Benchmarks make soft start on feeble global cues

Snapping the record-setting spree, Indian equity benchmarks have made a soft start and are trading with a cut of over half a percent in early deals on Thursday tracking feeble global cues. On domestic turf, traders remained on sidelines ahead of two-day GST Council meet beginning in Srinagar, which will see participation from 29 states and union territories, along with Jaitley, and senior officials from the revenue department. In the meeting Finance Ministry Arun Jaitley is likely to finalise the rates that various goods and services will attract from July 1. Market participants failed to get any sense of relief with Commerce and Industry Minister Nirmala Sitharaman’s statement that India's exports have been increasing despite global headwinds and efforts are being made to neutralise any impact on them due to implementation of GST.

Global cues too remained somber with most of the Asian counters were trading in red at this point of time. The Japanese market was down by over a percent as the yen strengthened against the dollar. The US markets slumped in the last session and the tech-heavy Nasdaq which has been on a record breaking spree pulled back well off its record closing high.

Back home, the Indian rupee weakened for the third consecutive session against the US dollar as concern over US President Donald Trump spurred a selloff in emerging market currencies. The rupee was trading at 64.39 a dollar, down 0.40% from its Wednesday’s close of 64.16. In scrip specific developments, Hindustan Unilever fell around one third of a percent even after it posted a 6.19% increase in standalone net profit to Rs 1,183 crore for the fourth quarter ended March 31, driven by robust sales across various business segments. JSW Steel edged lower by over three percent even after it announced a three-fold increase in its consolidated profit at Rs 1,008.5 crore in Q4 as against Rs 300.6 crore in the year-ago period.

The BSE Sensex is currently trading at 30500.82, down by 157.95 points or 0.52% after trading in a range of 30436.56 and 30567.82. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined by 1.01%, while Small cap index was down by 0.86%.

The only gaining sectoral indices on the BSE were IT up by 0.40% and TECK up by 0.25%, while Realty down by 2.07%, Metal down by 1.31%, Industrials down by 1.24%, Basic Materials down by 1.22%, Capital Goods down by 1.21% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.60%, TCS up by 0.99%, Coal India up by 0.45%, Sun Pharma up by 0.38% and Infosys up by 0.18%. On the flip side, Larsen & Toubro down by 1.54%, Axis Bank down by 1.44%, Tata Motors down by 1.38%, ITC down by 1.28% and Adani Ports down by 1.17% were the top losers.

Meanwhile, in a big relief to the power sector, the Cabinet Committee on Economic Affairs (CCEA) has given its approval to long pending new coal linkage policy, for ensuring proper supply of the fuel to power plants through the reverse auction route. The coal linkage auction policy for power has been named 'Shakti' or a scheme to harness and allocate koyla (Coal) transparently in India. The move may ease stress on account of non-availability of linkages to power sector projects.

Shakti will help power producers ensure fuel supplies in an organised manner. The government's initiatives as well as international market conditions have helped bring down price of the dry fuel and boosted domestic production. But a mechanism was required for providing coal linkages to power plants at competitive rates. The new policy will address this concern and put in place a proper mechanism for sourcing of the dry fuel by the power plants as per their schedules.

The Coal Ministry in its statement has said that allocation of linkages for power sector shall be based on auction of linkages or through Power Purchase Agreement (PPA) based on competitive bidding of tariffs except for the state and the central power generating companies and the exceptions provided in Tariff Policy, 2016. It further said that Coal drawal will be permitted against valid long-term PPAs and to be concluded medium term PPAs. PPA is a contract between two parties, one which generates electricity and one which is looking to purchase it.

The Ministry added that as per the new policy, thermal power plants (TPPs) having Letter of Assurance (LoA) will be eligible to sign Fuel Supply Agreement (FSA) after ensuring that the plants are commissioned, respective milestones met, all specified conditions of the LoA fulfilled within specified timeframe and where nothing adverse is detected against the LoA holders and the TPPs are commissioned before March 31, 2022. TPPs, part of 78000 mw, which could not be commissioned by March 31, 2015, will now be eligible for coal drawal if the plants are commissioned before March 31, 2022.

The CNX Nifty is currently trading at 9465.60, down by 60.15 points or 0.63% after trading in a range of 9448.75 and 9489.10. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 0.99%, TCS up by 0.97%, Tech Mahindra up by 0.93%, Wipro up by 0.86% and Sun Pharma up by 0.48%. On the flip side, Hindalco down by 2.62%, Yes Bank down by 2.56%, Axis Bank down by 1.65%, Indiabulls Housing down by 1.54% and Ambuja Cement down by 1.40% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 316.94 points or 1.6% to 19,497.94, Hang Seng slipped 59.29 points or 0.23% to 25,234.34, Taiwan Weighted decreased 51.84 points or 0.52% to 9,961.83, KOSPI Index shed 10.6 points or 0.46% to 2,282.48, FTSE Bursa Malaysia KLCI fell 9.52 points or 0.54% to 1,766.13 and Shanghai Composite was down by 5.84 points or 0.19% to 3,098.60. On the flip side, Jakarta Composite was up by 9.38 points or 0.17% to 5,624.88.