Sell Off in the Final Hour

Thu, 5 Nov Closing

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Selling activity intensified in the final hour of trade leading the Sensex today to end lower by 248 points while the NSE-Nifty ended down by 85 points. The S&P BSE Midcap and S&P BSE Smallcap plunged further, ending lower by 1.5% and 1.6% respectively.

Asian markets closed on a negative note with markets in Indonesia and Singapore down by 0.8% and 0.6% respectively. However, China bucked the trend with its market closing up by 1.9%. The rupee was trading at 66.73 against the US$ in the post noon session.

Coming to corporate developments - IDBI Bank has received an in-principle approval to raise equity capital through the Qualified Institutional Placement (QIP) route. The company is planning to raise Rs 28 bn. The bank has a plan to raise Rs 50 bn during this fiscal year. Reportedly, Rs 22 bn will be infused by the government in the next few days. The government's stake in the bank currently stands at 76.5%. Post capital infusion, the stake would go up to 80%. The stock of IDBI Bank ended the day lower by 0.6%.

It may be noted that all of these developments are coming in at a time when there are news of the government considering the privatization of IDBI Bank. But the key question remains - will the government get around to privatizing the bank? Vivek Kaul attempts to answers this question in a recent edition of the Daily Reckoning.

Moving further, state-run gas utility GAIL reported its results for the quarter ended September 30, 2015. The company has posted a 66% drop in its net profit during the quarter on a YoY basis. Profits were down due to lower realisations of LPG, other liquid hydrocarbons and petrochemical products. Also, the increased interest and depreciation charges - after commissioning of a petrochemical plant - burdened the profitability.

Revenues from natural gas transmission business increased 38% YoY while sales from natural gas increased 3% YoY. Further, petrochemical sales fell 37.7% YoY to Rs 7 billion while revenue from LPG and liquid hydrocarbons business fell 56% YoY. The revenue from LPG transmission, however, increased 14% YoY to Rs 1 billion.

It is reported that GAIL sold 8% more gas at 74.25 million cubic meters (mcm) per day. The company, through its pipeline network, transmitted 90.26 mcm of gas per day during the quarter as against 91.18 mcm last year.

Petrochemical production during the quarter stood at 85,000 tonne, lower than 119,000 tonne produced during the corresponding period last year. This was mainly due to stabilization of petrochemical plant after annual shutdown and partly due to low availability of feed gas.