Markets hit fresh intraday low

The local equity markets have extended losses and hit fresh intraday lows in late afternoon session. Investors are poised for a hawkish statement from the Reserve Bank of India (RBI), when it releases policy on Tuesday (May 3, 2011). Meanwhile, European markets and US index futures were also trading flat while most of the other Asian markets settled in the negative terrain and remained highly unsupportive giving no significant direction to the domestic indices. Back home, in BSE sectoral space, selling was seen in most of the sectors. Rate sensitive sectors like Realty and Banking counters were facing selling pressure while defensive sectors like FMCG and Health Care counters were witnessing some buying activity. The broader markets were also trading in negative; the BSE Mid cap index and Small cap index lost 1.12% and 1.62% respectively. The market breadth was extremely negative; losers outpaced the gainers in a ratio of 1939:866 while 102 scrips remained unchanged.

The BSE Sensex trimmed 200.74 points or 1.04% at 19,091.28. The index has touched a high of 19,356.50 and a low of 19,047 respectively.

The BSE Mid cap index and Small cap index lost 1.12% and 1.62%, respectively. 

The top losers on the BSE sectoral space were Realty down 2.85%, Capital Goods (CG) down 2.47%, Bankex down 1.77%, Consumer Durables (CD) down 1.67% and Metal down 1.14%.

On the flip side, Healthcare (HC) up 0.48% and Fast Moving Consumer Goods (FMCG) up 0.44% were the only gainers on the BSE sectoral space.

The top gainers of the Sensex were HUL up 1.81%, Maruti Suzuki up 1.17%, Wipro up 0.49%, BHEL up 0.23% and Tata Steel up 0.12%.

On the flip side, L&T down 3.41%, Jindal Steel down 3.30%, JP Associates down 3.10%, DLF down 2.69% and HDFC Bank down 2.21% were the major losers on the index.

India and three other nations involved in the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project have held extensive discussions on price of the proposed gas and other details. The project, worth $7.6 billion, however failed to see a consensus with countries failing to reach a common point on price of the gas.

India hosted the official-level dialogue which among other things was aimed at deliberating on the official Gas Sale and Purchase Agreement (GSPA) and project structure. While the talks were productive, the final price for gas did not see any agreement and both India and Pakistan opposed the high prices asked by Turkmenistan. All the countries however remain hopeful that an agreement will be reached over next few months.

According to officials, India was willing to pay about $12.67 per million British Thermal Units (mBTU) of gas, while Turkmenistan was demanding price linkage to the market rate of LNG. If the importing countries agree to the demand of Turkmenistan, actual price of gas could be as high as $14-$15 per mBTU. This however is not acceptable to Indian side as it would be intercepting in pipeline if it can import LNG from alternative routes at a cheaper price.

If successful, the project would be an enduring example of regional cooperation in South and Central Asia. The project is also being pushed by the US as an alternative to Iran-Pakistan-India (IPI) pipeline which continues to be marred not only by the US opposition but Indian security related concerns. The Asian Development Bank (ADB) is the Lead Development Partner for the TAPI project which is expected to be signed soon in case an agreement on pricing is reached between the seller and buyers.

As per the structure of the deal being currently discussed, Turkmenistan will deliver the gas at the Afghanistan border and from there on, the responsibility will be taken by a consortium of global companies that would have experience in handling such projects. Part of the equity in the proposed consortium could also be held by buying countries. This makes the project very different from IPI project where India wanted Iran to ensure safe delivery of gas at its door steps. In the TAPI project, Turkmenistan will not be responsible for any disruptions in supplies caused outside its border. 

The S&P CNX Nifty shed 59.05 points or 1.02% at 5,726.40.  The index has touched a high and a low of 5804.30 and 5713.60 respectively.

The top gainers of the Nifty were Sun Pharma up 3.67%, Ambuja Cement up 1.82%, Siemens up 1.64%, HUL up 1.58% and Maruti Suzuki up 1%.

On the flip side, Axis Bank down 4.18%, L&T down 3.51%, JP Associate down 3.36% Jindal Steel down 3.20% and IDFC down 3.09% were the major losers on the index.

Most of the other Asian markets settled in the red. Hang Seng lost 0.36%, KLSE Composite slipped 0.02%, Straits Times shed 0.72%, Seoul Composite dropped 0.94% and Taiwan Weighted dipped 0.36%; while Shanghai Composite gained 0.87% and Jakarta Composite surged 0.29%.

The European markets were trading on a flat note. CAC 40 fell 0.04%, Germany's DAX gained 0.10%.

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