Markets get a gap-up start on Fed’s status quo stance

Indian markets extended their jubilation with a good start after the US Fed left the interest rates unchanged, in the face of jittery financial markets and a global slowdown. Not only the local markets but the whole emerging markets were trading higher getting respite with Fed’s decision. Traders were also getting support with Minister of State for Finance Jayant Sinha’s statement that the government is aiming for an 8-10 percent annual economic growth through supply-side measures to increase the capacity of Asia’s third-largest economy rather than risk higher inflation by stimulating demand. Additionally markets were aided with government favouring an increase in pension fund EPFO's equity market investment to 15%, from 5% currently, saying it will help contain volatility in the domestic capital markets. The banking stocks were in action, after RBI accorded 'in-principal' approval for 10 small finance banks that will focus on small geographies for operations. Markets were also getting some encouragement with strength in rupee, the domestic currency has appreciated 31 paise to 66.15 against the US dollar and was trading at two-week high post Fed meet. Back on street, Sensex has rallied over 340 points while Nifty has reclaimed its crucial psychological level of 8000.All the sectoral indices were in green led by banks and realty, and the broader markets too were trading in tandem with the benchmarks.

The BSE Sensex is currently trading at 26306.86, up by 342.89 points or 1.32% after trading in a range of 26130.36 and 26319.18. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were going neck in neck to the benchmarks; the BSE Mid cap index was up by 1.29%, while Small cap index gained 1.16%.

The top gaining sectoral indices on the BSE were Bankex up by 2.53%, Realty up by 2.02%, PSU up by 1.64%, Capital Goods up by 1.48%, Metal up by 1.40%

The top gainers on the Sensex were Axis Bank up by 3.41%, SBI up by 2.75%, ICICI Bank up by 2.67%, Lupin up by 2.56% and Hero MotoCorp up by 2.28%. On the flip side, Tata Motors down by 2.43%, GAIL India down by 1.25%, Hindustan Unilever down by 0.23%, Bharti Airtel down by 0.17% and ITC down by 0.06% were the top losers.

Meanwhile, government has firmed up plans to shut down some 11,000 mw of thermal power generation capacities that are at least 25 years old, instead it will be building bigger plants with total capacity of at least 20,000 mw on the same tract of land at an estimated investment of Rs 70,000 crore. This will result in savings of about Rs 40,000 crore on land acquisition as well infrastructure cost like rail and water linkages along with facilities like ash pond and power evacuation lines. Coal supplied to the old plants would be fed into the units that would replace them.

In the meeting held between the Central Electricity Authority (CEA) and state utilities, the road map for shuttering  at least 100 old units having capacities ranging from 60 mw to 220 mw was given a preliminary shape, which will be replaced by 30 odd super critical units ranging between 660 mw and 800 mw.

The replacement of old units by new super critical units was being encouraged by the government and the coal ministry has already issued guidelines for automatic transfer of coal linkage from old and inefficient units to new super critical units. Coal supplied to the old plants would be fed into the units that would replace them.

It is estimated that a total capacity of about 36,000 mw in the country is more than 25 years old and this units should be replaced by new super critical units. Though, few plants which have undergone renovation and maintenance will be allowed few more years to run. According to data of CEA, replacing sub-critical, old and inefficient thermal units with super critical units would enable effective utilisation of already available scarce resources like land, water and coal.

The CNX Nifty is currently trading at 8000.50, up by 101.35 points or 1.25% after trading in a range of 7958.75 and 8007.45. There were 44 stocks advancing against 6 stocks declining on the index.

The top gainers on Nifty were Bank Of Baroda up by 3.75%, Axis Bank up by 3.19%, PNB up by 3.00%, ICICI Bank up by 2.62% and SBI up by 2.55%. On the flip side, Tata Motors down by 2.03%, GAIL India down by 1.35%, Cairn India down by 1.25%, Hindustan Unilever down by 0.29% and Bharti Airtel down by 0.28% were the top losers.

Most of the Asian markets were trading in green, Shanghai Composite was up by 12.22 points or 0.4% to 3,098.29, KOSPI Index gained 12.53 points or 0.63% to 1,989.02, Taiwan Weighted added 15.32 points or 0.18% to 8,460.82, Straits Times was up by 19.27 points or 0.67% to 2,915.08, Jakarta Composite increased by 29.56 points or 0.68% to 4,407.95 and Hang Seng moved higher by 92.1 points or 0.42% to 21,946.73.

On the other hand, Nikkei 225 slumped by 281.24 points or 1.53% to 18,151.03 and FTSE Bursa Malaysia KLCI declined by 3.29 points or 0.2% to 1,678.25.