Volatility plagues Indian indices

Wed, 18 Jan Closing

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Indian stock markets had a rather volatile outing today as they oscillated to either side of yesterday's close for the larger part of the day. The indices struggled to stay afloat in the final trading hours as well and profit booking finally pushed them below the dotted line. While the BSE-Sensex closed lower by around 15 points, the NSE-Nifty closed lower by around 12 points. The BSE Mid cap and the BSE Small cap were not spared either as they closed lower by 1% each. While losses were largely seen in IT, metals and auto stocks, Oil and gas stocks managed to buck the trend.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 50.53 to the dollar at the time of writing.

Energy stocks closed mixed today. While Oil and Natural Gas Corporation Ltd. (ONGC) and Bharat Petroleum Corporation Ltd. (BPCL) found favour, Essar Oil and Gas Authority Of India Ltd. (GAIL) closed into the red. As per a leading business daily, state-run Oil and Natural Gas Corporation (ONGC) is in talks with US energy firm ConocoPhillips to explore the possibilities of tying up for the exploration of oil and gas in Indian deep sea and shale gas in North America. ConocoPhillips is the third-largest integrated energy company in the US and the fifth-largest refiner in the world. ONGC is particularly looking to rope in a foreign major with technology to develop deep water finds in the Krishna Godavari basin. This is ONGC's fourth attempt to get a credible foreign partner in its exploration acreage after Petrobras of Brazil, Statoil of Norway and BG Group of UK walked out of its ventures for various reasons. If talks with ConocoPhillips succeed, ONGC is looking at bringing to production many of its deep sea finds in the Krishna Godavari and Mahanadi basin. India's energy needs have been rising and given that the country imports around 70% of the oil that it consumes, it has become necessary to secure oil assets. This is by either acquiring oil assets abroad or partnering with global majors to develop fields either in the country or overseas.

As per a leading business daily, the United Nations expects the Indian economy to grow at 8% per annum between calendar years 2011 and 2013. Given that slowdown is expected to continue in the US and Europe, this is bound to have some impact on Asian nations including India. What will take India's growth to the next level are the steps the government takes to introduce some much needed reforms and also bring the fiscal deficit down. So far, the Indian government has stated that it would not be able to meet its target of bringing this deficit down to 4.6% of GDP by FY12. Reserve Bank Of India's (RBI's) monetary policy will also determine in which way India's growth will be headed. In the fiscal so far, India Inc has witnessed some slowdown as 13 successive rate hikes in the past took its toll on consumer demand and corporate profits. Thus, with inflation showing some signs of cooling down, the central bank may consider cutting rates which will add some fillip to growth of India Inc going forward.