The Indian markets opened above the breakeven mark, in line with positive cues from the Asian markets. However, there have been signs of a negative movement towards the dotted line since then. Asia is currently trading in the green with South Korea (up 1.5%) leading the pack of gainers. The US markets closed 1.2% higher yesterday.
Currently, in India, heavyweights from the BSE-Sensex are trading a mixed bag with banking and auto stocks leading the pack of gainers. Select power and software majors are in the red. The BSE-Sensex is trading higher by 50 points, while the NSE-Nifty is up by 20 points. Buying interest is also being witnessed among mid and small-cap stocks as the BSE-Midcap and BSE-Smallcap indices are trading higher by 1.0% each. The rupee is trading at 46.16 to the US dollar.
Steel stocks have opened the day on a positive note. Gainers here include JSW Steel, Tata Steel and SAIL. As per a leading business daily, India's largest steel producer SAIL plans to reduce prices of flat steel products sold in the spot market by up to 3% or Rs 800 per tonne. Other steel makers such as Ispat Industries, Essar and JSW are likely to do the same soon. However, Tata Steel has no such plans. Flat products are used in auto and consumer durables. Currently, flat steel products are selling for around Rs 32,000 per tonne in India. In our view, this move is due to the lower steel prices prevailing in the international markets. At a time when global prices have dropped to US$ 450 to US$ 500 per tonne, higher domestic prices give rise to the threat of low-priced imports.
Energy stocks have opened the day on a mixed note. Gainers here include Indraprastha Gas and HPCL. However, ONGC is trading in the red. As per a leading business daily, the recent trip to India by top officials from Iranís oil ministry is paying off. ONGC has signed agreements to develop the Farsi gas field, explore the South Pars gas field and build an LNG plant in Iran. ONGCís overseas arm OVL along with Indian Oil and Oil India will invest US$ 5.5 bn in developing the Farsi gas field which they had discovered two years ago. OVL and the Hinduja group will get a 40% stake in the US$ 7.5 bn phase 12 of the South Pars (SP -12) gas field. Both of them along with Petronet LNG will also get a 20% stake in the project to convert gas from the SP-12 into LNG. India will get 60% of the LNG so produced. While these are positive developments for the respective companies and the India oil & gas sector, the key issue will be smooth diplomatic ties between India and Iran.