Power, capital goods help markets recover

Mon, 13 Jun 01:30 pm

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The Indian stock market recovered during the previous two hours of trade and is now trading in the green. Stocks from the power, capital goods and banking space are leading the pack of gainers, while those from the oil & Gas and metal are trading weak.

The BSE-Sensex is trading up by 30 points, while NSE-Nifty is trading 6 points above the dotted line. The BSE Midcap and BSE Small cap indices are up by 0.2% and 0.1% respectively. The rupee is trading at 44.83 to the US dollar.

Energy stocks are trading mixed with Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Gujarat State Petronet leading the pack of gainers. However, Reliance Industries, Castrol India and Chennai Petroleum Corporation are trading weak. As per a leading financial daily, HPCL will soon seek petroleum products from Reliance Industries, Essar Oil and Mangalore Refinery and Petrochemicals Ltd. post the shutdown of half the capacity of its Mumbai refinery for upgradation. The Mumbai refinery has an annual capacity of 6.5 million tonnes. The company intends to shut half of this for a period of two months post the monsoons. The plan is to upgrade one of the two crude distillation units (CDUs) to increase energy efficiency and enable the refinery to process a wider range of crude oil grades. The estimated cost of upgradation is around Rs 1.5 bn. Meanwhile, the company plans to approach standalone refiners to meet the shortage. If there is a requirement, it may also look at sourcing petroleum products from the 9 million tonne per annum HPCL-Mittal Energy (HMEL) refinery at Bhatinda, Punjab. Post upgradation, the refinery's capacity will rise to 7 million tonnes per annum. Also, while it presently processes only low-sulphur Mumbai High crude, it would be able to also refine high-sulphur crude. The stock of the company is trading in the green.

Power stocks are trading mixed as well with NTPC, Torrent Power and Reliance Power leading the pack of gainers. However, Coal India and Neyveli Lignite are trading weak. As per a leading financial daily, Coal India Ltd's (CIL) plan to pick up a 15% stake in US-based firm Peabody Energy's mining project in Australia may get delayed as it is still waiting for the government's response on certain issues pertaining to the deal like listing of the company. The coal ministry had earlier stated that acquisition of the property in the overseas market will be confined to listed companies so that the there is not much problem during the valuation of the deal.

The project is worth Australian $600 m. Both the companies are mulling the formation of a joint venture company (JV) to implement the project. Peabody Energy is the world's largest private sector coal company, with sales of 246 million tonnes in 2010. The US-based firm will have an 85% holding in the JV, while the rest will be owned by CIL.