India Deregulates Natural Gas Market

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
04 Jun, 2010
New York City

The Reserve Bank of India needs to consider the credit crunch created after payment of license fees for 3G phone services drained cash from the system, said Kaushik Basu, Chief Economic Advisor in the finance ministry.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai trade higher and the government deregulated the natural gas market. ONGC and OIL closed higher. ArcelorMittal plans to set a steel plant in Karnataka. TVS Motor jumps on strong sales in May. Ashok Leyland sales rises 21%.[/R]

The Sensex index in India increased 95.36 or 0.56% to 17,117.69 and CNX Nifty index rose 26.10 or 0.51% to 5,136.60. Among the Sensex 30 stocks, 19 rose and 11 fell.

On BSE trading, 1,406 stocks advanced, 1,336 declined and 116 were unchanged. IT and realty stocks reversed early losses. Banking and capital goods stocks gained.

Shares of three state-run oil marketing companies rose 0.34% to 1.14% after a member of the Planning Commission Kirit Parikh told the media that the panel of ministers may deregulate fuel prices next week.

Six sugar stocks rose by 1.28% to 6.31% on reports a panel of ministers will consider whether to re-impose a tax on white sugar imports next week as millers fear a flood of cheap imports.

Rupee edged lower 4 paisa to Rs 46.72 against one dollar.

The Reserve Bank of India needs to consider the credit crunch created after payment of license fees for 3G phone services drained cash from the system, said Kaushik Basu, Chief Economic Advisor in the finance ministry.

“With the 3G auction now over and demand for credit having picked up, there is a credit hunger now. The Reserve Bank of India needs to take stock of it, as it balances inflation management and growth, while deciding actions on policy rates,” said Basu in an interview in New Delhi yesterday.

World’s largest steel producer ArcelorMittal on Thursday signed an agreement with the Karnataka government to establish a 6 million ton integrated steel plant in Bellary district.

Speaking to reporters on the sidelines of the two-day conference organized by the state government in Bangalore, company Chairman and CEO Lakshmi Mittal said “The company expects to invest about 30,000 crore rupees in the project, including a 750 MW power plant, and we hope to have fast progress in the state.”

In what could be indicative of the introduction of a free pricing regime, India’s Petroleum and Natural Gas Ministry has given freedom to the state-run ONGC and Oil India Ltd to price natural gas produced by them at market rates.

According to the notification issued on May 31, the government has made it clear that any additional natural gas produced from the blocks given to ONGC and OIL will fall under the free pricing category.

Wipro Infrastructure Engineering, the information technology giant’s hydraulics arm, will in six months launch one of Indian industry’s most ambitious attempts to tap China’s fast growing motor vehicle market, when it opens its sprawling new $5.7 million facility at Changzhou in southern China.

To begin with Wipro will invest around 40 million yuan in the 40,000 square meter plant, which will manufacture high pressure precision hydraulic cylinders and tipping systems.

Fatpipe Networks, a leader in wide area networking solutions, will tap the capital market with an initial public offer of equity shares for Rs 49 crore.

The company has set a price range between Rs 82 and Rs 85 and the issue is scheduled to open between June 7 and June 9. The proceeds will be utilized for expanding product lines, R&D and for setting up 16 marketing offices across the world and for funding strategic acquisitions.

Gainers & Losers

Ashok Leyland fell 0.39% to Rs 64.05 after the company said total vehicle sales surged 229% to 6,502 units in May 2010 over May 2009.

Aqua Logistics Ltd rose 0.97% to Rs 440.65 after the company said it has completed acquisition of three Hong Kong-based companies CIT Logistics, TAG Logistics and AGI Logistics through its wholly owned unit Aqua Logistics HK.

BEML Limited rose 1.04% to Rs 1,001.00 after the company signed an agreement with Karnataka Government for establishing another manufacturing complex in Bangalore.

Cadila Healthcare Limited rose 2.35% to Rs 620.45 after the company introduced India''s first locally developed swine flu injectable vaccine on June 3, priced at Rs 350 per dose.

Godrej Consumer Products Limited rose 2.94% to Rs 343.15 after the company said it is planning to raise Rs 600 crore to Rs 700 crore through institutional placement to fund acquisitions.

Grasim Industries Limited fell 0.86% to Rs 1,773.95 after the company temporarily suspended production of staple fiber plant at Nagda in Madhya Pradesh due to water shortage.

Hindalco Industries Limited rose 1.23% to Rs 147.85 after consolidated net profit galloped 711.22% to Rs 3925.50 crore on 7.95% fall in net sales to Rs 60,722.10 crore in the year ended March 2010 over the year ended March 2009.

Hindustan Unilever Limited rose 2.4% to Rs 253.15 after the company said the board of directors will meet on June 11, to consider the proposal for buy back shares.

Hindustan Zinc Limited fell 0.47% to Rs 967.15 after the company reduced zinc prices.

ITC Limited rose 2.07% to Rs 290.75 extending gains after the company said a board meeting will be held on June 18 to consider issue of bonus shares.

Punj Lloyd Limited rose 1.19% to Rs 119.15 after the company secured a contract from the Hyundai Engineering & Construction Co. Limited for the Steel Structure, Equipment and Piping installation Works on Habshan-5 Utilities & Offsites Project in UAE for a value of approx Rs 96 crore.

Reliance Communications Limited rose 1.4% to Rs 166.65 after MTN Group Limited denied that the company is in talks with Reliance.

Sterlite Industries (India) Limited fell 0.26% to Rs 648.00 after copper prices fell in Shanghai and London.

TVS Motor Company Limited rose 6.71% to Rs 108.10 extending recent gains after the company’s total two wheeler sales grew 30% to 1,54,667 units from a year earlier.

United Phosphorus Limited rose 3.25% to Rs 187.25 extending gains for the third consecutive day after the company acquired global non-mixture mancozeb fungicide business and related assets from DuPont for an undisclosed sum.