India Markets Monday Wrap-Up: Europe Still Weighs Heavy On Markets

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 |  Includes: EPI, IFN, IIF, INDY, INR, PIN, SCIF, SCIN
by: Equitymaster

Indian stock market traded in negative territory throughout the session today. This was on account of weak cues from the Eurozone, as there still seems no concrete resolution to the debt crisis. Markets failed to recover after opening week and ended the day well below the dotted line. While the BSE-Sensex closed lower by around 189 points (down 1.1%), the NSE-Nifty closed lower by around 52 points (down 1%). The smaller indices however fared slightly better, albeit still in the negative. While the BSE Mid Cap closed lower by 0.3%, the BSE Small Cap closed flat. Gains were largely seen in the consumer durables and auto space. Capital goods and banking stocks however ended weak.

As regards global markets, all Asian indices closed in the red today while European indices have also opened deep in the red. The rupee was trading at Rs 47.75 to the dollar at the time of writing.

Top infrastructure financiers, India Infrastructure Finance Company (IIFCL), IDFC and LIC recently entered into a tie-up in order to provide financial resources of up to Rs 300 bn to various infrastructure projects. This will help financing under the takeout finance. This method helps banks to take care of their asset liability mismatches. The government has earlier appointed IIFCL as the special agency to look after the takeout finance scheme in 2010. However, it could take only 20% of a project's total cost. But, through this recent agreement signed by the three parties, the limit can go up to 50%. IIFCL and LIC will take 20% each of a project cost, with IDFC taking the remaining 10%. India requires up to a US$ 1 trillion investment in infrastructure in the 12th five-year plan period starting in 2012. This new move should help banks to take on more exposure into infrastructure financing which is desperately needed in a growing country like India.

Oil & Natural Gas Corp. (ONGC) plans to buy 10 onshore rigs for about Rs 11.5 bn (US$ 242.1 m). Six of these will be deep-drilling rigs and four will be mobile drilling rigs for onshore operations. The deep-drilling rigs are estimated to cost around Rs 8 bn and are likely be purchased from Bharat Heavy Electricals Ltd (BHEL). This move is in line with the company's plans to boost exploration and development activity. It plans to spend this money to stop declining output levels and meet the growing demand for energy in the India, the world's second-fastest growing major economy. The energy major accounted for 65% of India's crude oil and 44% of its natural gas output in the financial year 2010-11. But a number of its fields are aging having been in production for several decades. However, it has so far not been able to bring any big new fields into production as of yet.