Indian bourses trade marginally higher in afternoon deals

Indian equity indices, altering between positive and negative territory, were now trading marginally higher in afternoon session, as Oil & Gas, Energy, Capital Goods and Auto shares witnessed buying despite weak trend in other Asian markets. Traders took some support with the consumer price index (CPI) inflation easing to 3.31 percent in the month of October 2018 as compared to 3.58 percent in October 2017 on low food prices. The retail inflation number is the lowest since September 2017 when it touched 3.28 percent. Also, the prices of vegetables fell by 8.06 percent in the month of October in comparison to a 4.15 percent contraction in September. Some optimism also came in with a report stating that India is pushing for liberalising norms to promote services trade with 15 other countries including China as part of a mega free trade agreement as it looks for a balanced pact with these nations.  However, gains were limited with report that industrial output grew at the slowest pace in four months at 4.5% in September 2018, as the festival season started late this year compared to 2017. Growth faltered as the output of capital goods and mining expanded at a slower pace in September than in the previous month.

On the global front, Asian markets were trading mostly in red, after a tech sell-off dragged Wall Street lower. Back home, the BSE Sensex is currently trading at 34861.36, up by 48.37 points or 0.14% after trading in a range of 34672.20 and 34892.14. There were 22 stocks advancing against 9 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.63%, while Small cap index was down by 0.37%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.40%, Energy up by 1.08%, Capital Goods up by 0.30%, Auto up by 0.26% and PSU up by 0.24%, while Healthcare down by 1.38%, Consumer Durables down by 0.85%, Realty down by 0.84%, Telecom down by 0.69% and Utilities down by 0.20% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 1.37%, Yes Bank up by 1.19%, Coal India up by 1.08%, NTPC up by 1.05% and Mahindra & Mahindra up by 0.85%. On the flip side, Sun Pharma down by 4.64%, Tata Motors down by 3.12%, Tata Motors - DVR down by 2.39%, Indusind Bank down by 1.45% and SBI down by 1.28% were the top losers.

Meanwhile, credit ratings agency, Crisil Ratings in its latest report has said that as many as 19 gigawatt (GW) capacity out of the 40 GW identified as stressed power assets can participate in the second phase of Coal linkage policy named SHAKTI or the Scheme to Harness and Allocate Koyla (Coal) Transparently in India. It noted that the Lok Sabha's standing committee on energy has identified 34 power plants with a cumulative capacity of 40 GW as stressed assets due to lack of adequate fuel supply, absence of power purchase agreements (PPAs), weak financials of promoters, among others.

The rating agency said “our assessment of the 34 power plants suggests 19 GW of the 40 GW capacities do not have medium or long term PPAs, and hence, can participate in Shakti -II provided they meet other eligibility criteria set by Coal India for participation in the auction.” However, it noted that successful bidders under Shakti -II may find it difficult to secure long-term PPAs, given the high fixed cost of many of these projects. It also pointed out that of the 19 GW, about 10.3 GW of untied capacity has incurred overall investment of more than Rs 6 crore per megawatt (MW) whereas the typical coal-based power plant costs Rs 4-5 crore per MW.

The report stated that this indicates huge cost overruns, leading to escalation in fixed costs, which makes these plants unattractive for medium/ long-term power procurers such as discoms and even traders. It also said that given the cost overruns and the issues around signing of PPAs, SHAKTI-II may be of little help to these assets. It added that a further 6.4 GW of untied capacity with overall investment of Rs 4-6 crore per MW have relatively better chances of resolution if they manage to secure fuel supply at competitive rates.

The CNX Nifty is currently trading at 10503.15, up by 20.95 points or 0.20% after trading in a range of 10440.55 and 10512.30. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corp. up by 4.66%, BPCL up by 3.90%, HPCL up by 3.53%, Eicher Motors up by 3.43% and Ultratech Cement up by 2.12%. On the flip side, Sun Pharma down by 4.63%, Tata Motors down by 3.33%, UPL down by 1.75%, Indusind Bank down by 1.66% and Indiabulls Housing finance down by 1.62% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted decreased 55.37 points or 0.57% to 9,775.84, Hang Seng was down by 39.36 points or 0.15% to 25,593.82, Nikkei 225 fell 459.36 points or 2.11% to 21,810.52, Straits Times slipped 19.06 points or 0.63% to 3,049.09 and KOSPI dipped 9.21 points or 0.44% to 2,071.23.

On the flip side, Shanghai Composite increased 21.50 points or 0.81% to 2,652.02 and Jakarta Composite rose 33.41 points or 0.57% to 5,810.46.