Buying activity in index heavyweights helped the benchmark indices re-enter positive territory after a dip into the negative during previous two hours of trade. Buying interest is being seen in stocks from telecom and IT sectors. However, stocks from metal and energy sectors have failed to elicit sufficient investor interest and are seeing declines currently.
The BSE Sensex is currently trading higher by around 10 points while the NSE Nifty is trading flat. Stocks from the midcap and smallcap space are trading in the positive with the BSE MidCap and the BSE SmallCap indices trading higher by 0.3% and 0.7% respectively.
As per a leading business daily, engineering major L&T and French-German aerospace major EADS are discussing a revised proposal with a new joint venture structure in which the European defence giant would hold 26%. This JV would be for the supply of electronic warfare systems, avionics and radars. This new JV proposal comes on the back of the Foreign Investment Promotion Board (FIPB) rejecting the earlier proposed defence tie-up between L&T and EADS last week. The rejection from FIPB came because the earlier proposal was not adhering to the 26% upper limit prescribed for foreign direct investment in companies in the defence sector.
As per reports, India has a five-year military procurement budget of US$ 30 bn to replace its old defence equipment. L&T is keen to get a pie of this huge defence spending by the Indian government. If this restructured JV with EADS is accepted by the FIPB, it will help L&T go one step further in achieving its goal. The stock of L&T is trading marginally higher on the bourses currently.
As per reports, ONGC’s overseas subsidiary, ONGC Videsh, is in discussions to set up a greenfield refinery in Nigeria. The company’s intention is to aggressively participate in upcoming exploration and production opportunities in Africa. It will also explore opportunities for sourcing liquefied natural gas (LNG) and picking up equity stakes in existing and upcoming liquefied natural gas terminals in Africa. As per the company, established oil fields the world over are ageing and it is an uphill task to prevent huge erosion in production levels. As such, the company believes the world will face supply problems in the future. It does not expect crude oil prices to go below US$ 50 per barrel again. In fact, it believes that the marginal cost of production from such sources as the Canadian tar sands and ultra deep water fields will determine oil prices, which will be at least US$ 70 to US$ 80 per barrel. With this in mind, the above move is in line with ONGC’s strategy of acquiring overseas assets through ONGC Videsh (OVL). The stock of ONGC is trading flat currently.