The domestic equity markets have taken the turn for the worst and while the global cues remain positive the local indices have plunged by over a percent in the mid morning session. Oil & gas sector is witnessing a sharp plunge partially by the rise in international crude prices and partially by the sudden fall in the index heavyweight reliance Industries, which has lost over 3 percent, declining below Rs 1000 mark again after it replied to DGH that the production of national crude oil and gas could fall further. Oil regulator Directorate General of Hydrocarbons (DGH) has asked Reliance Industries to fulfill its commitment of drilling 22 wells in the KG-D6 field to boost production. It has written last month to the company asking it to drill two more wells by April to meet its commitment of drilling 22 wells in the phase-1 development of the Dhirubhai-1 and 3 or D1 and D3 gas fields in the KG-D6 block. Back on street the broader indices too have lost their stem and were marginally trading in red while the metal index was the only gaining gauge on the BSE.
The BSE Sensex is currently trading at 17,959.06, down by 190.81 points or 1.05%. The index has touched a high of 18,259.61 and low of 17,953.24 respectively. There were 11 stocks advancing against 19 declines on the index.
The broader indices too were trading lower; the BSE Mid cap and Small cap indices were down by 0.24% and 0.12%, respectively.
The lone gaining sectoral indices on the BSE was Metal, up by 0.21%. On the other hand Oil & Gas down by 2.61%, IT down by 1.20%, TECk down by 0.85%, Bankex down by 0.80% and PSU down by 0.73% were the top losers.
The top gainers on the Sensex were Maruti Suzuki up by 1.25%, Bajaj Auto up by 0.59%, Bharti Airtel up by 0.52%, Hindalco up by 0.45% and DLF was up by 0.43%.
The top losers of the index were RIL down by 3.34%, BHEL down by 1.96%, TCS down by 1.66%, HDFC down by 1.64% and M&M was down by 1.17%.
Meanwhile, after seeing eight rounds of monetary policy tightening, the Indian Inc is finally beginning to complain about surging cost of funding, notwithstanding the high inflation which might require further tightening in the central bank’s monetary policy stance.
The Reserve Bank of India (RBI) hiked its key policy rates by 25 basis points (bps) on Thursday, implementing eighth such step. Cumulatively, the repo rate, or the rate at which the central bank lends to the commercial banks, has gone up by 200 basis points over the FY11. This would mean that lending rates of banks too will go up by 200 basis points at least, if not more, although this transmission is often slow and uneven across the verticals.
However, industry is already getting cautious of surging cost of financing. Lending rates have gone up significantly, even if not to the tune of tightening by the central bank. And, with continued deficit liquidity in the system, further upside to the rates is there. Coupled with the high inflation, this can dampen investment in the economy as many projects become unviable given the high cost of money.
Raising this point, the industry body FICCI said that the series of hikes in repo and reverse repo rates implemented so far have had a visible impact on the industrial production numbers, which were decelerating substantially in recent months. 'RBI's action in raising policy rates, though expected, will adversely affect growth prospects. There is also a lot of nervousness in the market given the global developments,' said the Director General of FICCI Rajiv Kumar.
Similarly, another industry chamber Assocham said the 25 bps increase in short-term lending and borrowing rates by RBI will hit the manufacturing sector which is already witnessing a slowdown due to rising input costs and wages. 'RBI should have waited till the new agriculture crop which is expected next month,' said the Assocham President Dilip Modi. The PHD chamber of commerce too in a similar tone said that while the rate hike might be justified due to high inflation, it will nonetheless impact growth going forward.
The S&P CNX Nifty is currently trading at 5,397.00, down by 49.65 points or 0.91%.The index has touched high of 5,483.05 and 5,395.80 respectively. There were 13 stocks advancing against 34 declines while 3 stocks remained unchanged on the index.
The top gainers of the Nifty were SAIL up by 2.02%, Maruti Suzuki up by 1.07%, Bajaj Auto up by 0.61%, Bharti Airtel up by 0.60% and Tata Steel was up by 0.51%.
The top losers of the index were Reliance Industries down by 3.52%, BHEL down by 2.34%, BPCL down by 2.12%, HDFC down by 1.79% and RPower was down by 1.76%.
All the Asian markets were trading in the green; Shanghai Composite was up by 0.57%, Hang Seng has gained 0.75%, Jakarta Composite up by 0.45%, KLSE Composite higher by 0.31%, Nikkei 225 surged by 2.87%, Straits Times up by 0.24%, Seoul Composite inched higher by 1.14% and Taiwan Weighted has gained 1.36%.
