Sentiments remain bearish in morning trade; Sensex breaches 17,000 mark

Prolonging their yesterday’s downfall, key benchmarks have made a gap-down opening with Sensex breaching its crucial 17,000 mark amid weak global cues. The US markets extended their losses overnight and the major indices closed lower by about half a percent on getting a weaker-than-expected report on durable goods orders while, most of the Asian counters were trading in the negative terrain at this point of time. Back home, squaring-up of positions by participants as today being the last session of monthly expiry in the derivatives segment, also dampened the sentiment. On the sectoral front consumer durables remained the lone gainer on the BSE while, major part of the blow was absorbed by software, technology and capital goods stocks. Meanwhile, IT index has slipped over one and a half percent after the rupee fell early on Thursday as weak economic data from the United States and China added to the clouded outlook for capital inflows caused by proposed changes in Indian tax laws. Moreover, the broader indices too were struggling to get some traction and the market breadth on the BSE was negative; there were 678 shares on the gaining side against 797 shares on the losing side while 51 shares remained unchanged.

The BSE Sensex opened at 17,039.85; about 82 points lower compared to its previous closing of 17,121.62, and has touched a high and a low of 17,045.76 and 16,952.27 respectively.

The index is currently trading at 16,994.22 down by 127.40 points or 0.74%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a negative start with 44.43% stocks advancing against 52.23% declines. The broader indices too were trading in the red; the BSE Mid cap and small cap indices declined 0.51% and 0.01% respectively.

The only gaining sectoral index on the BSE was CD up by 0.29%. While, IT down by 1.65%, TECk down by 1.48%, CG down by 1.06%, Bankex down by 0.83% and Realty down by 0.69% were the top losers on the index.

The top gainers on the Sensex were Jindal Steel up by 1.04%, Hero MotoCorp up by 0.85%, Coal India up by 0.83%, Sun Pharma up by 0.25% and HUL up by 0.15%.

On the flip side, Infosys was down by 2.16%, Hindalco was down by 1.51%, L&T was down by 1.45%, Bharti Airtel was down by 1.34% and TCS was down by 1.30% were the top losers on the Sensex.

Meanwhile, the government has admitted that there is no surplus coal available with the subsidiaries of Coal India (CIL) and there is a wide gap between availability and commitments made on coal. The Coal Minister, Sriparkash Jaiswal has apprised the lower assembly since the Maharatna company has made commitments through fuel supply agreements (FSAs) and letters of assurance (LOAs) for supply of coal.

The observations have come after the notification issued last month by the Prime Minister's Office (PMO) to CIL directing it to sign FSAs with 80% supply clause before March-end. The FSAs would be signed for power plants that have been commissioned on or before December 31, 2011. In case CIL fails to supply less than 80% of the agreed volume of coal, will be levied with 10% penalty; on the flip side similar amount of incentive will be awarded for supply over 90%, as per the draft FSAs. The FSAs would be signed for full quantity of coal mentioned in the LoAs for a period of 20 years.

The CIL board has already met on March 22, 2012; however, the meeting remained inconclusive as the independent directors felt that the clause of ensuring 80% of supply could not be met. Analysts too are of the opinion that the company may not be able to complete the process by the end of the month. Coal India officials, however, feel it is an achievable task and the March end deadline will be met.

CIL has targeted production of 464 mt during 2012-13 and this will gradually increase to 556 mt by the end of 2016-17. According to initial estimates, if CIL has to supply 80% of the coal requirement, there will be a shortfall of 40 mt during 2012-13. In the next year, the shortfall has been estimated at about 55 mt followed by about 73 mt in 2014-15 and 79 mt in 2015-16.

Coal, the most important fossil fuel in India is vital for its energy security. It is India's least-cost source of primary energy and currently meets two-thirds of the country's energy needs. The power sector is the largest consumer, followed by the industrial sector-the major consumers being steel, cement, and brick-manufacturing units.

The S&P CNX Nifty opened at 5,145.95; about 49 points lower compared to its previous closing of 5,194.75, and has touched a high and a low of 5,163.95 and 5,139.45 respectively.

The index is currently trading at 5,148.45, lower by 46.30 points or 0.89%. There were 8 stocks advancing against 42 declines on the index.

The top gainers of the Nifty were Hero MotoCorp up by 1.04%, Jindal Steel up by 0.60%, Coal India up by 0.59%, Sun Pharma up by 0.56% and BPCL up by 0.17%.

On the flip side, Infosys down by 2.57%, Rpower down by 2.51%, Hindalco down by 1.83%, ACC down by 1.77% and L&T down by 1.67%, were the major losers on the index.

Most of the Asian equities were trading in the red; Shanghai Composite was down 13.28 points or 0.58% to 2,271.60, Hang Seng was down 251.09 points or 1.20% to 20,634.33, Jakarta Composite was down 12.91 points or 0.32% to 4,077.67, Nikkei 225 was down 82.66 points or 0.81% to 10,099.91, Straits Times was down 8.54 points or 0.28% to 3,007.44, Seoul Composite was down 22.26 points or 1.10% to 2,009.48 and Taiwan Weighted was down 177.06 points or 2.20% to 7,861.01.

On the flip side, KLSE Composite was up 0.27 points or 0.02% to 1,584.02.