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IT and Metal lead the downfall
Mon, 12 Sep 11:30 am

Indian stock market indices continued to trade weak during the previous two hours of trade on the back of persistent selling pressure across index heavyweights. Barring FMCG, all sectoral indices are trading in the red. Stocks from the IT and Metal sectors are the biggest losers.

The BSE-Sensex is down by 366 points and NSE-Nifty is down by 120 points at the moment. BSE Mid Cap and BSE Small Cap indices are down by 1.68% and 1.7% respectively. The rupee is trading at 46.99 to the US dollar.

Power stocks are trading weak led by GVK Power and Infra and Reliance Infra. As per a leading financial daily, power companies may default on their loans. Companies like Power Finance Corp, Rural Elect., Tata Power, and Reliance Power are reeling under low tariffs, scarcity of fuel and land acquisition problems. Their new plants are not operating at the targeted capacities. They are likely to default on loans worth Rs 1,350 bn. As a result, banks are exercising caution while sanctioning loans for power projects. As per the Reserve Bank of India (RBI), banks have an exposure of Rs 2,923 bn loans to this sector. Of this half the loans have not yet been utilized and fund flow to new projects has almost stopped.

Energy stocks are trading in the red. Essar Oil and Cairn India are the biggest losers, while Petronet LNG and HPCL are the biggest gainers. According to a leading financial daily, state run HPCL is planning to outsource operations and maintenance (O&M) of its two integrated sugar mills in Bihar. The two mills have a combined crushing capacity of 7,000 tonnes per day and can produce 120 kilolitres (Kl) of ethanol per day. HPCL's subsidiary HPCL Biofuels Limited (HBL) has already invited proposals from companies who have carried out and completed at least one O&M contract service for an integrated sugar mill in the past seven years. The O&M contract will be for a period of one year and could be extended for another year depending on the performance of the bidder. HPCL is the country's first oil company to produce ethanol.

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