Benchmarks surrender to selling pressure after flattish start

After making a flat but positive start, benchmark equity indices have now slipped into negative territory and trading with slender loss as investors turned cautious and trimmed position ahead of the expiry of September derivative contracts tomorrow. Besides, some participants were adopting a wait-and-watch stance ahead of the Supreme Court verdict on coal block allocations later today. The apex court will pronounce its verdict at 2 pm on 218 blocks whose allocation was declared illegal by it. Sentiment on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1185 crore on September 23, 2014. However, losses remained capped as Former Finance Minister P Chidambaram in its statement said that India could achieve 8% growth in the next 2-3 years if it followed the path of fiscal prudence, which could be financed by domestic savings and some foreign direct investment.

Barring FMCG, all BSE sectoral indices were trading in the red with stocks in the Capital Goods and Infrastructure sector leading the losses. In scrip specific development, shares of Bajaj Electricals have surged on bagging new order worth Rs 108.63 crore for Turnkey construction of Transmission Lines from Maharashtra State Electricity Transmission Company. Besides, Manappuram Finance rose after its board approved diversifying into microfinance and financing commercial vehicles.

On global front, Asian stock markets drifted as the boost from stronger Chinese manufacturing was offset by grim economic news from Europe and airstrikes in Syria. On the other hand, US stocks fell overnight, weighed by downbeat European data and as the first US-led air strikes in Syria against Islamic State fighters dampened investor risk appetite.

Back home, the rupee lost 7 paise to 61.01 against the dollar in early trade due to increased demand for the US currency from importers. The market breadth on BSE was negative, out of 2321 stocks traded, 668 stocks advanced, while 1588 stocks declined on the BSE.
 
The BSE Sensex is currently trading at 26680.98 down by 94.71 points or 0.35% after trading in a range of 26844.70 and 26641.76. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.48%, while Small cap index was down by 1.71%.

The losing sectoral indices on the BSE were Capital Goods down by 1.67%, Infrastructure down by 1.35%, Realty down by 1.28%, Auto down by 0.91%, Power down by 0.88%, while FMCG up by 0.83% was the only gaining index on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.79%, Wipro up by 1.76%, Coal India up by 1.49%, Mahindra & Mahindra up by 0.85% and ITC up by 0.84%. On the flip side, BHEL down by 2.19%, Tata Power down by 1.88%, Tata Steel down by 1.80%, Cipla down by 1.78% and Larsen & Toubro down by 1.73% were the top losers.

Meanwhile, Power companies will be eyeing with bated breath the Supreme Court decision, which will be deciding the fate of 218 coal blocks allocated illegally to companies by the Centre. The apex court on August 25 had held that all coal blocks allocations since 1993 by various regimes at the Centre have been made illegally and arbitrarily on an “ad-hoc and casual” approach “without application of mind” and “Common good and public interest have, thus, suffered heavily” due to lack of fair and transparent procedure resulting in “unfair distribution” of the “national wealth”. The bench of chief justice has further stated that entire allocation of coal blocks as recommended by the Screening Committee from July 14, 1993, in 36 meetings and the allocation made through the government dispensation route suffered from the vice of arbitrariness and legal flaws.

Earlier, the apex court reserved the judgement into whether it would cancel the award of 218 coal blocks it had ruled illegal. The blocks include about 40 that are producing coal, estimated to have a capacity of about 9 percent of the 566 million tonnes India produced last year and the government claimed that Rs 2 lakh crore investments have been made altogether.

It has been reported that the government is working out to meet the exigencies that could arise from the final court order and the Attorney General Mukul Rohatgi had told the court that if coal block allocations are cancelled, the government was ready to re-auction the blocks.

The CNX Nifty is currently trading at 7,986.90 down by 30.65 points or 0.38% after trading in a range of 8,042.05 and 7,979.50. There were 15 stocks advancing against 35 declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 1.96%, Wipro up by 1.79%, DLF up by 1.38%, Coal India up by 1.34% and ITC up by 0.94%. On the flip side, PNB down by 2.76%, BPCL down by 2.67%, Jindal Steel & Power down by 2.47%, BHEL down by 2.33% and Bank of Baroda down by 2.15% were the top losers.

Asian markets were trading mostly in the green; Hang Seng increased by 0.40%, KOSPI Index spurted by 0.28%, Jakarta Composite strengthened by 0.21%, Shanghai Composite added 0.94%, FTSE Bursa Malaysia KLCI jumped 0.06% and Taiwan Weighted was up by 0.30%.  On the flip side, Nikkei 225 tumbled by 0.46% and Straits Times was down by 0.09%.