Andrew L Dcunha

Mumbai, Aug 26: Indian benchmark  Sensex slipped below the psychological 16000, Nifty below 4800 mark as investors turned cautious and booked profits following negative global financial indications .  On the domestic front  rising inflation  added to the markets woes  The markets had a positive opening, however, the initial momentum could not be sustained for very long.   The 30-share Sensex closed at 15848.83, down 297.50 points, after touching a low of 15,765.53 earlier in the session. The 50-share Nifty shed 91.80 points touched an intra-day low of 4,720, before closing the session at 4,747.80 (lowest closing for the first time since February 5, 2010).

Realty, Metals, Power, PSU, Oil & Gas, Banking and FMCG indices on the BSE are down between 4% and 2%. All sectoral indices end lower. The whole ADAG stock saw heavy selling pressure. On BSE, Reliance Capital was down over 12 per cent. Reliance Communications & Reliance Infrastructure slipped over 11 per cent and 6 per cent respectively.  Mining stocks such as NMDC, Sesa Goa, JSW Steel Ltd slipped 2-6% after Supreme Court banned mining of iron ore in Tumkur, Chitradurga.

Asian Indexes were choppy today swinging between positive and negative territory during the session with Hong Kong’s Hang Seng Index  finishing down 0.9%, China’s Shanghai Composite index slipping 0.1% South Korea’s Kospi   rose 0.8% and Japan’s Nikkei rose 0.3% after each changed direction a few times.

European stock markets dropped Friday as investors remained cautious ahead of a speech by U.S. Federal Reserve Chairman Ben Bernanke.

Oil PSUs may post Rs 1.2 trillion revenue on fuel sales in FY'12

Government run fuel retailers may post a Rs 121,000 crore  revenue loss on selling diesel, domestic LPG and kerosene at government-controlled rates in the financial year 2011-12, according to Oil Minister S Jaipal Reddy. This huge loss is despite the recent hike in diesel prices by Rs 3 per litre, kerosene by Rs 2 a litre and LPG rates by Rs 50 per cylinder. Customs and excise duties have also been reduced. Indian Oil, Hindustan Petroleum and Bharat Petroleum currently lose Rs 5 per litre of diesel, Rs 23.7 per litre of kerosene and Rs 247 per cylinder of domestic LPG.

Thus, the government will be under huge pressure to absorb the losses on account of the reduction in duties as well as compensation for under-recoveries for these oil marketing companies (OMCs). These losses have an adverse effect on the cash flows and thus the financial health of these OMCs. In order to meet their working capital requirements they are forced to borrow heavily from the market, which adds an interest burden to their shoulders.

Indian rupee continues decline

The Indian rupee declined to Rs 46.10 per US dollar in early trade today on persistent dollar demand from importers, coupled with a higher dollar in overseas markets.

The rupee resumed slightly lower at Rs 46.05/06 per dollar on the Interbank Foreign Exchange, as against yesterday's close of Rs 46.04/05 per dollar, and dropped further to Rs 46.10 per dollar before quoting at Rs 46.07/08 per dollar at 10:30 am. The domestic currency hovered in a range between Rs 46.00 and Rs 46.10 per US dollar during morning deals. Sustained dollar demand from importers, mainly oil refiners, and persistent foreign capital outflows in view of weak equity markets affected the rupee value against the dollar

Andrew L D Cunha, Managing Director, WinWin Fin  Advisory Pvt. Ltd. Mangalore. Email:  finadvisoryltd@yahoo.com