Indian equities continue weak trade in late afternoon session

Indian equity markets witnessed some profit booking amid choppy trade in the late afternoon session trading in a narrow range and putting pause on yesterday’s rally. The market fizzled on account of profit booking as investors seem to be lost in absence of any positive triggers for the market. Traders were seen piling up the positions in Oil & Gas and Realty sector while selling was witnessed in IT, Metal and TECk sector. IT bellwether TCS was down for its lowest level in almost two months despite announcing quarterly earnings that were in line with street expectations amid speculations that of slowdown in major importing regions like Europe and the US will impact future earnings. However, index heavyweight Reliance Industries was firm trading with gain of around more than four percent on reports that the board is mulling over share buy-back which underpinned the positive sentiments in the stock, giving the much needed support and preventing the downside for the benchmarks. Meanwhile, shares of aviation companies like Jet Airways, Kingfisher and SpiceJet rallied after the government opined that it was considering allowing foreign carriers to take 49 percent stake in Indian airlines. On the global front, Asian markets largely traded in green while the European markets were trading in red on pessimistic note. Investors seemed to be shifting their focus to Portugal’s debt auction and talks in Greece on its debt restructuring. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,950 and 16,500 levels, respectively.

The BSE Sensex is currently trading at 16,440.45 down by 25.60 points or 0.16% after trading as high as 16,517.96 and as low as 16,393.79. There were 19 stocks advancing against 10 declines while 1 stock remained unchanged on the index.

The broader indices were trading on a negative note; the BSE Mid cap index declined 0.94% while Small cap slipped 0.75%.

On the BSE sectoral space, Oil & Gas up 3.07% and Realty up 0.18% were the only gainer while IT down 2.04%, Metal down 1.80%, TECk down 1.55%, Power down 1.02% and Bankex down 0.91% were the major losers in the space.

RIL up 4.50%, ONGC up 2.69%, Hero MotoCorp up 1.71%, DLF up 1.14% and Coal India up 1.12% were the major gainers on the Sensex, while Tata Steel down 4.31%, M&M down 3.65%, BHEL down 2.64%, ICICI Bank down 2.62% and Wipro down 2.58% were the major losers in the index.

Meanwhile, a high level delegation consisting of top corporate leaders of the power industry like Ratan Tata, Anil Ambani, Prashant Ruia, L Madhusudan Rao, Anil Aggarwal and Ashok Hinduja are likely to meet Prime Minister Manmohan Singh today to discuss issues relating to shortage of coal and gas, issues arising out of coal imports becoming unviable, tariff hike and pending reforms in the power sector.

India has about 10% of the world's coal reserves, but has struggled to provide enough of the fuel to power sector because of challenges in land acquisition and environmental clearances for mining. The delegation will apprise the Prime Minister of the problems they face and the need to unleash the next round of reforms to meet the growing energy needs and to keep pace with the 9% GDP growth targeted in the 12th Five Year Plan.

From the government’s side, Finance Minister Pranab Mukherjee, Power Minister Sushil Kumar Shinde, Environment and Forest Minister Jayanthi Natarajan, Coal Minister Sriprakash Jaiswal and Planning Commission Deputy Chairman Montek Singh Ahluwalia are likely to attend the meeting.

Critical issues like deferred environmental clearances, slash in customs duty on imported coal, shortage of domestic coal and gas, and poor financial health of the distribution companies are likely to form the core of the discussions. The proposal to slap duty on imported power equipment would also figure in the discussions.

The Planning Commission has, however already showed its inclination for hike in tariffs to pay off the private power developers in view of increased cost of coal and other raw material after warning that banks have already started showing their unwillingness to finance power projects due to the poor outlook and various cost factors in the sector. Currently, the private power companies have a capacity of around 24,000 MW, while they are expected to add another 22,000 mw by March.

Further, it is reported that shortage of domestic supply is likely to increase coal imports by four times to 213 million tonnes in 2016-17 from 54 million tonnes this fiscal year. Tata Power and Reliance Power, developers of 4-gigawatt plus power plants, are also lobbying the government to free them from loss-making power sales contracts and want to be allowed to pass on rising fuel costs to consumers. Due to rate mismatches and subsidy problems, power distribution companies had accumulated a loss of about Rs 75,000 crore in 2008-09, which had increased to Rs 106,347 crore in 2009-10. Most discoms are under huge financial stress and some state discoms have already asked for a bailout package.

The S&P CNX Nifty is currently trading at 4,938.80, lower by 28.50 points or 0.57% after trading as high as 4,980.65 and as low as 4,933.55. There were 13 stocks advancing against 37 declines on the index.

The top gainers on the Nifty were Reliance up 4.31%, ONGC up 2.31%, Hero MotoCorp up 1.79%, DLF up 1.14% and Reliance Infra up 1.10%

Tata Steel down 4.39%, Kotak Bank down 3.94%, M&M down 3.88%, SAIL down 3.18% and Ranbaxy down 3.18% were the major losers on the index.

Asian markets were largely trading on a positive note; Shanghai Composite plunged 1.39%, Straits Times declined 0.31% and Seoul Composite inched down 0.02%. On the flipside, Nikkei 225 surged 0.99%, Taiwan Weighted added 0.17%, Hang Seng ascended 0.30% and Jakarta Composite inched higher 0.27%.

The European markets were trading in red with, France’s CAC 40 descended 0.65%, Germany’s DAX shed 0.75% and Britain’s FTSE 100 dropped 0.78%.