Indian equity markets have been trading in the negative during the last two hours of trade on back of selling across sectors. Auto and power stocks were the top losers while energy and FMCG stocks managed some gains.
The BSE-Sensex is down by 41 points and NSE-Nifty is down by 15 points. However, BSE Mid Cap and BSE Small Cap indices are trading higher by 0.2% and 0.3% respectively. The rupee is trading at 55.44 to the US dollar.
Steel stocks are trading in the red, led by Steel Authority of India (SAIL) and Tata Steel. According to a leading financial daily, SAIL has decided to outsource the development of two huge virgin iron ore mines at Rowghat in Chhatisgarh and Chiria in Jharkhand. The company has decided to develop these two mines through mine developer-cum-operators. The two mines are crucial for SAIL's expansion plans. Rowghat will have a capacity of 14 million tonne per annum (mtpa) and Chiria will have 15 mtpa. It would cost Rs 10-12 bn each for developing Rowghat and Chiria mines. If this method is successful, SAIL's investment for mine development would be reduced by around Rs 25 bn. The company would have long-term contracts with those who would develop and operate the mines. They would make the investment and charge SAIL on per tonne basis.
Energy stocks are trading strong led by Indraprastha Gas and Petronet LNG. As per a leading daily, PSU oil companies are seeking an immediate hike in petrol prices. As per the public sector oil firms, their losses have widened to Rs 3.56 per litre. We may note here that a hike in petrol prices was last implemented on July 24 when prices of petrol were raised by Rs 0.7 per litre. However, since then the global oil rates have escalated quite a bit. But presently, inflation is the main issue on the government's mind. It is highly unlikely that petrol prices will be raised any time soon. Earlier, petrol was deregulated from government control in June 2010 but prices have seldom moved in tandem with the cost.