Indian benchmarks continue to tread under the neutral line with around a quarter percent cut in the Tuesday afternoon session as fears of another fuel price and rate hike are making investors panicky, leading them to take money off the table. Meanwhile, the Oil and Gas counter has resulted the maximum damage in the session so far, as upstream companies like ONGC and OIL nosedived 5.38% and 4.18% respectively after reports that the government has increased upstream oil companies' contribution toward fuel marketing firms' subsidy burden to 38.5% of the Rs 77,922 crore estimate for FY'11. The rate sensitive counters like Auto and real estate too are witnessing heavy selling pressure on rising worries that corporate earnings will take a hit due to high borrowing costs. However, the gains in FMCG heavyweights like ITC, HUL and Capital Goods majors like L&T and BHEL are preventing the frontline indices from drifting deeper in the red territory. Moreover, the markets across the globe too are trading on a somber note as Asia markets are exhibiting mixed trends while the European counterparts have got off to a subdued opening on the back of renewed apprehensions over the lingering euro-zone sovereign debt troubles. While the wilt in international crude oil prices too failed to enthuse the local mood.
Meanwhile, the broader markets too are trading on a negative note rubbing shoulders with their larger peers. The midcap index eased 0.28% and the smallcap index fell 0.14% points. The market breadth on the BSE was in favor of declines in the ratio of 1083:1414 while 111 scrips remained unchanged.
The BSE Sensex declined 46.17 points or 0.25% at 18,298.86. The index touched a high and a low of 18,435.80 and 18,264.42 respectively.
The BSE Mid-cap index eased 0.28% and Small-cap index shed 0.14%.
On the BSE sectoral front, FMCG up 1.03%, CD up 0.97%, Capital Goods up 0.44%, IT up 0.40% and Teck up 0.31% were the only gainers.
While, Oil & Gas down 2.54%, PSU down 0.92%, Auto down 0.89%, Realty down 0.66% and Power down 0.34% were the major laggards in the BSE sectoral space.
The top gainers on the Sensex were ITC up 1.45%, TCS up 1.05%, HUL up 0.97%, L&T up 0.97% and BHEL up 0.84%.
On the flip side ONGC down 5.13%, Hero Honda down 2.97%, RIL down 1.96%, NTPC down 1.64% and Tata Motors down 1.52% were the major losers on the index.
Meanwhile, last week government owned Oil Marketing Companies (OMCs) have cut the Jet fuel prices by 2.9% after increasing it for 14 times in a row from last October. Despite the decrease in price of jet fuel, passengers are unlikely to pay less for their travels.
The domestic OMCs modify the jet fuel prices on 1st and 16th of every months based on the standard international prices in the prior fortnights. The jet fuel prices have been reduced by 2.9% to Rs. 58,794 per kilo litre from Rs. 60,560 per kilo litre, since last October jet fuel prices have gone up by more than 48.6% from Rs. 40,728.
As per the aviation experts, the reduced price of jet fuel is a welcome step of OMCs, but cut might be too modest for the industry, which is already reeling under significant operating cost. Fuel forms around 40% of airlines' total operation cost, which may differ among domestic flights which have to pay for surges; however international flights get exemptions from duty on the fuel. The airline industry has been demanding a declared goods status for ATF, which will attract a uniform 4% tax across the country.
Above all, it is being anticipated that the cut in fuel prices may not have any major impact on the pricing, as airlines' are already giving attractive fares, instead the reduced fuel prices will be used to improve the margins. The fare prices are likely to come down if the average of the basket of crude oil remains low and the ATF price is consistently reduced for some months.
The S&P CNX Nifty fell 16.20 points or 0.29% at 5,482.80. The index touched high and low of 5,523.85 and 5,471.40, respectively.
The top gainers on the Nifty were ITC up 1.67%, HUL up 0.92%, L&T up 0.86%, BHEL up 0.85% and Sesa Goa up 0.82%.
On the other hand, ONGC down 5%, GAIL down 3.36%, Ambuja Cement down 3.23%, Hero Honda down 2.89% and SAIL down 2.79% were the major losers on the index.
On the Asian front Shanghai Composite added 0.07% and Nikkei 225 gained 0.09%.
On the flip side, Hang Seng shed 0.24%, Seoul Composite eased 0.08% and Taiwan Weighted wilted 0.31%.
Stock markets in Indonesia, Malaysia and Singapore remained shut today for a public holiday.
The European markets have opened a negative note as the France's CAC 40 shed 0.69%, Germany's DAX fell 0.78% and London's FTSE 100 dropped 0.21%.
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