Markets slip into red after a positive opening

Indian equity benchmarks have slipped into red terrain as investors opted to book profit at higher level ahead of Wholesale Price Index (WPI) data, to be released later in the day. Initially, frontline gauges made a positive start with Nifty surpassing its crucial 8,400 level after Consumer price index (CPI) inflation in October fell sharply to 5.52 percent from 6.46 percent in September. On the same time the Index of Industrial Production for the month of September grew by 2.5 percent on the back of strong performance by the manufacturing sector that expanded after two months of contraction.

On the global front, the US markets made a mixed closing in last session after recovering from their initial dips as news of major fines levied against several big-name banks for currency market manipulation weighed on the markets. The Asian markets were trading mixed ahead of data on Chinese industrial output and retail sales.

On the sectoral front, consumer durables, capital goods and healthcare witnessed the maximum gain in trade, while realty, oil and gas and public sector undertaking remained the top losers on the BSE sectoral space. The broader indices were struggling to get some traction, while the market breadth on the BSE was negative; there were 951 shares on the gaining side against 1,049 shares on the losing side while 82 shares remain unchanged.

The BSE Sensex opened at 28048.56; around 40 points higher as compared to its previous closing of 28008.90, and has touched a high and a low of 28098.74 and 27916.24 respectively. The BSE Sensex is currently trading at 27975.67, down by 33.23 points or 0.12%. There were 13 stocks advancing against 17 stocks declining on the index.

The overall market breadth remained in the favour of advances with 62.10% stocks advancing against 34.55% declines. The broader indices were trading mixed; the BSE Mid cap index was up by 0.07%, while Small cap index down by 0.12%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.47%, Capital Goods up by 0.70%, Healthcare up by 0.56% and Power up by 0.33% while, Realty down by 1.28%, Oil & Gas down by 0.59%, PSU down by 0.56%, Infrastructure down by 0.43% and Bankex down by 0.33% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.87%, BHEL up by 1.70%, Sun Pharma up by 1.41%, Tata Steel up by 1.04% and Larsen & Toubro up by 0.64%. On the flip side, Dr. Reddys Lab down by 1.45%, HDFC down by 0.92%, TCS down by 0.71%, ITC down by 0.47% and Tata Motors down by 0.47% were the top losers.

Meanwhile, marking the first steps towards coal block re-allocation, an inter-ministerial panel in its meeting decided the methodology for fixing the reserve price for coal e-auction and now is planning to seek Cabinet approval for the same. Since the government would be auctioning 74 blocks in Phase I,  it is the coal ministry, which will now suggest the method of calculating the reserve and floor price of coal in the 74 cancelled coal blocks, which will go under the hammer through e-auction next month.

The price, which is expected to be announced within a fortnight, will be determined on the basis of the current value of the asset on offer, the international mine head price, and the three-year average of imported coal price. While a component for deriving the reserve price will be based on asset valuation, it will also factor in the gross calorific value (GCV) of coal for computing the net value to avoid any adverse impact on power tariffs.

The committee, comprising secretaries of ministries of finance, power, steel, law, mines, petroleum, industrial policy and promotion and coal, scheduled a meeting on Tuesday to deliberate upon the auction start price or the reserve price for allotting coal blocks, whose allocation was cancelled by the Supreme Court recently. This development came after Supreme Court (SC) on September 24 had cancelled allocation of 204 coal blocks to various companies between 1993 and 2009. Out of these, 37 were running coal mines and another five were ready to produce by April, 2015.

Re-allocation of these cancelled blocks were planned since there were many existing power plants, which were linked to these mines, or power plants, which have no tie-up for coal and would either have cost-plus power purchase agreements or would have contracted agreements to sell electricity on the basis of bid tariff. Nevertheless, the government sensed the need to revise the methodology decided by the IMC previously.

The government had in 2012 constituted an IMC to consider and examine the formulation of methodology for fixing floor/reserve price of coal blocks to be allocated through auction. However, based on recommendations of consultant Crisil, it proposed allotting coal blocks only to government companies or to power plants with tariff-based bidding, to ensure that the benefit of cheaper domestic coal is passed on to consumers.

The CNX Nifty opened at 8,405.25; around 22 point higher as compared to its previous closing of 8,383.30, and has touched a high and a low of 8,408.00 and 8,349.10 respectively.

The CNX Nifty is currently trading at 8357.50, down by 25.80 points or 0.31%. There were 14 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Cipla up by 1.83%, Tata Steel up by 1.47%, BHEL up by 1.43%, Sun Pharma up by 1.42% and Larsen & Toubro up by 0.73%. On the flip side, BPCL down by 3.57%, NMDC down by 2.11%, Cairn India down by 1.75%, DLF down by 1.71% and IDFC down by 1.66% were the top losers.

Asian markets were trading mixed; Nikkei 225 spurted by 151.24 points or 0.88% to 17,348.29, Straits Times soared 16.72 points or 0.51% points or 3,300.43, FTSE Bursa Malaysia KLCI improved 64.84 points or 0.23% to 28,073.74 and Taiwan Weighted was up by 15.08 points or 0.17% to 8,934.03.

On the flip side, Hang Seng declined by 9.54 points or 0.04% to 23,928.64, KOSPI Index contracted 5.47 points or 0.28% to 1,961.80, Jakarta Composite dipped 16.01 points or 0.32% to 5,032.83 and Shanghai Composite was down by 10.27 points or 0.41% to 2,484.20.