Increased selling activity led the Indian markets to lose further ground to close the day on a weak note. While the BSE-Sensex closed lower by about 320 points (1.1%), the NSE-Nifty closed lower by 90 points or 1.1%. The S&P BSE Midcap and S&P BSE Smallcap indices ended the day on a weak note too, closing lower by about 0.9% and 0.7% respectively. Barring stocks from the oil and gas space, weakness was seen across with FMCG and metal stocks being the top losers.
Asian markets ended the day in the green with China being the top gainer. European markets opened the day proceedings on a negative note after Greece threatened to default on 1.6 bn euro of debt repayment. The Indian rupee was trading at 63.63 per dollar at the time of writing.
Steel sector closed largely in the red, with Tata Steel and Jindal Steel witnessing maximum selling interest. According to a leading financial daily, ArcelorMittal and Steel Authority of India (SAIL) signed a Memorandum of Understanding to set up an automotive steel manufacturing facility in India. The project will be set up through a joint venture. Reportedly, the proposed joint venture will construct a state of the art cold rolling mill and other downstream finishing facilities in India that will offer technologically advanced steel products to automotive sector. This is a major strategic step for SAIL who plans to go up to 50 m tonne capacity by 2025.
According to a leading financial daily, public sector oil exploration and production firms ONGC and Oil India have been exempted from paying fuel subsidy if global oil prices average up to US$60 a barrel, but will have to share a part of the burden if rates go higher. The arrangement is in place for the first quarter of 2015-16. Reportedly, if oil prices are between US$60-100 a barrel, the companies would have to pay 85% of the incremental price over $60. If oil rates are over $100 a barrel, they would be liable to pay 90% of the incremental rate. Oil marketing companies get a cash subsidy from the government and discounts from ONGC and OIL for selling sensitive products, such as PDS kerosene and domestic LPG, at less than market rates. For the fourth quarter of 2014-15, the two companies will not be required to share the subsidy burden.