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Sensex Down 135 Points; ONGC, Oil India Hit 52 Week Highs
Mon, 12 Dec 11:30 am

After opening the trading day on a negative note, Indian markets continue to trade weak amid mixed Asian markets. Sectoral indices are trading mixed with auto and FMCG stocks leading the losses, while metal and PSU stocks are in demand.

The BSE Sensex is trading lower by 135 points and the NSE Nifty is trading lower by 53 points. The BSE Mid Cap index is trading down by 0.6% while the BSE Small Cap index is trading lower by 0.2%. The rupee is trading at 67.41 to the US$.

According to a leading financial daily, Oil and Natural Gas Corporation (ONGC) is eyeing approval from upstream regulator DGH to commence investing US$ 5.07 billion in bringing to production oil and gas discoveries in its Bay of Bengal block KG-D5.

About a year back, the company had submitted to the Directorate General of Hydrocarbons (DGH) a field development plan (FDP) for bringing to production ten oil and gas discoveries in KG basin block KGDWN-98/2 (KG-D5), which sits next to Reliance Industries' flagging KG-D6 fields. A meeting of the block oversight panel, Management Committee (MC) headed by DGH, has been called next week to review the FDP.

In another development, ONGC will set up a new basin in Agartala by the end of next year as it looks to focus more on exploration of oil and gas in the North-East region. The new basin is being created to focus more on exploration of energy sources in the area.

In last fiscal, ONGC production in Assam was 0.9 million tonnes and this year, it is targeted to reach the figure of one million tonnes.

Meanwhile, shares of oil exploration & production (E&P) companies such as ONGC (up 1.6%) and Oil India (up 1.4%) have hit their respective fresh 52-week highs on the BSE in early morning trade tracking surge in oil prices in an otherwise weak market.

ONGC's Share price Hit 52 Week High

Higher crude prices will result in higher realization for oil exploration and related business companies and result in increased profitability for them.

Moving on to news from stocks in public sector banks. According to an article in The Financial Express, Bank of Baroda (BoB) is in talks to buy a majority stake in Cent Bank Home Finance (CBHFL). CBHFL is the housing finance subsidiary of Central Bank of India. Central Bank holds 64% stake in CBHFL, while HUDCO, UTI, and National Housing Bank are the other promoters.

It is, however, not clear whether BoB has approached other shareholders of CBHFL to purchase their stakes as well.

Bank of Baroda is looking to strengthen its position in the home loan segment. As per the reports, Central Bank of India could get Rs 2.5 billion for its 64% stake in CBHFL. The home loan market, which includes banks and housing finance companies, is growing at 25-30%.

Home loans currently constitute nearly 10% of the overall advances of BoB and in the September quarter, this portfolio stood at Rs 263.27 billion, registering a 12% growth YoY.

The deal is part of Central Bank's attempt to shore up its bleeding balance-sheet, which has been mauled by mounting bad loans since the past few years. The cash-strapped government had earlier this year asked its banks to sell noncore assets to beef up core capital. At the recent first tranche of capital infusion, the government had given Rs 17.29 billion to Central Bank of India.

In the September 2016 quarter, its gross NPAs doubled to 13.7% YoY, while its net NPAs more than doubled to 8.17%.

Bank of Baroda is presently trading down by 1%, while Central Bank of India is up by 1%.

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Mar 16, 2018 (Close)