PSU OMCs decline amid surge in global oil prices

Key benchmark indices continued to hover with small movement above the flat line in early afternoon trade. At 12:15 IST, the barometer index, the S&P BSE Sensex, rose 40.77 points or 0.13% at 32,637.31. The Nifty 50 index was up 0.01% at 9,999.

Market sentiment remained subdued amid fears of global trade war. Higher global crude oil prices also kept the markets pressurized. In global commodities market, Brent crude oil futures were hovering above $70 a barrel. India imports majority of its crude requirements.

After initial volatility, key indices languished in a narrow range around the flat line so far. However, the Sensex hit intraday high in early afternoon trade.

Among secondary indices, the S&P BSE Mid-Cap index fell 0.09%. The S&P BSE Small-Cap index dropped 0.23%. Both these indices underperformed the Sensex.

The broad market depicted weakness. There were nearly two losers against every gainer on BSE. 1,627 shares declined and 838 shares advanced. A total of 141 shares were unchanged.

Realty stocks were mixed. Oberoi Realty (up 1.68%), Prestige Estates Projects (up 0.73%), Godrej Properties (up 0.48%) and D B Realty (up 0.34%) gained. Unitech (down 2.46%), HDIL (down 2.02%), Sobha (down 1.78%) and DLF (down 0.89%) declined.

Indiabulls Real Estate rose 0.81%. The company said that the company's wholly owned subsidiaries, pursuant to their respective board authorizations, have executed definitive transaction documents with the entities controlled by the Blackstone Group L.P., to divest their entire holding in certain subsidiaries and thereby indirectly divesting 50% stake in Indiabulls Properties (IPPL) and Indiabulls Real Estate Company (IRECPL) at an aggregate enterprise value of approximately US$1461.5 million equivalent to Rs 9500 crore (transaction). The announcement was made after market hours on Friday, 23 March 2018.

Substantial part of sale proceeds would be utilized towards repayment of existing debts of the company and its subsidiaries, and for achieving sustainable long term growth and for further strengthening of on-going businesses. The transaction is expected to be concluded during this financial year. Post conclusion of transaction, the company will cease its sole control over IPPL and IRECPL.

In a separate announcement made on Sunday, 25 March 2018, the company has entered into definitive transaction document(s) to sell its stake in its wholly owned subsidiaries, namely Selene Estate and Airmid Infrastructure (owning residential assets at Chennai) to a third party investor, for an aggregate consideration of Rs 285 crore.

Stocks of public sector oil marketing companies (PSU OMCs) declined as Brent crude oil hovered above $70 a barrel. HPCL (down 3.48%), BPCL (down 1.85%) and IOCL (down 1.33%) slumped. Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.

Overseas, most Asian stocks edged lower amid fears that rising tensions between the United States and China could lead to a full-blown trade war. US stocks fell sharply on Friday, 23 March 2018 as investors assessed the possibility of a trade war brewing between the US and China.

Meanwhile, reports suggested that China and the US have quietly started negotiating to improve US access to Chinese markets, after a week filled with harsh words from both sides over Washington's threat to use tariffs to address trade imbalances.

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