Indian indices continued to languish in the red on profit booking in heavy weights during the last two hours of trade. Stocks from the metals and banking space are trading weak, while stocks from the oil & gas space are trading firm.
The BSE-Sensex is down by 182 points while NSE-Nifty is trading 54 points below the dotted line. BSE-Midcap is trading down by 0.8% while BSE-Smallcap index is trading 1% below yesterday's closing. The rupee is trading at 45.10 to the US dollar.
Energy stocks are trading mixed with HPCL and IOC trading in the green, while Gujarat Gas and Cairn India are trading in the red. As per a leading financial daily, three public sector oil companies which are IOC, HPCL and BPCL have started the ethanol blending programme. In fact, by the end of this month, the companies are expected to streamline the blending programme in fourteen of the twenty states notified under the national ethanol blending programme. IOC, HPCL and BPCL have together signed purchase orders for 120 m litres of ethanol with companies in Maharashtra. The three oil companies together plan to blend 700 m litre of ethanol at 5% with petrol by September 2011. It is expected that the three companies will be able to achieve 100% blending in states like Maharashtra, Uttar Pradesh and Karnataka, where local ethanol supply is ample. However, in states where the companies will have to import ethanol, blending will be partial. While oil companies would be purchasing ethanol at Rs 27 per litre, their procurement price would be higher when adjusted for excise and other taxes. However, as per sources from these oil marketing firms, the price of ethanol blended petrol will be same as that of the unblended petrol.
Auto stocks are trading weak led by Tata Motors and Escorts. As per a leading financial daily, sales of Nano slowed down to just 509 units for the month of November. This is a drop of 85% YoY in spite of a surging auto market. The sad state of affairs has become a cause for worry for Tata Motors. It is believed that the company has called for a meeting of its vendors later this week to address this issue. Vendors had hiked their capacity to cater to the manufacture of 20,000-25,000 units per month in Sanand. But the current production is just 1,500 units. Given this situation, vendors are likely to divert their capacity to other manufacturers as 80-90% of the total capacity is flexible for other models and manufacturers. Another cause for concern for the company is that its dealers are holding huge stocks of Nano due to slowdown in demand. It may be noted that Indian auto sales rose 45% YoY in October. The Indian festival season peaks in November, when it is considered auspicious to buy big-ticket items and when most employees get their annual bonuses. But it was the leanest period of sales for Nano.