Markets extend losses amid volatility; Muthoot, Manappuram falls sharply

Indian equity markets witnessing seesaw trade and currently in negative territory on the back of some profit bookings. Investors were treading cautiously at higher levels and mostly seen using rallies to cut down positions to an extent amid increasing worries about the global economic outlook and on lack of positive news for the market from the budget. In the currency market, the rupee eased to its lowest level in more than two months this morning, due to increased dollar demand from importers. On the sectoral front select FMCG and PSU stocks were trading firm, while metal, realty and power stocks have drifted lower on selling pressure. Meanwhile gold financing companies Muthoot Finance and Manappuram Finance were down on Reserve Bank of India’s announcement that all non-banking finance companies that lend against gold collateral should maintain a loan-to-value ratio not exceeding 60% of loans granted against gold jewellery and such NBFCs should not grant any advance against bullion/ primary gold and gold coins. On the global front, most of the Asian markets were trading mixed. Back home, the market breadth favoring the negative trend; there were 1,085 shares on the gaining side against 1,352 shares on the losing side while 120 shares remained unchanged.

The BSE Sensex is currently trading at 17,579.20, down by 22.51 points or 0.13%. The index has touched a high and a low of 17,687.01 and 17,522.24 respectively. There were 14 stocks advancing against 16 declines on the index.

The broader indices also turned in red; the BSE Mid cap index was down by 0.39%, while the Small cap index down by 0.07%.

The only gaining sectoral indices on the BSE were, PSU up by 0.94% and FMCG up by 0.88%, on the other hand Metal down by 0.91%, Realty down 0.81%, Consumer Durables down by 0.57%, Power down by 0.49% and Capital Goods down by 0.44% were the top losers on the index.

The top gainers on the Sensex were Coal India up by 3.51%, ITC up by 1.21%, ONGC up by 1.03%, Sun Pharma up by 0.93% and HDFC Bank up by 0.82%.

On the flip side, Jindal Steel down by 6.13%, Bharti Airtel down by 1.31%, Tata Steel down by 1.24%, Tata Steel down by 1.24%, Maruti Suzuki down by 1.16% and Cipla down by 1.06% were the top losers on the Sensex.

Meanwhile, the Comptroller and Auditor General (CAG) has racked up yet another storm for the government by pointing out that coal acreages were allotted to private companies without any auctioning between 2004 and 2009.

In its draft report titled 'Performance Audit Of Coal Block Allocations', the CAG has stated that the government has allotted 155 coal acreages, totaling to a whopping Rs 10.67 lakh crore, to private players leading to ‘windfall gains’ to these companies. The beneficiaries include some 100 private companies, as well as some public sector units, in industries such as power, steel and cement.

This revelation has come in 16 months after the exposure related to the auctioning of the 2G spectrum that rocked the UPA government. As per CAG, the estimated a loss figure of Rs 10.67 lakh crore at March 31, 2011 prices, is six times that of its highest presumptive loss figure of Rs 1.76 lakh crore for the 2G scam. This too is conservative estimate, since it takes into account prices for the lowest grade of coal, not the median grade.

The report has further gone on to state that coal being a natural resource should have been allocated to private players on competitive bidding as it brings in more transparency and objectivity in the system. Also since the State legally owns the natural resources on behalf of citizens, the natural resources cannot be allocated to private hands without ensuring that the benefit of low cost of the natural resources is passed on to the citizens.

The object of allocation should be to serve the public cause and to do the public good by resorting to fair and reasonable methods. Every decision of the State to confer benefits must be sound, transparent, discernible and as per a well-defined policy, report added.

The major private companies that are likely to be beneficiaries of the allocation are Tata Group entitites, Jindal Steel & Power, Electro Steel castings, the Anil Agrawal group (Vedanta) firms, Delhi-based Bhushan Power & Steel, Jayaswal Neco Nagpur-based Abhijeet group And Aditya Birla Group companies, Essar group’s power ventures, Adani Group, Arcelor Mittal India, Lanco group and several other small to medium players.

The likely PSU beneficiaries are NTPC, MMTC, many West Bengal government owned corporations, and mines and mineral development corporations of Chhattisgarh, Jharkhand and Madhya Pradesh.

The S&P CNX Nifty is currently trading at 5,385.95, down by 11.45 points or 0.21%. The index has touched a high and a low of 5,385.95 and 5,337.15 respectively. There were 20 stocks advancing against 29 declines and one remained unchanged on the index.

The top gainers of the Nifty were Coal India up by 3.50%, Sun Pharma up by 1.18%, SAIL up by 1.12%, ONGC up by 1.10% and Hero MotoCorp up by 0.90%.

On the flip side, Jindal Steel down by 6.16%, IDFC down by 3.02%, HCL Technology down by 1.49%, Maruti Suzuki down by 1.48% and JP Associates down by 1.34%, were the major losers on the index.

The Asian equity indices were trading mixed; Nikkei 225 was down marginally by 0.40%, Straits Times lost 0.24%, Seoul Composite was down by 0.05%

On the flip side, Shanghai Composite up by 0.17%, Hang Sang was up by 0.28%, Jakarta Composite gained 0.13%, KLSE Composite added 0.15% and Taiwan Weighted was trading higher by 0.98%.