Oil & gas power markets above 18,000

Thu, 26 May 11:30 am

   Previous Close   

   Pre-Open   

   09:30 am   

   01:30 pm   

   Closing   

Indian stock markets traded firm on the back of buying interest in heavy weights over the last two hours of trade. Stocks from the oil & gas and metals space are trading firm, while stocks from the consumer durables space are trading weak.

The BSE-Sensex is trading up by 183 points while NSE-Nifty is trading 52 points above the dotted line. BSE Midcap index is up by 0.5% while BSE Small cap index is trading 0.9% above yesterday's closing. The rupee is trading at 45.27 to the US dollar.

Media stocks are trading mixed with Zee Entertainment and Prime Focus trading firm, while Broadcast Initiatives and TV Today Networks are trading weak. As per a leading financial daily, television channel distributors Star-DEN and Zee-Turner (subsidiary of Zee Entertainment) have reached an agreement to float a joint venture. The 50:50 JV named Star-Zee will offer around 75-80 channels. Star-Zee will enable the two companies to tap the Rs 25 bn annual subscription revenue by becoming a must carry boutique for all cable operators. As per the strategy outlined by the two companies, the JV will distribute all the Star and Zee group channels across India and collect the subscription revenue of the combined entity. It may be noted that currently Star collects around Rs 10 bn while Zee collects around Rs 8 bn in subscription revenue. The remaining market is divided amongst ESPN, Sony-One Alliance, Sun18 and others.

It is expected that the JV would help both companies fund the digitalization drive started by the government. The two companies will also jointly pitch for foreign investments. It may be recalled that both Star India and Zee Group have been rivals in the cable business in India since their first association over a decade ago. Market experts believe that Star-Zee has the potential to become a dominant force in the cable distribution business. However, the performance of this JV would have to be closely watched over the next year before any firm idea of its future can be formed.

Oil and Gas stocks are trading strong led by Reliance Industries and Cairn. As per a leading financial daily, The Indian government has decided to provide gas supply at regulated rates to only a few top-priority consumers. The move is likely to benefit RIL which will now have pricing freedom in case of non-core consumers. Under the new regime, gas at the regulated price of US$ 4.2 per unit would be used only for making fertilizers, subsidised cooking gas, and for city gas networks. It may be noted that a steep fall has been witnessed in output from KG-D6 gas field. This resulted in the government asking RIL to cut down supplies to non-core sectors like steel. With this the government wants to ensure steady supply of gas to power and fertilizer plants. The move is facing opposition from the non-core consumers. Steel companies have challenged the order in the court. However, as of now, these companies will have to buy gas at market prices as per the new system.