Markets extend early gains; Sensex above 16,800 level

Supported by recovery in the rupee and firming trend in Asian markets Indian equity markets extended early gains amid increased buying by funds and retail investors. On sectoral front consumer durables, realty, power, metal and PSU sectors were trading in green, while few stocks from health care were trading in red. In currency markets, Indian rupee gained against American currency on Monday following gains in Asian stocks and currencies, as euro zone offered financial support to Spain’s banks. On the global markets, Asian shares were trading in green. Back home, the market breadth favoring positive trend; there were 1,611 shares on the gaining side against 754 shares on the losing side while 107 shares remained unchanged.

The BSE Sensex is currently trading at 16860.94, up by 142.07 points or 0.85%. The index has touched a high and low of 16893.81 and 16804.89 respectively. There were 26 stocks advancing against 4 declines on the index.

The broader indices were following the benchmarks; the BSE Mid cap and Small cap indices were up by 1.08% and 1.26% respectively.

The top gaining sectoral indices on the BSE were, CD up by 2.25%, Realty up by 2.11%, Power up by 1.81%, Metal up by 1.71% and PSU up by 1.19%. While, HC down by 0.34% was the only loser on the index.

The top gainers on the Sensex were Sterlite Industries up by 4.13%, Tata Power up by 3.61%, Bajaj Auto up by 2.61%, Coal India up by 2.27% and Gail India up by 1.45%.

On the flip side, Cipla down by 0.68%, Sun Pharma down by 0.55%, ONGC down by 0.15% and L&T down by 0.8 points were the top losers on the Sensex.

Meanwhile, in its bid to help the power producing companies get their due, the Union Power Ministry is contemplating the idea to urge the Central Electricity Regulatory Commission (CERC) to recommend measures to bail out the beleaguered power producers. The move by power ministry is highly anticipated as it would be imperative in sorting out of the ongoing logjam between promoters of big power projects and the state utilities which are their bulk consumers.

Various power projects that have a combined generating capacity of over 59,000 MW are likely to become non-performing assets as the power producers face the prospects of defaulting on supply contracts since they are not able to pass on the increase in fuel cost to distribution companies with whom they have signed power purchase agreements (PPA). The changes made in tax laws by source nations like Australia and Indonesia have raised fuel costs for all imported coal-fired power projects, even those that were based on supplies from captive mines in these countries, thus adversely impacting Indian power producers.

However, the power ministry’s recent plan to refer the matter to the CERC under Section 72(2) (iv) of the Electricity Act, 2003, which gives the regulator the jurisdiction to look into such contractual issues and suggest a framework, might be a silver lining among dark clouds for the power producing companies. After months of lobbying by the Association of Power Producers (APP) over the issue, power projects using imported coal could be allowed to hike tariffs by up to Re 1 per unit to counter the effect of increase in fuel price due to additional taxes or changes in law by the governments of source nations.

The likely beneficiaries of this development would be companies like Adani Power, Reliance Infrastructure, JSW Energy and Tata Power as works on their power projects were stalled owing to rising costs. Tata Power suffered a major setback due to impairment provision for its Mundra ultra mega power project in the fourth quarter of FY12 while Reliance Power abstained from implementing Rs 17,500-crore Krishnapatnam ultra mega power project in Andhra Pradesh demanding tariff revision. Besides, Adani Power and JSW Steel too demanded increase in fuel cost following the recent change in the Indonesian and Australian coal pricing law.

The S&P CNX Nifty is currently trading at 5110.15, up by 41.80 points or 0.82%. The index has touched a high and low of 5,124.45 and 5,095.35 respectively. There were 44 stocks advancing against 6 declines on the index.

The top gainers of the Nifty were Sterlite up by 4.22%, Tata Power up by 3.45%, JP Associates up by 3.44%, Reliance Infra up by 3.40% and Bajaj Auto up by 2.81%.

On the flip side, HCL Tech down by 1.51%, Cipla down by 0.92% Sun Pharma down by 0.76%, L&T down by 0.29% and ONGC down by 0.04%, were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite up 0.93%, Jakarta Composite up 0.73%, KLSE Composite up 0.62%, Nikkei 225 up 1.96%, KOSPI Composite up 1.71%, Hang Seng was up by 2.42%, Straits Times added 1.57% and Taiwan Weighted added 1.72%.