Sensex Opens Weak; Oil & Gas Stocks Fall

Mon, 22 Apr 09:30 am

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Asian stock markets are steady today as investors awaited the return of major financial markets from the Good Friday holiday. Meanwhile, industrials led the S&P 500 and the Dow moderately higher on Thursday after robust US economic data and some healthy corporate earnings reports. All three major US stock indices closed in positive territory heading into the three-day weekend.

Back home, India share markets opened on a weak note. The BSE Sensex is trading down by 203 points while the NSE Nifty is trading down by 68 points. The BSE Mid Cap index and BSE Small Cap index opened down by 0.6% and 0.4% respectively.

Except IT stocks, all sectoral indices have opened the day in red with energy stocks and realty stocks leading the losers.

The rupee is currently trading at 69.81 against the US$.

In the news from the banking sector. The country's largest private sector lender HDFC Bank posted a 22.6% increase in its net profit to Rs 58.9 billion for the fourth quarter of FY19 on the back of robust revenue and stable asset quality.

Its net profit stood at Rs 48 billion in the quarter ended March 2018.

The bank's total income for the January to March 2019 quarter grew by 22.1% to Rs 312 billion from Rs 255.5 billion a year ago.

Net revenue (net interest income plus other income) increased by 20.7% to Rs 179.6 billion for the quarter ended March 2019, from Rs 148.9 billion in the corresponding quarter of FY18.

Core net interest margin was a robust 4.4% for the fourth quarter of the fiscal. Similarly, the lender reported a 22.8% increase in the net interest income for the quarter at Rs 130.9 billion.

HDFC Bank's asset quality also remained stable. Gross non-performing assets were at 1.36% of gross advances as on March 2019, as against 1.38% as on December 2018 and 1.3% as on March 2018.

Net non-performing assets were at 0.4% of net advances as on March 2019.

Provisions and contingencies for the quarter ended March 2019, however, rose to Rs 18.9 billion as against Rs 15.4 billion in the same period a year ago.

The bank's net profit for FY19 rose by 20.5% to Rs 210.8 billion.

HDFC Bank share price opened the day up by 0.4%.

Moving on to the news from oil space. Oil prices rose by more than 1% today to levels not seen since November 2018, driven up by a Washington Post opinion column that said the United States is preparing to announce all imports of Iranian oil must end or be subject to sanctions.

Brent crude futures rose above US$72.90 for the first time since November 2018 on Monday, hitting a high of US$72.93, up 1.3% from their last close.

Reportedly, the United States is preparing to announce today that all buyers of Iranian oil will have to end their imports shortly or be subject to US sanctions, Washington Post foreign policy and national security columnist Josh Rogin wrote on Sunday.

The US reimposed sanctions in November on exports of Iranian oil after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers.

Washington, however, granted Iran's eight main buyers of oil, mostly in Asia, waivers to the sanctions which allowed them limited purchases for half-a-year.

The report comes amid an oil market that is already relatively tight.

These potential disruption to Iranian supplies adds to an already tight market.

The Organization of the Petroleum Exporting Countries (OPEC) has led supply cuts since the start of the year aimed at tightening global oil markets and to propping up crude prices.

In the United States, energy firms last week reduced the number of oil rigs operating by 2, to 825, the reports noted.

As a result, Brent prices have risen by more than a third this year, while WTI has climbed more than 40% over the same period.

While the domestic markets have continued their sentiment fueled rally, crude oil prices have also quietly creeped up.

As you know, rising crude oil prices have a big impact on the country's economy as India imports over 70% of its energy needs.

Rise in crude oil increases input costs for dependent firms. It also means rising inflation. Rising inflation means rising interest rates.

It also puts pressure on the government to cut excise duty, thereby impacting its revenues. We have already seen that happening.

Research Analyst, Richa Agarwal believes that this has the potential to bring down sentiments in the domestic markets. She further believes that, if oil prices continue their upward march in a tight global environment, a broader correction in the sentiment fueled domestic market cannot be ruled out.

Now how this pans out going forward remains to be seen.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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