Indian equities get pummeled in Monday noon trades; slip to day’s lows

Indian benchmark equity indices are trading on a bleak note and have even slipped to the session’s lows in the afternoon trades. The BSE’s Sensex got pounded by around half a percent to drift below the psychological 17,000 while the NSE’s Nifty is steadily drifting towards the crucial 5,100 levels, thanks to across the board hefty position squaring. Power Sector bellwether BHEL remained the main culprit in the session as it got butchered by over eight percent on announcing worse than expected earnings for the third quarter of this fiscal and dented investors’ sentiments. Besides, downbeat result announcements from other stocks like NTPC, Indian Bank, Oriental Bank of Commerce too weighed down investors’ morale. Meanwhile, a CII survey further underscored the decline in business confidence in the December quarter owing to uncertain global economy, rising interest rates and surging inflation. On the global front, investors led to across the board risk aversion from risky asset classes like equities and commodities as underwhelming US economic growth reading dented hopes of a swift recovery in world’s biggest economy while uncertainty kept looming over Greek debt deal. Market participants also awaited the meeting of Euro-zone ministers scheduled later on Monday to discuss austerity and belt-tightening measures. Asian markets largely exhibited somber trends in the session while the European futures too are signaling at dismal opening for markets there as investors are likely to take profits off the table after the recent sharp rise.

Moreover, the broader markets too traded on negative note with over half a percent losses but were performing better than their larger peers. The bourses plummeted on weak volumes of around Rs 0.50 lakh crore as it is the second day of a new F&O series. The market breadth on BSE was in favor of declines in the ratio of 1444:1031 while 110 scrips remained unchanged.

The BSE Sensex is currently trading at 16,976.52 down by 257.46 points or 1.49% after trading as high as 17,138.04 and as low as 16,959.12. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index slipped 0.73% and Small cap dipped 0.76%.

On the BSE sectoral space there were no gainers while Capital Goods down 3.06%, Bankex down 1.98%, Power down 1.72%, Auto down 1.67% and Consumer Durables down 1.51% were the major losers in the space.

Sun Pharma up 1.82%, Jindal Steel up 1.16%, GAIL India up 0.79%, Bajaj Auto up 0.72% and Hero Moto up 0.45% were the major gainers on the Sensex, while BHEL down 8.37%, Sterlite down 3.95%, ICICI Bank down 3.60%, Bharti Airtel down 3.49% and M&M down 3.25% were the major losers in the index.

Meanwhile, India's premier apex chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM), has sought exemption from basic customs duty and countervailing duty on thermal or steam coal from the finance ministry. In a communication to the ministry, ASSOCHAM secretary general D S Rawat has stated that the demand for coal far exceeds its supply and hence it needs to be imported in large quantities. 

Thermal generation (coal, lignite and gas) of power still constitutes 65% of total generation capacity and domestic coal supply is just not sufficient to meet these requirements. Additionally, environment stipulations make it essential for coal companies to import high quality coal for blending with lower grades of indigenous coal.

Imposing customs duty not only raises the cost on imports but also has a cascading effect on the demand for all goods and services in the economy. Amid global recessionary trends, it is imperative that the Indian economy maintains a steady and accelerated rate of growth and for this the power sector has to play its legitimate and designated role. But this was hampered due to the high customs duties which lead to an increase in the power tariff by 25 paise per unit, and go against the basic tenets of ensuring long-term fuel sustainability and energy security.

Imported coal is subject to imposition of 7.55% customs duty for imports from Indonesia and 10.83% for imports from other countries. In addition, there is countervailing duty of 5%. This distorts the field in favour of domestic coal based projects and discourages investments in imported coal based projects, threatening shortages. Moreover, risk profiles of independent power producers are adversely affected due to volatility in prices of imported coal, unpredictable long-term pricing arrangements, instability in shipping and exchange rates, logistical and infrastructural constraints for moving imported coal from ports to power stations.

ASSCHAM suggested that to bridge the gap in demand and supply, emphasis should be on importing thermal coal or acquiring new mines abroad. It has further predicted that shortage of domestic coal is likely to continue to persist over the medium term as the additional coal generation programme is not likely to catch up with the growing demands of capacity addition to align with economic growth targets.

The S&P CNX Nifty is currently trading at 5,128.00, lower by 76.70 points or 1.47% after trading as high as 5,166.15 and as low as 5,117.00. There were 14 stocks advancing against 36 declines on the index.

The top gainers on the Nifty were R Power up 4.27%, Sun Pharma up 2.12%, R Infra up 1.42%, Jindal Steel up 1.36% and R Com up 1.25%.

BHEL down 8.64%, Sterlite down 4.35%, JP Associates down 4.03%, M&M down 3.66% and BPCL down 3.64% were the major losers on the index.

In the Asian space, Shanghai Composite plunged 1.38%, Hang Seng plummeted 1.26%, Jakarta Composite got pounded by 1.85%, Nikkei 225 slipped 0.54%, Strait Times dived 0.83% and Seoul Composite sank 1.24%.

On the flipside only Taiwan Weighted spurted with 2.40%.