Indian equities trim gains; trade continues in green

Indian equities trim gains but continued their firm trade in green in the late afternoon session. The markets sentiments were bolstered since morning by encouraging weekend cues from both sides of Atlantic. Traders were seen piling up position in Consumer Durables, Power and Realty sector while selling was witnessed in Heath Care (HC) sector. On the global front, the Asian markets were trading in green while the European markets too were trading in green on optimistic note. As investors cheered European Union’s decision to provide a loan of up to 100 billion euros ($125 billion) for distressed Spanish banks. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,100 and 16,800 levels respectively. The market breadth on BSE was positive in the ratio of 1701:871 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,843.78, up by 124.91 points or 0.75%. The index has touched a high 16,893.81 and low 16,784.51 of respectively. There were 24 stocks advancing against 6 declines on the index.

The broader indices were trading on a positive note; the BSE Mid-cap index was up by 1.00%, while Small-cap index was up by 1.15%.

The top gaining sectoral indices on the BSE were Consumer Durables up 1.97%, Power up 1.94%, Realty up 1.53%, Metal up 1.52% and Bankex up 1.30% while, HC down by 0.80% was the only loser on the index.

The top gainers on the Sensex were Tata Power up 3.93%, Sterlite up 3.88%, Bajaj Auto up 2.68%, Coal India up 2.34% and Gail India up 2.26%. On the flip side, Cipla down 1.49%, Sun Pharma down 0.89%, ONGC down 0.81%, Dr Reddy’s down 0.25% and Wipro down 0.10% remained 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 by the CERC 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 5,113.15, up by 44.80 points or 0.88%. The index has touched a high and low of 5,124.45 and 5,089.80 respectively. There were 42 stocks advancing against 7 declines while 1 remains unchanged on the index.

The top gainers of the Nifty were R Infra up 4.67%, JP Associates up 4.54%, Tata Power up 4.14%, Sterlite up 3.83%, and Siemens up 3.14%. On the flip side, Cipla down 1.65%, HCL Tech down 1.55%, Sun Pharma down 0.85%, Ranbaxy down 0.67% and ONGC down 0.66 were the major losers on the index.

All the Asian equity indices were trading in the green; Jakarta Composite up 0.79%, Straits Times Index up 1.78%, Taiwan Weighted up 1.72%, Nikkei 225 up 1.96%, KLSE Composite up 0.50%, KOSPI Composite Index up 1.71% , Shanghai Composite up 1.07% and Hang Seng Index was up 2.44%.

The European markets were trading in green with, France’s CAC 40 jumped 1.96%, Germany’s DAX surged 1.98% and the United Kingdom’s FTSE 100 soared 1.28%.