Markets suffer sharp plunge; Sensex slips below 24000

Indian equity benchmarks pared their early gains and were trading in red in early noon session, as Asian markets have lost steam and slipped in red. Select auto, Oil & Gas, FMCG and Metal shares are exerting selling pressure, however, the rally in banking and Power stocks have arrested the downfall. Sentiments were down beat after volatility in the crude oil prices and relentless selling by foreign investors. However, investors got some encouragement with the report that India's current account deficit may narrow to 0.5 per cent of GDP in 2016 from 0.7 per cent in 2015 owing to lower commodity prices, particularly oil. Furthermore, with global headwinds hitting emerging markets as well, Finance Minister Arun Jaitley said volatility had become a global norm, but India could certainly grow at 8-9 per cent in a friendlier global climate.

On the global front, Asian markets were trading mostly in red, following another selloff on Wall Street overnight on global growth concerns, uncertainty in China and fresh lows in oil prices. Back home, both the Sensex and Nifty were trading below their crucial 24,000 and 7,300 levels, respectively. In scrip specific development, share of Natco Pharma was trading higher after the company has signed a nonexclusive, royalty free licensing agreement with the Medicines Patent Pool (MPP) and Bristol-Myers Squibb to manufacture and sell generic versions of Bristol-Myers Squibb’s chronic hepatitis C medicine -- Daclatasvir Dihydrochloride (Daclatasvir). On the flip side, Gati has dipped 15.28% after the company reported 33% year-on-year (YoY) drop in its net profit at Rs 7.67 crore for the third quarter ended December 2015 (Q3FY16) due to lower operational income.

The BSE Sensex is currently trading at 23979.39, down by 82.65 points or 0.34% after trading in a range of 23963.34 and 24351.83. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red and green; the BSE Mid cap index was down by 0.03%, while Small cap index up by 0.41%.

The top gaining sectoral indices on the BSE were Bankex up by 1.07%, Power up by 0.14% and IT up by 0.12%, while Auto down by 1.25%, Oil & Gas down by 0.93%, FMCG down by 0.88%, Metal down by 0.55% and PSU down by 0.42% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 4.32%, ICICI Bank up by 1.72%, BHEL up by 1.37%, Asian Paints up by 1.15% and NTPC up by 1.10%. On the flip side, Tata Motors down by 3.07%, ONGC down by 2.79%, Hindustan Unilever down by 2.45%, Maruti Suzuki down by 1.87% and Dr. Reddys Lab down by 1.51% were the top losers.

Meanwhile, amid falling solar tariffs and increasing capacity addition, the Cabinet Committee on Economic Affairs (CCEA) has given approval for setting up of over 5,000 MW Grid-Connected Solar PV Power Projects on build, own and operate basis. The work will be implemented by Solar Power Developers (SPDs) with viability gap funding (VGF) under Batch-lV of Phase-ll of the Jawaharlal Nehru National Solar Mission (JNNSM).The total investments expected under this scheme is about Rs 30,000 crore.

The VGF support envisages creation of 5,000 MW capacity in four tranches of 1,250 MW each during four financial years viz. 2015-16, 2016-17, 2017-18 and 2018-19.  Minister of State Power, Coal and New & Renewable Energy Piyush Goyal said that there will be some capacity reserved for projects with domestic content, projects with foreign equipment can also participate in the bidding to get VGF.  Besides, this move would also help employment generation for about 30,000 people in rural and urban areas of about with reduction 8.525 Million T of CO2 emissions into environment every year.

The requirement of funds to provide VGF for 5,000 MW capacity solar projects is estimated to be Rs. 5,050 Crore (Rs 1crore per MW). This includes handling charges to Solar Energy Corporation of India (SECI) at 1% of the total grant disposed and Rs 500 crore for payment security mechanism for all three VGF schemes of 750 MW, 2000 MW and 5000 MW. Out of 5,000 MW, some capacity in each tranche will be developed with mandatory condition of solar PV cells and Modules made in India. The VGF amount would be Rs 1.25 crore for domestic content based projects and Rs 1 crore for open category.

The VGF scheme will be implemented by SECI as per MNRE Guidelines. SECI shall prepare necessary bidding documents for inviting the proposals for setting up of projects on a competitive bidding through e-bidding. SECI will enter into Power Purchase Agreement (PPA) with the selected developers and the Power Sale Agreement (PSA) with the buying entities.

The Central Electricity Regulatory Commission would clear the benchmarking of tariff. Under this regime, solar power project developers would bid for viability gap funding requirement in Rs/MW and the bidder with minimum VGF requirement would be selected. The bidders will be free to make use of fiscal incentives such as accelerated depreciation, concessional customs and excise duties, tax holidays and other such schemes available for solar power projects. However, accelerated depreciation and VGF cannot be claimed together.

The CNX Nifty is currently trading at 7279.35, down by 29.95 points or 0.41% after trading in a range of 7279.30 and 7398.70. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 4.37%, Ambuja Cement up by 2.17%, Ultratech Cement up by 1.86%, ICICI Bank up by 1.74% and BHEL up by 1.33%. On the flip side, Tata Motors down by 3.49%, Idea Cellular down by 3.02%, ONGC down by 2.91%, Hindustan Unilever down by 2.44% and Vedanta down by 2.03% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 155.79 points or 0.82% to 18,730.51, Nikkei 225 decreased 127.89 points or 0.78% to 16,288.30, Taiwan Weighted decreased 35.11 points or 0.46% to 7,664.01, Shanghai Composite decreased 30.05 points or 1.01% to 2,946.65, FTSE Bursa Malaysia KLCI decreased 5.11 points or 0.32% to 1,613.72 and KOSPI Index decreased 1.66 points or 0.09% to 1,843.79, while Jakarta Composite increased 13.01 points or 0.29% to 4,441.00.