Indian Markets Thursday Wrap-Up: IT, Energy Drag Indices Lower

After witnessing a volatile trading session today, the Indian markets ended the day on a weak note as selling activity increased during the final minutes. The BSE-Sensex ended lower by around 60 points, while the NSE-Nifty, closed lower by about 15 points. Stocks from the mid-cap and small-cap spaces ended the day on a negative note as well, recording losses of around 0.2% and 0.9% respectively. Stocks from the metal, auto and FMCG spaces managed to garner the investors’ interest today, while stocks from the IT and energy sectors led the pack of losers.

Other Asian markets ended the day on a mixed note today. The European indices are currently trading in the green. Rupee was trading at 47.5 against the US dollar at the time of writing.

Telecom stocks ended the day on a firm note led by Spice Communication, Idea Cellular and MTNL. Telecom major, Bharti Airtel recently signed a three-year managed services contract for its value added services (VAS) with its group company Comviva Technologies. As part of the contract Comviva will manage the company’s VAS nodes from various partners. However, financials of the deal have not yet been disclosed. This is a positive development for Bharti as this would primarily allow the company to focus on its key strengths of marketing and branding. In addition to this, the company will be in a position to save costs and also roll out better and larger number of value added services. It may be noted that the company has signed deals of similar nature with Ericsson (ERIC) and Nokia (NOK) to manage its network and IBM for IT management.

Energy stocks ended the day on a weak note led by HPCL, BPCL and ONGC. As per a leading business daily, state run oil marketing companies (OMCs) plan to approach the government for revision of retail fuel prices on account of the rise in global crude oil prices. It is believed that the OMCs are currently recording losses of around Rs 3 per litre on petrol sales and Re 1 per litre on diesel sales. On an average, OMCs are making daily losses of around Rs 1.2 bn on sale of fuel. According to one of the state run oil marketers, OMCs start making losses on fuel sales once the price of crude oil crosses US$ 65 a barrel. Currently, oil prices have been flirting with the US$ 70 per barrel mark. It may be noted that the OMCs last revised retail fuel prices in January this year when the price of crude oil was around US$ 42 per barrel.

Inflation (as measured by WPI) for the week ending May 30 stood at 0.13%. This is the lowest figure recorded in around three decades. Last week, the figure stood at 0.48%. The main reason behind this fall was the decrease in prices of manufactured products. However, prices of food items increased on a week on week basis. It may be noted that inflation during the same week last year stood at 9.32%.