Positive global cues fail to impact India

Tue, 29 Nov Closing

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The Indian stock market started off the day on a weak note, and they never really recovered for most of the day. Yesterday's intense buying session could not be sustained, and as a result the markets closed the day in the red on account of selling pressure. Losses on the BSE-Sensex came in the region of 159 points (down 1%) while NSE-Nifty witnessed losses in the region of 46 points. The smaller indices including the BSE Mid Cap and BSE Small Cap indices witnessed lower losses; they were trading 0.6% and 0.2% lower respectively. FMCG and healthcare stocks were some of the few gainers. Realty and banking stocks on the other hand were hammered.

Buoyancy was seen across Asian indices. Europe too is trading in the positive currently. The rupee was trading at Rs 51.99 to the dollar at the time of writing.

State refiners including Indian Oil Corporation (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) were trading weak on account of news that petrol prices would be cut by Rs 1 per litre. The decline of Singapore spot prices have somewhat offset the impact of a weaker rupee, according to people from the industry. A weaker global economy on the euro zone crisis may have also led to the decline in prices. Spot gasoline prices in Singapore this fortnight have averaged US$ 108.8 a barrel compared with US$ 114.13 in the previous fortnight, according to Reuters. Just earlier this month petrol prices were cut by 3.2%. Shares of oil refiners were trading weak on this news and were 2-4% in the red. However this news provides some relief to India's middle class population already having suffered 4 rate hikes this year.

A consortium of 26 lenders (SBI being the leader of the group) has approved a plan to restructure Rs 180 bn (US$ 3.5 bn) in debt for the loss-making carrier Air India, according to the aviation ministry. Just a few minor clarifications are still required from the Reserve Bank which should be worked out in the next few days. Most major banks have exposure to the cash strapped aviation sector. First it was Kingfisher Airlines requesting a cash infusion. And now public sector Air India is forcing banks to restructure its loans. The plan includes converting some loans to equity, restructuring some at lower interest rates and increasing the repayment tenure for the rest. The government has agreed that over the next 10 years it will put Rs 67.5 bn as equity into the carrier. It will also cover Air India's losses worth Rs 45 bn and back aircraft purchase loans worth Rs 170-180 bn.