Friday October 5, 02:00 PM
Further up... |
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By Equitymaster.com
The benchmark indices moved further into the green as buying activity intensified during the previous hour of trade. Currently, amidst selling pressure, buying is being seen in engineering and select telecom and auto stocks. The overall market breadth is negative with losers outnumbering gainers in the ratio of 1.4 to 1 on the NSE.
The BSE Sensex is trading at 17,920 (up 143 points) while the NSE Nifty is trading at 5,231 (up 23 points). The rupee is trading at 39.48 to the dollar.
Oil stocks are trading weak with ONGC (down 2%), BPCL and HPCL (each down 1%) being the key losers. ONGC will be reviewing its existing mechanism for development of marginal fields, which would result in offering attractive fiscal packages for service contractors. Currently, the company enters into service contracts with companies having expertise in development of marginal fields through a bidding process. A substantial amount of hydrocarbon is locked up in marginal fields and as these fields cannot be produced economically on a standalone basis, or with a conventional approach, the best possible way to exploit the full potential is when outsourced to smaller companies. Under the current dispensation, ONGC finds it tough to attract bidders, as the fiscal package offered to the service contractors is not very lucrative. The company has to also provide for cess and royalty from these fields. There is also a cap of US$ 35 per barrel on the crude pricing from these fields, which means the price of oil produced from marginal fields cannot be above US$ 35 a barrel even if there is any change in the international crude pricing. This makes the offer not very attractive for the prospective bidders, as all development cost has to be borne by the contractor.
Telecom stocks are trading firm with Bharti Airtel and RCOM (each up 2%) and Idea Cellular (1%) being the key gainers. The Indian Cellular Association (ICA) will approach the finance ministry and department of telecommunications (DoT) for a 26% reduction in duties on mobile phone accessories. The current customs duty is as high as 34% and ICA want the duties to be slashed to 8% for accessories including batteries, chargers, bluetooth and hands-free devices. ICA has also decided that if the government offers benefits in the form of duty cuts or any other fiscal benefits to members of ICA, it will have to be passed onto consumers within a month.
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