Indian equity markets open weak

Wed, 22 Aug 09:30 am

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Most major Asian stock markets have opened the day on a weak note with markets in South Korea (down 1%), Hong Kong (down 0.8%) and Singapore (down 0.8%) leading the losses in the region. However, markets in Indonesia (up 0.5%) and Malaysia (up 0.2%) are trading firm. The Indian equity market indices have opened the day on a weak note. Stocks in the realty and technology space are leading the pack of losers. However, healthcare and auto stocks are trading firm.

The Sensex today is down by around 14 points (0.1%), while the NSE-Nifty is down by around 5 points (0.1%). However, mid and small cap stocks are trading in the green with the BSE Mid Cap and BSE Small Cap indices up by around 0.1% and 0.2% respectively. The rupee is trading at Rs 55.4 to the US dollar.

Engineering stocks have opened the day on a mixed note with Elgi Equipments and Blue Star trading firm. However, Cummins India and Bharat Bijlee are facing selling pressure. As per a leading financial daily, public sector power equipment manufacturer Bharat Heavy Electricals Ltd (BHEL) is actively scouting for acquisition opportunities in the US and Europe. The company is looking at acquisitions in the areas of core technologies in the energy sector. This includes renewable, transportation and transmission. The main purpose behind this effort is to gain access to technology, global markets and to secure global supply sources. Currently, BHEL is executing about 24 contracts across 19 countries. This includes countries such as Syria, Vietnam, Afghanistan, Indonesia, Ethiopia and Sudan. It must also be noted that on account of severe challenges in the domestic power equipment sector, the company is looking at fortifying its presence in water, nuclear and renewable segment.

Oil and gas stocks have opened the day on a firm note with Oil India, Cairn India and Oil and Natural Gas Corporation (ONGC) trading firm. In the financial year 2008-09, state-run gas utility Gas Authority of India Ltd (GAIL) had taken 19% stake in ONGC Petro-additions Ltd (OPaL), ONGC's mega petrochemical project at Dahej in Gujarat. At that time, the estimated cost of the 1.1 m tonnes plant was pegged at Rs 124.4 bn. In 2010, the project cost was revised upwards by 57% to Rs 195.4 bn. On account of this, GAIL decided to limit its stake to 17%. It must be noted that the company's board has powers to approve investment only up to Rs 10 bn. So GAIL would have to invest Rs 99.6 bn to acquire 17% stake in OPaL. But now, ONGC, the principal promoter of OPaL, has again revised the cost upwards by 9.5% to about Rs 214 bn. As such, GAIL has decided to maintain its equity contribution to Rs 99.6 bn and hence, its stake in the project would come down to 15.5%.