Asian equity markets have opened the day on a mixed note with stock markets in Japan (down 1%), China (down 0.4%) and Singapore (down 0.4%) leading the losses in the region. However, markets in Hong Kong (up 0.2%) and Indonesia (up 0.1%) are trading firm. and The Indian equity market indices have opened the day on a weak note. Stocks in the banking, oil & gas and realty space are leading the pack of losers. However, FMCG stocks are trading firm.
The Sensex today is down by around 21 points (0.1%), while the NSE-Nifty is down by around 10 points (0.2%). However, while BSE Mid Cap index is trading flat, the BSE Small Cap index is up by around 0.1%. The rupee is trading at Rs 55.15 to the US dollar.
Finance stocks have opened the day on a weak note with Shriram Transport Finance, Bajaj Finance and Srei Infrastructure Finance leading the pack of losers. On account of the slowdown in the Indian economy, non-banking finance companies like Shriram Transport Finance and L&T Finance are reducing their advances to infrastructure and commercial vehicle segments. This is on account of the decline in the sales of heavy trucks and concerns over rising non-performing assets (NPAs). Shriram Transport Finance has reduced its loan-to-value (LTV) ratio to 60-65% from 70-75% in the last one year. It must be noted that at the end of March 2012, the company gross NPAs stood at 3%. In a bid to beat the slowdown blues, the truck financier has planned to expand its network to another 400 villages. It is expecting a growth of 10-15% in the current financial year 2012-13. This is significantly lower than the 30-35% growth over the last few years.
Oil & gas stocks have also opened the day on a weak note with Castrol and Reliance Industries trading in the red. Mukesh Ambani-led Reliance Industries has sold off its 80% stake in two exploration blocks in the Kurdistan region of Iraq to Chevron Corporation. As per the statement released by the company, the transaction for divestment of its 80% working interest and operationship in the production sharing contracts (PSCs) for the Rovi and Sarta Blocks in the Kurdistan region to subsidiaries of Chevron was completed. This was done by Reliance Exploration and Production DMCC, a wholly-owned subsidiary of the Indian conglomerate. It is said that the exit from the blocks was part of the company's rationalisation of its international portfolio. Though Reliance has not revealed the value of the deal, some agency reports estimate the value to be around US$ 200 m. Earlier, Chevron held 5% stake in Reliance's second refinery at Jamnagar. However, instead of exercising the option of to raise its stake further, the US company sold the stake back to Reliance. The reason cited was that it was keener to invest in exploration rather than refining.