Indian stock markets lose further

Tue, 12 Jul 01:30 pm

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Indian stock markets made further inroads into the negative territory during the previous two hours of trade as selling intensified across index heavyweights. All sectoral indices are trading in the red. Stocks from the software, realty, and auto are the biggest losers.

The BSE-Sensex is trading down by 381 points, while NSE-Nifty is trading 115 points below the dotted line. The BSE Midcap and BSE Small cap indices are down by 1.4% and 1.1% each. The rupee is trading at 44.70 to the US dollar.

Most of the power stocks are currently trading weak with GVK Power, PTC India Ltd and Reliance Infrastructure leading the pack of losers. However, Coal India is trading firm. As per a leading financial daily, the Government has expressed concerns regarding power sector investment for current plan (2007-2012) which is facing a 40% funding gap. The investment was planned at Rs 10 trillion. As per the Power Minister, Power Finance Corporation (PFC) is playing a critical role in addressing the issue of fund requirements of the sector. The company has cumulatively sanctioned loans worth Rs 3.4 trillion and has disbursed loans worth Rs 1.7 trillion to the power sector in a span of 25 years. Currently, it has a loan asset size of about Rs 1 trillion. In the last five years, the installed capacity in the sector has grown up by 43%. For 2010-11, the country has a synchronized capacity of 15,975 MW. According to the Power Minister, the Government had also initiated development of large transmission systems through private sector participation on the lines of Ultra Mega Power Projects (UMPP).

Six such projects have already been awarded and five more were in the pipeline. There were also concerns regarding high technical and commercial losses in the sector. In order to reduce such losses, the Government of India had launched a scheme APDRP (Accelerated Power Development and Reforms Programme) during the 10th Plan. The scheme aimed at reforming the power distribution sector by providing investment and incentives to state power utilities.

Energy stocks are trading mixed led by IOCL, HPCL and ONGC. However, Indraprastha Gas, Castrol and Petronet LNG are trading weak. As per a leading financial daily, Gujarat Gas Company Ltd (GGCL) has announced a price hike for compressed natural gas (CNG). With this, the users in Surat and South Gujarat will be facing a hike of 8%, implying a revised end customer price of Rs 39.75 per kilogram from existing Rs 36.75 per kilogram. This is the third consecutive revision in the CNG prices by GGCL since January 2011. In January 2011, the auto-rickshaw unions had opposed the price hike by increasing the per kilometer tariff by Re 1. Despite the price hikes, the increase in CNG based vehicles has been phenomenal as the Central Government has increased prices of diesel and petrol which are even costlier. The company has revised prices to cope up with increased operation and maintenance activities related to setting up of CNG infrastructure, increase in the equipment fuel cost and distribution cost and enhanced safety measures etc. The stock of the company is trading in the red.