Sensex up 0.4% for the week

Profit booking in key banking, commodity and pharma heavyweights led the indices in Indian stock markets to shed gains in the final hours and close in the red. Sectoral indices across the board except auto and consumer durables closed lower today. While the Sensex closed lower by around 63 points, the NSE-Nifty closed lower by 24 points. The BSE Mid Cap and BSE Small Cap indices also ended lower by around 0.2% each.

Asian indices closed a mixed bag today while Europe is trading in the negative currently. The rupee was placed at Rs 54.55 to the dollar at the time of writing.

Coal India (CIL), world's largest coal miner is planning to dilute a fraction of its US$ 11 bn cash reserve to increase production by 180 million tonnes in five years. The company is also considering acquisition of 77 dumpers of 190 tonnes each, as entity has decided to invest widely on mining equipment. The company will also purchase 70 dumpers of 190 tonnes, primarily for Northern Coalfields; 20 high-capacity 320-360 tonne dumpers for South Eastern Coalfields and Mahanadi Coalfields and 150-tonne dumpers for Eastern Coalfields. All purchases will be backed by a 11-year maintenance and repair contract (MARC).

Textile major Raymond has marked its foray into energy drink business with launch of its energy drink 'KS E Drink', stepping into the Rs 2 bn energy drink market in India. The drink is available in two flavors 'X- Fruit', a mixed fruit flavor and 'X- Berry' which is a mixed berry flavor.The energy drink is the newest addition to Raymond's KS product portfolio. The company's textile has also shown some signs of turnaround, but the problem of high debt looms large.

Realty, IT stocks pull Sensex lower
01:30 pm

The Indian markets slipped into the red zone during the post noon trading session. Stocks from the realty, IT and metal spaces led the pack of losers. However, those from the consumer durables, auto and capital goods spaces are still managing to find favour amongst investors.

The Sensex today is trading lower by about 50 points (down 0.2%), while the NSE-Nifty is trading lower by about 20 points (down 0.3%). Stocks from the midcap and smallcap spaces are trading flat with the BSE Mid Cap and BSE Small Cap indices up by about 0.1% each. The rupee is trading at 54.33 to the US dollar.

Stocks of engineering companies are trading firm led by Lakshmi Machine Works, Jyoti Structures and Punj Lloyd. As per a leading financial daily, capital goods major Bharat Heavy Engineering Ltd (BHEL) is seeking levy of duties on imported solar equipment to shield the domestic industry from cheap imports mainly from China. Currently there is no duty on imported solar power equipment. It is to be noted that the government recently imposed higher duty on imports of power equipment. BHEL has been grappling with fuel shortages impeding new projects. As part of diversification strategy, the company aims to invest Rs 20 bn for manufacturing solar equipment such as silicon wafer, solar cell and solar module. But this investment would be viable only if the threshold domestic demand is ensured.

Power stocks are currently trading weak with GMR Infrastructure, PTC India and Power Grid Corporation of India leading the pack of underperformers today. It is reported that India's largest power producer National Thermal Power Corp (NTPC) has borrowed Rs 6 bn from the Jammu & Kashmir Bank, making this its hundredth term loan in about thirteen years. This loan is believed to have tenure of 15 years. It would be utilised to part finance the capex plans of NTPC. NTPC currently has an installed capacity of 39,674 MW. About 16,000 MW of capacity is believed to be under construction. At the end of FY12, the total debt on the company's book stood at Rs 642 bn, while its net worth stood at about Rs 744 a debt equity ratio of about 0.86. The company's interest coverage ratio also stood at a comfortable figure of over 7 times during the year ended March 2012.

India equity markets shed early gains
11:30 am

Indian equity markets have given up early gains but continued to trade strong over the last two hours of trade. Auto and capital goods stocks witnessed maximum buying interest while IT and FMCG stocks witnessed maximum selling pressure.

The Sensex today is up by 30 points, while the NSE-Nifty today is up by 5 points. BSE Mid Cap index and the BSE Small Cap index are up by 0.78% and 0.81% respectively. The rupee is trading at 54.20 to the US dollar.

Finance stocks are trading strong. Indiabulls Finance Limited and JM Financial Limited are the biggest gainers while Crisil and HDFC are the biggest losers. According to a leading financial daily, Power Finance Corporation (PFC) is planning to raise Rs 45.9 bn through tax-free bonds by March next year. The proposed issue is part of its plan to garner Rs 50 bn by way of issuing tax free securities in the current fiscal (2012-13). Out of the total target, Rs 4.1 bn has already been raised. The bonds would be issued in one or more tranches through non-convertible debentures (NCD) route. The funds would be utilised towards lending purposes, debt servicing and working capital requirements.

