Benchmarks continue firm trade in late morning session

After getting a gap-up start, benchmark equity indices continued to trade in fine fettle in late morning deals on continued buying activities by both funds and retail investors. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. At present, Sensex and Nifty were trading above the crucial 27,400 and 8,200 levels respectively, with gains of over a percentage point. Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1.25%. Expectations of acceleration in reforms process after the Cabinet’s clearance to the Constitutional Amendment Bill on GST too triggered buying activity.  However, there was some cautiousness on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 874.89 crore on December 18, 2014. Furthermore, investors will be watching the progress of the Parliament session that ends December 23 and the results of the five-phase elections of Jharkhand and Jammu and Kashmir Assembly to be announced the same day for further cues on the markets.

On global front, Asian stocks rallied for a second day Friday, after Wall Street boasted its biggest two-day advance since late 2011 amid relief the Federal Reserve was in no rush to withdraw stimulus from the U.S. economy. The gains came even as oil stayed under pressure, suggesting equity investors were beginning to see the positives in lower fuel costs and increased consumer spending power. Back home, some support also came with international credit rating agency Crisil saying that the Indian economy is well prepared to deal with any eventuality arising out of spike in the interest rates by the US Federal reserve. Also, there are reports that Prime Minister Narendra Modi has taken direct control of a project-monitoring body to fast-track investments worth almost $300 billion and revive manufacturing in the country. This could help firms planning coal, power, steel and infrastructure project early clearance.

Back on street, IT shares firmed up on the back of robust first quarter earnings from Accenture. The global IT major has upped its revenue growth guidance for FY15. In scrip specific development, shares of Punj Lloyd have surged after the company received an approval from Foreign Investment Promotion Board (FIPB) for manufacture of defence items. Furthermore, shares in Crompton Greaves have rallied after the Reserve Bank of India (RBI) allowed foreign institutional investors to invest up to 100% of the paid up capital in the company. The market breadth on BSE was positive, out of 2220 stocks traded, 1578 stocks advanced, while 571 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27443.58 up by 317.01 points or 1.17% after trading in a range of 27493.07 and 27292.14. There were 25 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.26%, while Small cap index gained 1.54%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.72%, Auto up by 1.67%, Metal up by 1.45%, IT up by 1.38% and Realty up by 1.25% while, there were no losers on the BSE sectoral index.

The top gainers on the Sensex were Sesa Sterlite up by 3.44%, Coal India up by 2.78%, BHEL up by 2.74%, Mahindra & Mahindra up by 2.73% and Reliance Industries up by 2.36%. On the flip side, Bharti Airtel down by 1.52%, GAIL India down by 0.58%, Hindustan Unilever down by 0.47%, Bajaj Auto down by 0.30% and ITC down by 0.16% were the top losers.

Meanwhile, gearing up for fresh allocation of coal blocks cancelled by the Supreme Court in September, the government notified draft rules for e-auction of 92 cancelled coal mines in the first phase and fixed a floor price of Rs 150 per tonne for sectors like steel, sponge iron, cement and captive power. The government will auction total 101 coal mines out of which 65 mines will be allocated to private players while 36 other blocks will be directly allotted to state-owned companies.

Coal Ministry notified that there would be two methods of bidding namely forward bidding and Reverse biding.  Under forward bidding, specified end use of coal is for production of iron and steel, generation of power for captive use and cement. On the other hand, Reverse Bidding includes the end use of coal for the generation of power. Further, the Ministry cleared that applications will be sought from intending companies in these sectors for pre-qualifications and only the top 50 per cent of the pre-qualified bidders will be allowed to submit their bids.

Further, the notification highlighted that indicative price offer will be bid price per tonne of the coal produced and such bid price will be above the floor price in case of forward bidding or below the ceiling price in case of reverse bidding. The floor price and ceiling price for the coal mine along with the methodology for fixing the same will be included in the tender document. Providing details of the methodology for auction, the Intrinsic Value of the coal block will be calculated by computing its Net Present Value, based on the Discounted Cash Flow method for auction of sectors like steel, sponge iron, cement, captive power etc. Winners from these sectors would have to pay 10% of the floor price upfront.

Regarding the ceiling price for coal mines to be auctioned for power projects having cost plus power purchase agreements, the notification added that a ceiling price of the prevailing CIL notified price for each coal mine will be fixed and the bidder will be mandated to quote lower than this ceiling price. For, power plants having un-contracted capacity, the bidder shall be restricted to cap its merchant capacity at 20 per cent of the installed power capacity linked to the allotted coal mine.

The CNX Nifty is currently trading at 8244.35 up by 85.05 points or 1.04% after trading in a range of 8258.65 and 8208.60. There were 39 stocks advancing against 11 declining on the index.

The top gainers on Nifty were Sesa Sterlite up by 3.24%, Mahindra & Mahindra up by 2.89%, BHEL up by 2.88%, Coal India up by 2.84% and Zee Entertainment up by 2.59%. On the flip side, DLF down by 1.77%, Bharti Airtel down by 1.59%, Hindustan Unilever down by 0.91%, GAIL India down by 0.43% and HCL Tech. down by 0.42% were the top losers.

The Asian markets were trading mostly in the green; FTSE Bursa Malaysia KLCI increased 0.91%, KOSPI Index surged 1.63%, Straits Times soared 1.16%, Jakarta Composite gained 0.72%, Taiwan Weighted strengthened 0.95%, Hang Seng added 1.27% and Nikkei 225 was up by 2.25%. On the flip side, Shanghai Composite was down by 0.48%.