The Indian stock market continued to trade in the green on account of buying interest in heavyweights. Stocks from the capital goods, consumer durables, power, and auto sectors are leading the pack of gainers while those from software and FMCG space are trading weak.
The BSE-Sensex is trading up by 81 points while NSE-Nifty is trading 22 points above yesterday's closing. The BSE Mid Cap and BSE Small Cap indices are trading up by 0.9% and 0.6% respectively. The rupee is trading at 49.10 to the US dollar.
Energy stocks have been trading mixed with Petronet LNG, Mangalore Refinery and Petrochemicals Ltd (MRPL) and Cairn India leading the pack of gainers. However, Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Ltd (HPCL) and Essar Oil are trading weak. As per a leading financial daily, ONGC has expressed concerns over its bottomline declining by over 47% to less than Rs 100 bn if government increases the company's share to compensate for the under recoveries of state run oil and marketing companies (on selling fuel products at government controlled prices). Traditionally, the upstream companies led by ONGC bear one third of the losses. However, this year, their share would not be based on the actual under recoveries but on the projected notional under-recoveries that existed before the June fuel price increase and duty cuts. At US$ 110 per barrel of crude price, the projected notional under-recoveries prior to June price hike are estimated at Rs 1,711 bn while at today's prices, they stand at Rs 1,211 bn. The company's burden as per prior estimates comes to Rs 474 bn versus a burden of Rs 335 bn as per current estimates. This will imply a realization of US$ 41.27 per barrel for the company versus a realization of US$ 55 per barrel as expected by the company, thus dragging bottomline below Rs 100 bn. This will have an adverse impact on its Rs 300 bn planned capital expenditure and its plan to provide financial support of Rs 75 bn to its overseas subsidiary.
Engineering stocks have been trading mixed as well with Praj Industries Ltd, Crompton Greaves, Jain Irrigation Systems and Welspun Corporation leading the pack of gainers. However, Cummins India and Honeywell Automation are trading weak. As per a leading financial daily, Bharat Heavy Electrical Ltd (BHEL) has bagged over Rs 40 bn contract for setting up a 1,200 (2x600) MW thermal power plant of Singareni Collieries Company (SCCL)in Andhra Pradesh. The plant will be for SCCL's upcoming super thermal power project at Adilabad. The company has established the capability to deliver 15,000 MW per annum. It is being augmented to 20,000 MW. It has also bagged a Rs 38 bn order from Dainik Bhaskar Power Ltd recently, for setting up a 1,320-MW thermal power plant in Madhya Pradesh. The stock of the company is trading in the green.