The Indian markets after losing their momentum in final hours managed a flat closing, paring all their early gains. Today, the start is likely to remain muted on sluggish global cues and the impact of Supreme Court jolt is likely to continue. The apex court has held that all coal block allocations made since 1993 till 2010 before pre-auction era have been done in an illegal manner by an “ad-hoc and casual” approach “without application of mind”. The mining, minerals and power stocks are likely to keep reeling under pressure due to SC ruling. It is being said that as much as 28,000 MW of power generation capacity may be affected if the Supreme Court were to cancel coal mines that it has declared illegal. There will be some buzz in the banking stocks too, as the Reserve Bank of India Governor Raghuram Rajan has cautioned finance secretaries of state governments against debt waiver schemes as banks are already starved of capital. Some action will be seen in the fertilizer sector, as the Minister for Chemicals & Fertilisers, Ananth Kumar, has reiterated the government’s commitment to constituting a Task Force to draft a New National Fertiliser Policy.
The US markets ended in green with the S&P 500 rising above 2,000 for the first time. Although the economic news were not that good, as the sales of new single-family homes fell 2.4 percent in July, but traders took cues from European markets which rose on hopes for stimulus. The Asian markets have made a mixed start with some of the indices trading marginally in red, as the valuation has climbed to the highest level this year.
Back home, Monday’s trading session turned out to be a disappointing one for the Indian equity markets as market participants booked all their initial gains hurt by the sharp sell-off in metal counter. The domestic benchmarks traded jubilantly for most part of the session but a sharp wave of selling, which emerged in last leg of trade, dragged the key gauges near their neutral lines. Earlier, markets traded at their fresh all time highs as sentiments remained up-beat after Finance Minister Arun Jaitley underscored that there would be huge opportunities for the corporate sector to invest once the country reached the take-off stage of economic advancement. But, sentiments turned negative after Supreme Court said coal blocks allocated via screening panel since 1993 are illegal. The Supreme Court said that guidelines were breached in coal block allocations during the UPA regime and the terms of allotment were illegal. The court also disallowed exploitation of captive coal mines by Ultra Mega Power Projects (UMPPs). Sentiments also remained down-beat after latest Reserve Bank of India (RBI) report stated that foreign direct investment inflows into India have fallen sharply from $23.47 billion in 2011-12 to $18.29 billion in 2012-13 and further to $16.05 billion in 2013-14. Domestic investors also shrugged off positive opening in European counter, while Asian markets too had ended mostly in the green. Back home, some support came from report that the foreign portfolio investors bought shares worth a net Rs 302 crore on August 22, as per provisional data from the stock exchanges. However, selling in metal stocks mainly dragged the markets lower after Supreme Court cancelled all coal blocks allocated since 1993 observing that the allocation done by screening committee was ‘not fair and transparent’. Power stocks, which edged higher after reports suggested that government has started the process for setting up four new ultra mega power projects in Bihar, Jharkhand and Odisha, which will together add 16,000 MW capacity to the country's power generation, succumbed to selling pressure by close of trade. Finally, the BSE Sensex added 17.47 points or 0.07%, to 26437.02, while the CNX Nifty lost 6.90 points or 0.09% to 7,906.30.
