Indian stock markets bounce back

Wed, 22 Jun 09:30 am

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Asian stock markets have opened the day in the green. Stock markets in South Korea (up 1%), Indonesia (up 0.5%), Hong Kong (up 0.6%), and Japan (up 1.3%) are trading in the green while China is trading marginally in the red. The Indian stock markets have opened the day on a firm note. Stocks in the IT and Oil & Gas space are leading the gains.

The BSE-Sensex is trading up by 78 points (0.5%) and the NSE-Nifty is up by around 22 points (0.4%). Midcap and small cap stocks are trading in the green as well, with the BSE Midcap and BSE Small cap indices up by 0.5% and 0.4% respectively. The rupee is trading at 44.77 to the US dollar.

Oil & Gas stocks have opened the day on a firm note with Cairn and Indian Oil Corp (IOC) trading in the green while Hindustan Petroleum Corporation Ltd (HPCL) is trading in the red. ONGC (Oil and Natural Gas Corporation) is in talks with BG Group of UK and Ebi of Italy to sell around 30% in its gas block off the east coast. The motive is to learn from the expertise of these companies in the deep water drilling. The quantum has yet not been decided and it will be discussed by the board. Currently Cairn India is a 10% partner to this block. The company also added that the stake sell will help the company to finance its planned investments of more than US $7 bn to develop the gas field. The block is estimated to have gas reserves of 3.42 trillion cubic feet (tcf) of which more than 50% can be recovered.

Meanwhile, the follow-on public offer (FPO) of ONGC is likely to be opened in mid-July. In order to meet the regulatory aspects, the company has appointed more independent directors. The government currently owns 74% stake in ONGC of which it plans to sell around 5% as a part of divestment. The proceeds from the sale will be used to fund infrastructure projects and social welfare schemes.

IT stocks have opened the day on a firm note with Infosys, Tech Mahindra and Patni Computers trading firm. However, TCS is facing selling pressure. After the financial crisis of 2008, IT majors such as Wipro, Infosys and TCS were forced to freeze promotions and even cut payrolls. Now, for the first time after the crisis, companies are offering lucrative promotions to employees to retain good talent with them. At Wipro, top managers have been promoted to become vice presidents at different business units and functions. This move will provide growth prospects to mid-level employees. Earlier in June, Infosys gave promotions to many of its mid-level managers and even promoted three of the company's future leaders to the board.