxation.

Last month, ahead of GST implementation cement offtake by dealers had slowed down due to speculation over tax rates. There will be somewhere 2% to 3% reduction in cement prices because of reduction in tax rates due to GST.

Speaking of cement sector in India, the cement sector was always in a need of revival considering its important role in India's growth story. The logical route seemed to be consolidation.

Consolidation is expected to increase the pricing power of the top producers and lead to better margins. There's been one downside though. All this consolidation has weakened the balance sheet of these top cement companies.

Cement Companies Increasing Leverage

However, once the synergy benefits kick in, debt levels are expected to reduce from FY19. This will provide respite to cement producers who have been engaged in price wars with small players for a long time.

Ultratech Cement share price opened the day up by 0.7%.

Moving on to the news from stocks in oil & gas sector. As per an article in a leading financial daily, Indian Oil Corporation (IOC) issued its first ever tender to buy high-sulphur, or sour, crude from North America as it seeks to diversify imports.

The purchase comes after Indian Prime Minister Narendra Modi's visit to the United States last week when President Donald Trump said the US looked forward to exporting more energy products to the world's third-biggest oil buyer.

It is part of Trump's policy to assert power globally by boosting natural gas, coal and petroleum exports.

IOC has issued a tender to buy up to 2 million barrels of sour crude from North America and Canada to meet its growing demand.

India joins China and Japan in casting their nets further to North America to source for competitively priced sour crude after heavy oil production in the Middle East and Latin America fell on OPEC-led output cuts and lack of investments.

IOC is seeking to buy the crude grades, Mars, Southern Green Canyon and Thunderhorse from the US and Western Canadian Select from Canada in the tender.

IOC share price began the trading day up by 0.7% on the BSE.

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Jul 26, 2017 (Close)

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