Auto stocks are trading in the green led by Maharashtra Scooters and Force Motors. According to a leading financial daily, automobile companies led by Maruti Suzuki are planning to raise car prices in January 2013. While Maruti Suzuki is likely to increase prices by up to Rs 20,000, Toyota Kirloskar Motor may also raise prices by 1-2% across all models. Increasing pressure on margins due to currency fluctuation appears to have necessitated this move. Other companies, such as Honda Cars India and Volkswagen India, were also contemplating such a move, but the details are still being worked out.

Indian share markets open firm
09:30 am

The major Asian stock markets have opened the day on a positive note with stock markets in China (up 1.2%) and Singapore (up 0.9%) leading the gains in the region. However, markets in Indonesia (down 0.2%) have opened in the red. Indian share market indices have opened the day on a firm note. Barring software and oil and gas, all sectoral indices have opened in the green led by the stocks in the auto and capital goods space.

The Sensex today is up by around 30 points (0.2%), while the NSE-Nifty is up by around 10 points (0.2%). Mid and small cap stocks have opened in the green as well with the BSE Mid Cap and BSE Small Cap indices up by around 0.5% reach. The rupee is trading at Rs 54.29 to the US dollar.

PSU bank stocks have opened in the green led by Andhra Bank and Indian Bank. As per a leading financial daily, the country's largest public sector lender State Bank of India (SBI) is expecting a capital infusion of around Rs 40 bn from the central government in the current fiscal year. With this, the bank's capital adequacy ratio will increase to over 13%. As per the management, the mode of infusing capital is not decided yet. It will be the government's call to decide on how to infuse the equity. SBI has been waiting for government's nod for the rights issue for more than 2 years. Earlier this week, the government had said that it will finalize capital infusion plans for public sector banks this week to strengthen the banks' capital base and to offset impact of bad loans and poor asset growth.

Engineering stocks have opened the day mainly on a positive note with AIA Engineering and Sanghvi Movers leading the pack of gainers. As per a leading financial daily, the engineering & construction major Larsen & Toubro (L&T) Ltd. has secured an order valued at over Rs 7.3 bn from Nuclear Power Corporation of India (NPCIL) for the Rajasthan Atomic Power Plant (RAPP). The company has bagged the order amid stiff competition. L&T Power will supply, install and commission the Balance of Turbine Island package for two new 700 MW capacity units located at Rawatbhata near Kota. The order also includes civil work for the turbine halls, electrical bays and transformer yard. The stock has opened in the green.

What if US exports oil?

Just a few days ago, it was reported that US is all set to become the largest oil producing nation by the end of this decade. Improved technologies as well as huge shale gas reserves are expected to drive the nation's oil production capacities. Currently the US is a net importer of oil. But with the rise in production, it is touted to become a net exporter of oil when this happens. An article by Firstpost discusses as to how this would affect India.

The impact on India would be in two fold. The first would obviously be on its energy policy. The increase in supply of oil would eventually lead to oil prices stabilizing. This would bring some relief to the oil importing countries like India. The extreme volatility in oil prices that we have seen in recent times have badly affected our fiscal deficit. It did not bode well for the industries either who saw their margins fluctuate wildly as oil prices went all over the place. The caveat in this expectation is obviously that US does not curb its exports of oil.

The second impact would be on the US economic standing. With the export of oil, the country would be able to bring its fiscal deficit under control. This in turn would help boost the value of the US dollar which has been seeing dark times off late. This improvement in US dollar would most certainly help US gain back its economic supremacy which has come under attack since the onset of the crisis. Another impact of a strengthening US dollar would be on the commodity prices. Most prominently on the price of gold. Thanks to the crisis that has currently gripped the world, gold has been witnessing a stellar run owing to its 'safe haven' status. But it must be remembered that gold and US dollar usually move in opposite directions. IF US dollar strengthens the prices of gold should come down.

As we can see if and when US does turn into an oil exporting nation, there would be a shift of power at least in economic terms. Indian policy makers would do well to keep this in mind and prepare accordingly from now itself. Otherwise they would very well end up in an awkward position when this happens.