Sensex Opens Flat; Power & Automobile Stocks Lose

Asian share markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.5% while the Hang Seng is down 0.9%. The Shanghai Composite is trading down by 0.8%. An escalating trade dispute between the United States and other leading economies battered US stocks on Monday, handing the S&P 500 and Nasdaq their steepest losses in more than two months.

Back home, India share markets opened the day on a flat note. The BSE Sensex is trading down by 9 points while the NSE Nifty is trading down by 8 points. The BSE Mid Cap index and BSE Small Cap index both opened down by 0.1%.

Sectoral indices have opened the day on a mixed note with power stocks and automobile stocks witnessing maximum selling pressure. While, FMCG stocks & IT stocks opened the day in green. The rupee is trading at 68.15 to the US$.

It's been almost five & a half months of 2018.

While the BSE-Sensex has increased marginally so far, the mid and small cap indices have fallen between 10% and 12%.

Uncertain Times for the Benchmark Index

But that's just the indices. Individual mid and small caps have fallen much more.

The steep fall in these indices is due to several reasons.

First, there has been some profit-booking in the mid and small cap space. After all, these indices were sharp outperformers in 2017. Second, rising crude oil prices and a falling rupee have taken a toll.

And third, there is some pressure in this space due to the re-alignment of investments by mutual fund managers prompted by the recent changes in regulation.

In such an environment, it makes sense for investors to be selective while buying stocks. Focus on value and the underlying fundamentals of the business. Then, they need not worry about the market.

In the news from the energy sector. As per an article in a leading financial daily, Oil India Limited, through its exploratory efforts has made its second Hydrocarbon Discovery in the onland KG Basin NELP VI Block in the month of May 2018 at Thanelanka-l in Andhra Pradesh.

Earlier, a gas discovery was made at well Dangeru-lin Andhra Pradesh in the block.

Reportedly, the well Thanelanka-1 is the first High Pressure - High Temperature (HP-HT) well drilled by OIL and has encountered multiple sands in Gollapalli Formation of Late Jurassic-Early Cretaceous and one zone in Raghavapuram Formation of Intra Cretaceous.

At present, the well is under further testing. Market participants will closely monitor the development.

Oil India share price opened the day up by 0.5%.

Moving on to the news from the steel sector. As per an article in a leading financial daily, Tata Steel is planning to raise Rs 120 billion via non-convertible debentures. It will seek shareholders' approval for the issue at the annual general meeting on 20 July.

The announcement comes after Tata Steel raised Rs 128 billion through a rights issue in March to fund capacity expansion at its Kalinganagar plant in Odisha.

Tata Steel is reviewing its financing requirements to fund the company's growth projects and capital expenditure programmes and to maintain a strong liquidity position.

In line with its focus on growth and expansion, Tata Steel is expanding its capacity at Kalinganagar from 3 MT to 8 MT. It has also acquired Bhushan Steel for Rs 352 billion and is one of the final two bidders for Bhushan Power & Steel for which it has reportedly bid Rs 170 billion.

It is also eyeing the speciality steel business of Kolkata-based Usha Martin.

With so much going on, Tata Steel will need to raise money through different routes and with the current promoter stake, the reports noted.

Tata Steel share price opened the day down by 0.1%.