Stock markets in India continue to trade in a narrow range amid weakness in the Asian stock markets. Sectoral indices are trading mixed with stocks in the banking sector and consumer durables sector witnessing maximum selling pressure. Gains are largely seen in capital goods sector and automobile sector.
The BSE Sensex is trading down by 76 points (down 0.2%), and the NSE Nifty is trading down by 15 points (up 0.1%). Meanwhile, the BSE Mid Cap index is trading down by 0.1% while, the BSE Small Cap index is trading flat. The rupee is trading at 67.44 to the US$.
We are nearing the end of May. That's almost five 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.
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. 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.
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 telecom sector. As per an article in a leading financial daily, Idea Cellular has the rollout of Idea VoLTE service across nine major circles- Mumbai, Karnataka, Punjab, Haryana, West Bengal, UP East, UP West, Bihar & Jharkhand and Rajasthan.
Idea VoLTE is now available in 15 circles which cover 85% of the country's mobile subscriber base, that also makes the telco biggest VoLTE network by a GSM operator.
One shall note that Idea Cellular, launched VoLTE services in Maharashtra & Goa, Madhya Pradesh & Chhattisgarh, Gujarat, Andhra Pradesh & Telangana, Tamil Nadu and Kerala circles earlier this month.
Furthermore, as part of the expansion offer, Idea is providing 30GB of free data to its VoLTE users.
The rollout of Idea VoLTE in 15 circles means the users will be able to use HD voice services delivered over Idea's 4G/LTE network.
The benefits of using VoLTE doesn't end there. Idea VoLTE also allows users to continue using the 4G internet while simultaneously being on a voice call. Same as on Airtel and Vodafone network, Idea VoLTE enables users to automatically be routed to 3G/2G when they move out of 4G network using Single Radio Voice Call Continuity (SRVCC), thus ensuring continuous call connectivity.
Having said that, Idea Cellular is still working with mobile handset brands to increase the Idea VoLTE compatible device list.
Idea Cellular share price was trading up by 3% at the time of writing.
Moving on to the news from oil & gas sector. As per an article in a leading financial daily, state oil companies spent a record Rs 1290 billion in 2017-18 on acquisitions as well as expanding oil production, refining and distribution facilities. Capex was 22% more than the previous year.
In the last few years, state oil firms have been spending at a rapid pace on drilling wells, laying pipelines, upgrading refineries, expanding cooking gas bottling facilities and marketing infrastructure to meet the growing domestic oil demand. They plan to spend Rs 880 billion in the current fiscal year.
India's oil demand expanded 5.3% in 2017-18, after rising 5.4% in 2016-17 and 11.6% in 2015-16. Growth in production of refined products lagged demand expansion in all three years.
The government's focus on pushing up natural gas consumption has also prompted bigger investments in pipelines and liquefied natural gas import terminals.
The capex has expanded sharply in the last two financial years due to major acquisitions by state oil firms. ONGCspent about Rs 450 billion in acquiring the government stake in Hindustan Petroleum Corp and a gas field from Gujarat State Petroleum Corp in 2017-18.
Similarly, in 2016-17, ONGC Videsh, Indian Oil, Oil India and Bharat Petroleum spent about US$2.2 billion to acquire stake in Russia's Vankor field. In 2017-18, ONGC's capex more than doubled to Rs 720 billion from Rs 280 billion in the previous year. However, capex for these three companies dropped sharply in 2017-18 since they made no acquisition as they did in the previous year.
Spending by GAIL rose two-thirds to Rs 36 billion as its gas pipeline project in eastern India gathered pace. HPCL's capex too expanded by a fifth to Rs 70 billion.
India's oil production has, however, crawled for several years, necessitating big investments by ONGC and Oil India in exploration and production. ONGC drilled 503 wells at a cost of about Rs 140 billion in 2017-18. It has now set a target of spending Rs 176 billion on drilling a record 535 wells in 2018-19.
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