Commodities drag indices lower

Tue, 28 Aug Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Weighed by selling pressure on heavyweights from metal, auto and engineering sectors, the key indices in Indian equity markets ended the session below the dotted line today. In what was even otherwise a muted session, post noon profit booking gathered momentum after reports of deadlock in the Parliament and the CAG pulling up Oil and Natural Gas Corporation Ltd. (ONGC) unnerved investors. While the BSE-Sensex today closed lower by 47 points, the NSE-Nifty today closed lower by 16 points. Both the BSE Mid Cap and the BSE Small Cap indices closed more than 1% lower. Gains were, however, seen in select IT and FMCG stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened lower. The rupee was trading at Rs 55.74 to the dollar at the time of writing.

As per a business daily, the Comptroller and Auditor General (CAG) has slammed state-owned Oil & Natural Gas Corporation (ONGC) for not placing desired emphasis on discovering oil and gas. Also the PSU has been behind the schedule in monetizing its discoveries. CAG's report on Hydrocarbon Exploration Efforts of ONGC, which was tabled in Parliament today, underscored concern at the company's lack of adequate efforts, besides highlighting its anomalies in MoU target setting and reporting as well as performance measurement.

Blaming ONGC for being tardy in purchase of seismic survey vessel, CAG reported that less than 50% of the basins were only able to meet survey targets. Further, CAG mandated the company to introduce transparency and competitive tension in the process of hiring consultants/expert. Moreover, it recommended the company to a review of Reserve Replacement Ratio (RRR) as a performance parameter for ensuring performance in exploration efforts. The stock closed 2% lower today.

Meanwhile the PSU banks do not seem to be relenting to the government's demands to lower lending rates. At the same time there is a growing mismatch in loan and deposit growth rates. According to the Reserve Bank of India's (RBI) data, deposit growth, which was 14.3%, was way below the central bank's projection of 16% for FY12. However, the country's second-largest PSU bank, Punjab National Bank (PNB), has stated its unwillingness to prune its retail lending rates further until the cost of funds come down. Most PSU banks have seen pressure on net interest margins (NIMs) in the June quarter.