Post Session: Quick Review

Volatility playing usual on the expiry session of derivatives contract, led to obliteration of over a percent at Dalal Street on Thursday that dragged both Sensex and Nifty below psychologically crucial 26,500 and 7950 levels respectively. Much of the selling pressure was witnessed during last hour of trade as market-participants adjusted their derivative positions, especially ahead of Reserve Bank of India's policy review on September 30, 2014. Caution set in after reports suggested that RBI’s governor, Raghuram Rajan underscored that the back of inflation required to be broken since it remains persistently high and the Apex Bank would only be in comfortable position once the inflation is contained.

Nevertheless, the sentiment right from the start remained downbeat after cancellation of coal blocks allocated to companies sparked concerns that more coal would be imported, which in turn would widen the trade and current account deficits. In the extremely somber session of trade, broader indices nursed heavier losses and went home with cut in the range of 2.40%-3.40%.  For the series, while Nifty concluded with loss of over half a percent, Sensex ended with cut of around 0.30%.

On the global front, Asia pacific shares giving away earlier gains, concluded mixed as initial cheer from a rebound on Wall Street fizzled out. The US markets rebounded broadly overnight, buoyed by strong US housing data and dovish statements from a top Federal Reserve official. Meanwhile, European shares gained ground in early trade on Thursday, extending the previous session's rebound as a further drop in the euro fuelled expectations of a boost to the region's corporate earnings.

Closer home, most of the sectoral indices on BSE concluded in negative territory; however stocks from Information Technology, Technology and Healthcare counters remained the exceptions. While, IT stocks rallied after global major Accenture said it expects better profitability this fiscal year. Healthcare stocks rebounded after previous two sessions of sharp fall post Department of Pharmaceuticals withdrew guidelines issued by it on May 29 which gave National Pharmaceutical Pricing Authority (NPPA) the powers to fix the prices of drugs that are not on the essential medicines list in response to a plea filed by an organization of drug manufacturers challenging the drug regulator’s July 10 notification that brought over 100 medicines under price control.

On the flip side, amidst sea of red, stocks from Realty, Oil & Gas and Metal counters were the prominent losers. Oil & Gas witnessed nasty blow in trade after Cabinet Committee on Economic Affairs (CCEA) deferred its decision on revising gas prices, which was expected October-end, to November 15.  Besides, power and coal stocks witnessed heavy selling pressure for second consecutive session after Supreme Court cancelled all coal block allocations except for government-run blocks that operate on a non-JV basis. Additionally, banking shares also sulked for second consecutive session on concerns of asset quality due to their exposure to coal mines. The market breadth on the BSE remained in the favour of decliners; where advancing and declining stocks were in a ratio of 692:2267, while 86 scrips remained unchanged. (Provisional)

The BSE Sensex ended lower by 276.33 points or 1.03% at 26468.36 after trading in a range of 26349.55 and 26814.20. 8 stocks advanced against 22 stocks decliners on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 2.11%, while Small cap index slumped by 2.93%. (Provisional)

The gaining sectoral indices on the BSE were IT up by 1.12%, TECK up by 0.94% and Healthcare up by 0.15%, while Realty down by 3.21%, Oil & Gas down by 3.08%, Metal down by 3.00%, PSU down by 3.00% and Power down by 2.80% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 3.08%, Dr. Reddys Lab up by 2.19%, GAIL India up by 1.91%, Cipla up by 1.67% and Infosys up by 1.30%. On the flip side, SBI down by 4.24%, Hindalco down by 4.19%, Axis Bank down by 4.02%, BHEL down by 3.80% and Reliance Industries down by 3.73% were the top losers. (Provisional)

In not so positive development for the economy, India’s coal import bill is likely to go up further by around Rs 18,000 crore due to the cancellation of coal blocks by the Supreme Court. In a landmark verdict which would have significant impact on the energy sector, the apex court on Wednesday cancelled 214 coal blocks that were illegally allocated to private firms by various governments between 1993 and 2011, exempting 4 coal block owned by the government. The blocks exempted were way less than that sought by the government, which asked the court to exempt 46 coal blocks that have either started production or are near it.

Meanwhile, India the third largest importer of coal, imported around 168.4 million tonnes of coal worth Rs 95,000 crore last fiscal and this figure is expected to rise in the current year. Further, reports suggest that in the event of complete de-allocation of the coal blocks, the import bill of India would jump by $3 billion.

As estimated by Coal Insights, based on monitoring of vessels and customs data, coal and coke imports stood at 50.94 mt in the first quarter of FY15. This however showed a modest increase of 3.87% over 49.04 mt imported during the same period last year. Of the total imports in first quarter FY15, steam coal accounted for 40.2 mt, coking coal 8.48 mt and anthracite and PCI coal around 0.2 mt. Imports of pet coke were at 0.39 mt while that of met coke was estimated at 0.2 mt.

India VIX, a gauge for markets short term expectation of volatility surged 6.08% at 13.29 from its previous close of 12.53 on Wednesday. (Provisional)

The CNX Nifty ended lower by 90.55 points or 1.13% at 7911.85 after trading in a range of 7877.35 and 8019.30. There were 10 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddys Lab up by 2.52%, TCS up by 2.48%, GAIL India up by 2.08%, Zee Entertainment up by 2.02% and Cipla up by 1.41%. On the flip side, Jindal Steel & Power down by 7.70%, PNB down by 6.15%, NMDC down by 5.45%, Axis Bank down by 4.82% and Hindalco down by 4.45% were the top losers. (Provisional)

European Markets were trading mostly in the red; Germany's DAX was up by 0.32% and France’s CAC was up by 0.22%, however, UK's FTSE 100 was down by 0.12%.

Asian markets ended mixed on Thursday, with Nikkei 225 closing at the highest in more than six years. Corporate governance in Singapore deteriorated in the past two years amid slowing reforms on the subject, dipping below the perceived strength of Hong Kong for the first time since 2007. According to a survey, Hong Kong scored the highest in Asia Pacific this year with 65, followed by Singapore’s 64, though both were tied for first in the rankings because of the minimal difference in the results. Japan passed Thailand for third, while the Philippines and Indonesia ranked last. The Asian Development Bank trimmed its growth forecast on Indonesia’s economy to 5.3% from 5.7% previously, citing weak commodity prices and the government’s policy to stabilize the economy. The Manila-based institution also revised down its growth forecast on gross domestic product for next year to 5.8% from 6%. The government set a target of 5.4% growth for this year and 5.8% for 2015. Bambang Brodjonegoro, Vice-minister of Finance stated that annual inflation in Indonesia is expected to be under 5% in September and as little as 0.2% on a month-on-month basis. The bureau of statistics will release September inflation and trade data on October 1. Japan’s corporate services price index (CSPI) rose to a seasonally adjusted annual rate of 3.5%, from 3.4% in the preceding month whose figure was revised down from 3.7%.