Markets slip further into red; Power sector leads the laggards

Markets are not getting any respite from their fall and have slumped further in the late morning trade with major indices losing their crucial psychological levels, trading near 26600 (Sensex) and 7950 (Nifty).There is gloom in broader sphere with most of the sectoral indices suffering deep cuts. The major indices valiantly trying to hold their nearest support levels were finding is difficult in absence of any supportive cues.  The regional markets too were showing mixed trend, unable to give any firm cues. Major impact of market free fall was being seen on the power stocks, which after last day’s Supreme Court judgment of scrapping 214 of the coal blocks allocated between 1993 and 2010, have fallen further on increased woes of coal shortage. Shares of oil & gas companies too were witnessing selling pressure after the government delayed gas price hike decision. The Cabinet Committee on Economic Affairs deferred its decision on revising gas prices. Markets were getting additional pressure with the weakness in rupee, which has weakened further on high dollar demand from importers. However, some recovery can be expected in late trade with traders covering their short owing to the F&O series expiry.

The BSE Sensex is currently trading at 26601.35, down by 143.34 points or 0.54% after trading in a range of 26598.52 and 26814.20. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were in deep red; the BSE Mid cap index was down by 1.61%, while Small cap index slumped by 2.27%.

The gaining sectoral indices on the BSE were IT up by 0.88%, TECK up by 0.65%, FMCG up by 0.08% while, Power down by 1.78%, Bankex down by 1.59%, Realty down by 1.59%, Metal down by 1.57%, PSU down by 1.46% were the major losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.95%, GAIL India up by 1.87%, Cipla up by 1.61%, Dr. Reddys Lab up by 1.53% and Coal India up by 1.39%. On the flip side, Hindalco down by 3.68%, Axis Bank down by 3.30%, ICICI Bank down by 2.76%, ONGC down by 2.55% and SBI down by 2.36% were the top losers.

Meanwhile, in a major setback to the oil and gas sector, the Cabinet Committee on Economic Affairs (CCEA) has deferred its decision on revising gas prices, expected October-end, to November 15. The CCEA headed by Prime Minister Narendra Modi in its meeting, took up the issue but did not take a decision and deferred it to November 15.

Although, the Oil Ministry was in favour of remunerative gas price that will encourage investments in exploration and production, the Power Ministry does not want the rates to be hiked by more than 25 per cent over the current price of $4.2 per million British thermal unit (MBTU) as a higher fuel cost will push up electricity tariff.

It is being said that since the price increase will have direct implications on electricity tariffs and the gas used for cooking (piped natural gas) and auto fuel (compressed natural gas), the government did not want to take any risks with State elections coming up. Wider consultation is said to be essential and a draft cabinet note probable with comprehensive discussion possible only after the prime minister returns from the US.

The previous Government had in June last year approved a price formula suggested by a panel headed by C Rangarajan of doubling of rates from $4.2 per MBTU to $8.4 MBTU. The formula was to be implemented from April 1, 2014 but before a rate could be notified, general elections were announced and the Election Commission asked the government to defer the decision, later the new government deferred it for a further three months.

The CNX Nifty is currently trading at 7954.25, down by 48.15 points or 0.60% after trading in a range of 7952.30 and 8019.30. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 2.01% and TCS up by 1.94% and Dr. Reddys Lab up by 1.59%, Cipla up by 1.57% and Coal India up by 1.55%. On the flip side, Jindal Steel & Power down by 8.02%, PNB down by 5.42%, Hindalco down by 3.91%, Axis Bank down by 3.53% and ICICI Bank down by 2.86% were the top losers.

The Asian markets were showing mixed trend, Shanghai Composite increased 14.98 points or 0.64% to 2,358.55, FTSE Bursa Malaysia KLCI was up by 0.49 points or 0.03% to 1,840.57, Jakarta Composite gained 18.1 points or 0.35% to 5,192.11 and Nikkei 225 surged by 174.52 points or 1.08% to 16,341.97. On the other hand Taiwan Weighted declined by 91.37 points or 1% to 9,007.12, Straits Times decreased 5.07 points or 0.15% to 3,287.74, KOSPI Index was down by 2.11 points or 0.1% to 2,033.53 and Hang Seng was trading lower by 1.17 points or 0% to 23,920.44.