Markets deep into the red; broader markets also plunge

Key benchmark indices are trading with deep cuts and are trading near their day's low levels as selling pressure intensified amongst index heavyweights like RIL, Infosys, L&T, ICICI Bank etc. Meanwhile, most of the Asian markets barring Jakarta Composite which was down by 0.28% and Nikkei 225 which was up by 1.08% remained closed today on account of Lunar New Year Day holiday. Back home, all the sectors are trading in the red. Realty, Fast Moving Consumer Goods, Information Technology and Oil & Gas segments witnessed maximum selling pressure. As such, the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) and the 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) are still holding on to their psychological levels of 18,100 and 5,450. The broader markets took a sudden turn on the way down in the afternoon session with BSE mid-cap and small-cap indices declining by 0.25% and 0.27%, respectively. The market breadth on the BSE also turned negative; the losers thrashed the gainers in a ratio of 1439:1204 while 104 shares remained unchanged.

The BSE Sensex dropped 257.88 points or 1.40% at 18,191.43. The index touched a high and a low of 18,542.20 and 18,191, respectively.

The BSE Mid-cap and Small-cap indices dipped 0.25% and 0.27%, respectively.

All the BSE sectoral spaces were trading in the red. Realty down 2.06%, Fast Moving Consumer Goods (FMCG) down 1.59%, Information Technology (IT) down 1.58%, TECk down 1.47% and Oil & Gas down 1.38% were the major losers.

Meanwhile, in a move aimed at helping the Indian public sector companies (PSUs) compete their Chinese counterparts in acquiring resources abroad, like that in coal and crude oil sectors, the Indian government is considering to fast track the process of approval of PSU proposals for overseas investments aimed at acquiring assets.

The government has constituted an empowered committee headed by Cabinet Secretary KM Chandrasekhar. This committee is likely to be put in charge of clearing the PSU projects for acquisitions of strategic assets abroad. This will save a lot of time and help the PSUs make timely decisions in an increasingly competitive global energy atmosphere.

China has been acquiring overseas assets at a fast pace to support its rapidly growing economy. India, which in many ways lags China substantially, but has seen accelerated growth over the last one decade, is now realizing that it will also need tremendous amount of resources to sustain a high growth trajectory of 8-10% in the coming couple of decades. As such, it wants its companies to acquire overseas assets on the line of Chinese companies.

However, Indian companies like ONGC or Coal India face long delays in getting official approvals for overseas investments. This also often leads to them losing out on attractive opportunities. By cutting down this time substantially, the government hopes that India will be in a better position to secure the future energy needs of the country.

Earlier, Prime Minister Manmohan Singh himself had stated that the government would soon formulate a policy to encourage public sector units to scout for raw materials and strategic assets abroad. This will help fast track a number of deals that Indian companies are currently eyeing. For instance, the Coal India is in talks with US-based Peabody Energy and Massey Energy for stakes in the mines owned by these companies. Similarly, the a consortium of steel major SAIL, NTPC, Coal India and Rashtriya Ispat Nigam Ltd (RINL) are also for coal mines in Australia and other places.

The top gainers on the Sensex were Bajaj Auto up 2.03%, Tata Steel up 0.54%, ONGC up 0.34%, Tata Motors up 0.33% and Jindal Steel up 0.31%.

M&M down 3.53%, Tata Power down 2.98%, TCS down 2.63%, L&T down 2.47% and ITC down 2.25%, were the top losers on the index.

In a major relief to oil refiners, after weeks of dilemma, India has finally charted out a mechanism to pay Iran for crude oil purchases ending doubts about the continuation of vital crude supplies. While, the new mechanism may not prove sustainable in long run, it will give both the sides enough time to find a better route.

As per the agreement, between the two sides, the State Bank of India (SBI) will now make payments to Iran in euros through the Hamburg-based European-Iranian Trade Bank AG, said the government on Thursday. India has been negotiating alternative payment route with Iran since December, when its Central bank stopped Iran-related payments through a south Asian financial clearing house that Washington has alleged to be helping Iran avoid international sanctions.

It was the Iran who first proposed a temporary payment channel through a euro account at EIH Bank.  After initial hesitation, the Indian authorities have now agreed to route the payments through this EIH. But routing the payments through this bank may place the SBI, India's largest lender, in an uncomfortable position with Washington, which has placed the bank under US sanctions.

Both India and Iran had shown strong commitment to continue the trade despite US sanctions. India is second largest crude buyer for Iran and similarly Iran is second largest crude seller to India following the Saudi Arabia. In fact, Tehran was even ready to take rupees as payment and pay Indian exports in its currency but this would not be sustainable as the trade between the two countries is heavily weighted in favour of Iran. While India imports nearly $9 billion worth of crude oil from Iran, it exports to the oil rich country rice, tea and machinery etc and are worth around just $2 billion.

Iran had been supplying crude to India on credit for last couple of months. Indian refiners have $2 billion in pending payments for oil bought from Iran, as accepted by the Indian government official too. In this wake the vice president of international affairs at the Iran Chamber of Commerce, Industries and Mines Mehdi Fakheri had said recently that if the payment issue was not resolved, Iranian companies were not in a position to continue supplying oil on credit for too long. However, the new mechanism will now give both the sides enough time to find a sustainable solution to the problem.

The S&P CNX Nifty declined 73.60 points or 1.33% to 5453.15. The index touched a high and a low of 5556.30 and 5446.30, respectively. 

The top gainers of the Nifty were Bajaj Auto up 2.20%, Suzlon Energy up 1.13%, Reliance Power up 0.61%, Tata Steel up 0.35% and Jindal Steel up 0.32%.

The top losers of the index were M&M down 3.66%, Tata Power down 2.90%, TCS down 2.83%, L&T down 2.61% and ITC down 2.35%.

Asian markets barring Jakarta Composite and Nikkei 225 remained closed today on account of Lunar New Year Day holiday; Jakarta Composite shed 0.28%, while Nikkei 225 jumped 1.08%.

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0HJwczKzMzA==