BPCL, Videocon Industries jump as Petrobras JV strikes oil in Brazil

Weakness continued on the bourses in afternoon trade as European stocks edged lower in early trade there. The market sentiment was hit adversely by hawkish comments from the Reserve Bank of India governor Raghuram Rajan on Thursday, 26 September 2013, that inflation continues to remain high. The barometer index, the SP BSE Sensex, was down 116.98 points or 0.59%, off about 205 points from the day’s high and up close to 20 points from the day’s low. The market breadth, indicating the overall health of the market, was positive.

Shares BPCL and Videocon Industries, both, jumped after a drilling campaign off Brazil’s northeastern coast showed that an area controlled by Petrobras and the Indian companies likely holds more than a billion barrels of oil. Among FMCG stocks, Britannia Industries hits record high.

The market edged higher in early trade on firm Asian stocks. The market reversed initial gains and hit fresh intraday low in morning trade. Key benchmark indices weakened once again after trimming intraday losses in mid-morning trade. The Sensex extended losses and hit fresh intraday low in early afternoon trade. Weakness continued on the bourses in afternoon trade.

In the foreign exchange market, the rupee extended Thursday’s gains triggered by the Reserve Bank of India’s concessional swap facility for banks on overseas borrowings. The partially convertible rupee was hovering at 61.925, compared with its close of 62.07 on Thursday, 26 September 2013.

At 13:18 IST, the SP BSE Sensex was down 116.98 points or 0.59% to 19,776.87. The index declined 136.65 points at the day’s low of 19,757.20 in early afternoon trade, its lowest level since 25 September 2013. The index rose 87.72 points at the day’s high of 19,981.57 in early trade.

The CNX Nifty was down 31.25 points or 0.53% to 5,851. The index hit a low of 5,846.40 in intraday trade, its lowest level since 25 September 2013. The index hit a high of 5,909.20 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,084 shares rose and 1,058 shares dropped. A total of 142 shares were unchanged.

Among the 30-share Sensex pack, 21 stocks fell and rest of them rose. ICICI Bank (down 2.67%), Tata Steel (down 2.47%), Hindalco Industries (down 2.26%), Bhel (down 2.06%), Bharti Airtel (down 1.82%), HDFC Bank (down 1.54%), Hindustan Unilever (down 1.53%), HDFC (down 1.36%), Dr Reddy’s Laboratories (down 1.2%) and NTPC (down 1.17%), edged lower from the Sensex pack.

Hero MotoCorp (up 2.74%), Sun Pharmaceutical Industries (up 1.5%), Reliance Industries (up 0.65%), Bajaj Auto (up 0.5%), TCS (up 0.46%), Jindal Steel Power (up 0.21%), Sesa Goa (up 0.16%) and Coal India (up 0.07%), edged higher from the Sensex pack.

Shares BPCL and Videocon Industries, both, jumped after a drilling campaign off Brazil’s northeastern coast showed that an area controlled by Petrobras and the Indian companies likely holds more than a billion barrels of oil. BPCL jumped 7.76% to Rs 333.80. Videocon Industries spurted 7.56% to Rs 182.75.

Videocon Industries announced during trading hours today, 27 September 2013, that Brazil’s state-run oil company Petrobras and IBV Brasil, a 50-50 joint venture between BPCL and Videocon Industries, have determined that “SEAL-11″ exploration block contains very large amounts of high-quality light crude oil and natural gas. The SEAL-11 block and adjacent areas, 100 kilometers off the coast of the Brazilian state of Sergipe, may hold more than 3 billion barrels of oil in place, according to reports. If confirmed, that would make the block — owned 60% by Petrobras and 40% owned by IBV — one of the biggest global discoveries of the year.

Shares of biscuits major Britannia Industries rose 3.21% to Rs 780 after hitting a record high of Rs 783.75 in intraday today, 27 September 2013.

MRF (up 5.10%), Aurobindo Pharma (up 3.91%), Dish TV India (up 3.63%), United Breweries (up 3.58%) and United Spirits (up 3.47%), were among the major gainers in the BSE’s ‘A’ group.

Wockhardt (down 4.99%), Oberoi Realty (down 4.12%), Indian Hotels Company (down 3.76%), Essar Oil (down 3.32%), IRB Infrastructure Developers (down 3.16%) and TTK Prestige (down 2.93%), were among the major losers in the BSE’s ‘A’ group.

