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Sensex, Nifty in red; BHEL surges 4%, SBI gains 1%

13:00

The News International Team

1:55 pm Oil market: Oil markets edged up to halt a two-day drop, helped by expectations that data later in the day would show a continued decline in the US oil rig count, a clear sign of the pressure the tumble in crude has put on crude producers.

A weekly survey by Baker Hughes last week showed the US oil rig count fell to its lowest since August 2011, although government data indicated US oil output was 9.2 million barrels a day, the highest since 1973.  “I assume we’re going to continue to see another big fall and that’s going to provide support for the market,” said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

But near-term demand for OPEC oil is likely to remain under pressure as US shale production remains strong, BP said this week.

1:45 pm Coal auction: A day after Jindal Steel & Power engineered a virtual coup by bagging rights to explore Gare Palma IV/2 and 3 at a low price of Rs 108 per tonne, a development that sent its shares soaring 26 percent yesterday, the company suffered an upset by failing to qualify as a bidder for Gare Palma IV/1.

In an exclusive interview with CNBC-TV18, JSPL MD and CEO Ravi Uppal said the company was not comfortable with the prices that were being quoted for the mine in question. “We have known that mine intimately as we were operating it for 12 to 14 years. We quoted a price that we were comfortable with. But it did not qualify.”

JSPL had been previously operating blocks IV/1, 2 and 3 and while 2 and 3 (which it won back yesterday) was for the regulated power sector, block 1 was for the unregulated sector (steel, cement and iron).

1:30 pm FII view: As a global investor, Geoff Dennis of UBS will be focusing on fiscal deficit and whether it can be reigned within 3.5-4 percent of GDP, structural reforms once again focusing on the fiscal side and significant increases in infrastructure spending. “What’s important is the trajectory of fiscal deficit and whether it is coming down… As long as it is lower than 4 percent of GDP, the market will not be too worried,” he told CNBC-TV18.

Despite high valuations, Dennis remains overweight on India. He believes valuations should be high as he expects earnings growth to be 15-16 percent in dollar terms in two years. He says earnings growth continues to remain a challenge for many emerging markets, further justifying the high valuations in India.

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The market is still struggling to get in green zone. The Sensex is down 105.28 points or at 29356.99 and the Nifty is down 25.35 points at 8869.95. About 1426 shares have advanced, 1202 shares declined, and 205 shares are unchanged.

BHEL is up 4 percent while Hindalco, SBI, Tata Steel and Sesa Sterlite are top gainers in the Sensex. Among the losers are Reliance, ICICI Bank, Wipro, Tata Power and Wipro.

Abhay Laijawala, Deutsche Equities believes the government needs to unequivocally signal its medium-term commitment to reviving stalled investment momentum, through increasing capital expenditure in critical sectors like roads, railways, irrigation and defence.

“The government can do this by articulating a 3-4 year roadmap to raise share of capital expenditure to 20 percent of total budget expenditure by FY18 from 10-12 percent currently,” he adds.

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