Benchmarks plunge in early trade tracking weak global cues

The Indian equity markets have witnessed sharp decline in the early trade tracking weak cues from global equity indices while, continued selling by foreign funds and retail investors on domestic front also dampened the sentiments. The US markets were back on the southward journey on Friday and the Dow slipped below 12,000 mark, with other major indices too touching their multi month low and all the Asian peers were trading in the negative terrain at this point of time, further dampening the sentiments. Back home, investors remained cautious on worries that Reserve Bank of India (RBI) may announce a hike in interest rates in its credit policy review later this week which dragged the BSE's -- Sensex - below its crucial 18,200 level while, NSE's -- Nifty -- was trading tad above its crucial 5,450 mark. On the sectoral front, oil and gas, realty and metal were the major losers, while there was no gaining sectoral gauge in the trade. The broader indices too were bleeding in the early morning session. The market breadth on the BSE was negative; there were 894 shares on the losing side against 696 shares on the gaining side while 69 shares remained unchanged.

The BSE Sensex opened at 18,242.25; about 26 points lower compared to its previous closing of 18,268.54, and has touched a low of 18,158.74, while high remain its opening.

The index is currently trading at 18,161.56, down by 106.98 points or 0.59%. There were 8 stocks advancing against 22 declines on the index.

The overall market breadth has made a negative start with 41.95% stocks advancing against 53.89% declines. The broader indices too were trading in the red; the BSE Mid cap and Small cap indices lost 0.33% and 0.17% respectively.

All sectoral indices on the BSE were trading down; Oil and Gas down by 1.32%, Realty down by 1.09%, Metal down by 0.86%, Bankex down by 0.63% and PSU down by 0.57%, were the major losers on the index.

RCom up by 1.89%, Cipla up by 1.13%, Bajaj Auto up by 0.85%, Bharti Airtel up by 0.78% and Hero Honda up by 0.47%, were the only gainers on the BSE.

On the flip side, RIL down by 2.00%, Tata Power down by 1.24%, DLF down by 1.19%, Maruti Suzuki down by 1.14% and Hindalco down by 1.11% were the top losers on the index.

Meanwhile, the Petroleum Minister S Jaipal Reddy on June 10, 2011 met Finance Minister Pranab Mukherjee to discuss the issue of rising financial losses of public sector oil marketing companies (OMCs). Currently, OMCs are sitting on high borrowing because of a log in release of government compensation and revision in fuel prices. S Jaipal Reddy said, "I am concerned about the increasing under-recoveries (revenue losses) of oil marketing companies (OMCs). Everyday, OMCs are incurring under-recoveries of about Rs 450 crore,"

An empowered group of ministers (EGoM) chaired by Finance Minister, which makes decision on revision in price of diesel, kerosene and cooking gas, has not met since June last year, even though crude oil prices have spiraled by about 50%. The EGoM was originally scheduled to meet on May 11, but was postponed at the last moment. A second meeting was slated for June 9 but it did not take place. The new day of the next meeting is yet to be decided. 

The OMCs purchase crude oil at market rate and they sell diesel, kerosene and cooking gas at government-subsidized price, because of this mismatch between buying and selling price, OMCs are making loss of Rs 450 crore a day. At these rates, companies may end up the present fiscal year with an all time high loss of Rs 165,000 crore. Presently, OMCs incur revenue loss of Rs 12.64 on every litre of diesel, Rs 26.16 on every litre of kerosene and Rs 381 for every LPG cylinder.

Oil Ministry is seeking for an Rs 3 to Rs 4 litre hike in diesel, and Rs 20 to Rs 25 per cylinder increase in LPG. The last increase in prices of these three products was taken in June last year when crude was ruling around $72 per barrel. Crude oil has averaged $110 barrel this month. In June 2010, diesel price was increased by Rs 2 per litre, kerosene by Rs 3 per litre and LPG by Rs 35.

The S&P CNX Nifty opened at 5,469.85; about 16 points lower compared to its previous closing of 5,485.80, and has touched a high and a low of 5,470.85 and 5,450.70 respectively.

The index is currently trading at 5,450.75, down by 35.05 points or 0.64%. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were RCom up by 1.73%, Rpower up by 1.95%, Cipla up by 0.95%, Bajaj Auto up by 0.84% and BPCL up by 0.72%.

The top losers of the index were RIL down by 2.30%, Hindalco down by 1.87%, Ambuja Cement down by 1.73%, Tata Power down 1.62% and DLF was down by 1.41%.

All the Asian markets were trading in the red; Shanghai Composite was down 30.04 points or 1.11% to 2,675.10, Hang Seng was down 174.39 points or 0.78% to 22,245.98, Jakarta Composite was down 52.03 points or 1.37% to 3,735.61, KLSE Composite was down 6.95 points or 0.45% to 1,549.24, Nikkei 225 was down 82.20 points or 0.86% to 9,432.24, Straits Times was down 18.44 points or 0.60% to 3,059.91, Seoul Composite was down 1.11 points or 0.05% to 2,045.56 and Taiwan Weighted was down 99.40 points or 1.12% to 8,738.42.

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/?TJzsLEwstCyc7OysHMyctEa0jAyMzKxMbOw=