Bond prices dropped after Reserve Bank of India (RBI) governor Raghuram Rajan’s hawkish comments on inflation on Thursday, 26 September 2013. The yield on the benchmark federal paper 7.16% GS 2023 was hovering at 8.7388%, higher than its close of 8.7178% on Thursday, 26 September 2013. Bond prices and bond yields are inversely related. The RBI has a neutral stance on interest rates for now, but it is still worried about high inflation, even when taking out volatile food prices, Rajan said on Thursday, 26 September 2013. He said that inflation is not due just to higher food prices. “Unfortunately there is still some inflation when you strip out the effects of food and energy. Therefore it is not just food, it’s other factors also which are driving inflation,” Rajan told reporters on the sidelines of a conference. “CPI core (inflation) is about 8.2 percent, that is certainly high, but I think we are looking at all aspects of inflation at this point,” Rajan said.

Turning to cross-border capital flows, Rajan said that especially emerging markets were often the losers as flows turned around very quickly. “We need to solve this problem (of capital flows) and we need to take a more practical view of this,” Rajan said, without going into details.

The Reserve Bank of India on Wednesday, 25 September 2013, said that it is closely and continuously monitoring liquidity conditions in the banking system and will take actions as appropriate, including open market operations, to ensure that adequate liquidity is available to support the flow of credit to productive sectors of the economy.

European stocks were trading lower in early trade on Friday, 27 September 2013, as investors awaited a report on economic confidence in the euro area. Key benchmark indices in UK, France and Germany were down by 0.04% to 0.22%.

Asian stocks rose on Friday, 27 September 2013, after US jobless claims unexpectedly fell and Japan’s inflation accelerated to the fastest pace since 2008. Key benchmark indices in China, Hong Kong, Taiwan, Indonesia, Singapore and South Korea rose 0.20% to 0.58%. Japan’s Nikkei Average fell 0.26%.

Japan’s inflation accelerated to the fastest pace since 2008 in August on higher energy costs, underscoring pressure on Prime Minister Shinzo Abe to drive wage increases as he seeks to end 15 years of deflation. Consumer prices excluding fresh food increased 0.8% from a year earlier, the statistics bureau said today in Tokyo.

Trading in US index futures indicated a flat opening of US stocks on Friday, 27 September 2013. US stocks rose on Thursday, halting the longest slump this year for the Standard Poor’s 500 Index, as an unexpected drop in jobless claims overshadowed concern that a budget impasse could hurt economic growth.

A Labor Department report showed the number of Americans filing applications for unemployment benefits unexpectedly fell last week, indicating further progress in the labor market. First-time claims for unemployment benefits in the US dropped by 5,000 to 305,000 last week. The economy expanded at faster pace in the second quarter from the previous three months, with gross domestic product rising at a 2.5% annualized rate, the Commerce Department said. A separate report added to signs that rising mortgage rates may have slowed housing market momentum. Fewer Americans signed contracts in August to buy previously owned homes, figures from the National Association of Realtors showed.

The 2014 fiscal year in the United States starts on Monday, 1 October 2013, and politicians remain at loggerheads over passing a budget, with this weekend expected to see some crucial scrambling in Washington. Investors are also closely watching debt-ceiling negotiations in Washington. House Speaker John Boehner said on Thursday that his party will push for a bill that will tie increasing the debt ceiling and continue funding the government past Oct. 1 to more cuts in federal spending. Senate Majority Leader Harry Reid, D-Nev., said his chamber plans to have a stopgap budget bill finished by Sunday.

The Senate on Wednesday moved toward advancing a bill that would keep the government open after Monday without wiping out funding from the health-care law. Also Wednesday, Treasury Secretary Jacob Lew told Congress the Treasury will only have $30 billion in cash by Oct. 17, putting the nation on the brink of default.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said on Thursday that the US central bank will face risks as it pursues its exit strategy from recent unconventional policies. Lacker is a nonvoting member of the Fed’s policy-making committee. Participating on a panel in Germany, Fed Gov. Jeremy Stein, a voting member, said the US central bank should develop a methodical approach to tapering by linking reduced asset purchases to the unemployment rate. In Houghton, Mich., Minneapolis Fed President Narayana Kocherlakota, who votes next year, said the central bank should do “whatever it takes” to bolster the labor market.

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BPCL, Videocon Industries jump as Petrobras JV strikes oil in Brazil