Sell-off continues in domestic equities amid feeble global cues

Indian equity benchmarks continued to trade deeply in red in the early noon session on account of selling witnessed in front line blue chip stocks amid weak global cues. Barring IT and Teck, which saw some buying, rest other sectors led by metal, Auto and Telecom witnessed hectic selling. Besides, broader indices were also trading in red, dragging their larger peers lower during the trade. Sentiments remained subdued as the spread of corona virus outside China spooked global markets. The corona virus, that has killed 2,442 people in China, has spread to 28 other countries and territories, with the IMF warning that the deadly corona virus epidemic could put an already fragile global economic recovery at risk. The mood on the street also remained cautious with Chief Economic Adviser Krishnamurthy Subramanian’s statement that India has some distance to go in fully shifting from pro-crony to pro-business policies.

On global front, Asian markets were trading lower as the number of coronavirus infections rose sharply in South Korea, Italy and Iran. Closer home, in scrip specific development, shares of Aurobindo Pharma slipped by over 14% after in surprise development, the US drug regulator FDA revoked the ‘Voluntary Action Initiated’ status issued to company’s plant in Hyderabad, days after indicating it might not pursue further regulatory action.

The BSE Sensex is currently trading at 40752.49, down by 417.63 points or 1.01% after trading in a range of 40673.38 and 41037.01. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 0.39%, while Small cap index was down by 0.38%.

The only gaining sectoral indices on the BSE were IT up by 0.70% and TECK up by 0.32%, while Metal down by 3.34%, Auto down by 1.68%, Telecom down by 1.49%, Energy down by 1.26% and Healthcare was down by 1.22% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.42%, Tech Mahindra up by 0.95%, Sun Pharma up by 0.47%, TCS up by 0.40% and Ultratech Cement was up by 0.27%. On the flip side, Tata Steel down by 3.26%, ONGC down by 2.97%, HDFC down by 2.32%, Maruti Suzuki down by 2.32% and ICICI Bank was down by 2.21% were the top losers.

Meanwhile, ratings agency ICRA has said that the auction of coal linkages under the SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India) policy to independent power projects (IPPs) will have a positive impact on coal-based power plants. ICRA’ Group Head and Senior Vice President -- Sabyasachi Majumdar said the availability of coal linkage will enable the plants to declare normative availability allowing recovery of fixed charges and improve their merit order position.

The government had recently notified the third round of auction for award of coal linkages under SHAKTI to independent power projects having long-term power purchase agreements (PPAs). This will have a positive impact for coal-based power plants. The government has proposed the minimum tariff discount to be quoted by the bidders for securing coal linkage at 7 paise per unit.

However, agency stated that the high base tariff discount and 90 percent cap on quantity under the third round of auction are negative for the IPPs.  The latest discount is higher than 1 paise per unit base discount set under the first round of auction held in September 2017 and 4 paise per unit base discount set under the second round of auction for coal linkages held in May 2019. The base discount for the third round of auction is equal to the bid discount discovered in this second auction.

The CNX Nifty is currently trading at 11949.75, down by 131.10 points or 1.09% after trading in a range of 11923.85 and 12012.55. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Infosys up by 1.22%, Tech Mahindra up by 0.90%, BPCL up by 0.49%, Ultratech Cement up by 0.46% and Sun Pharma was up by 0.36%. On the flip side, Hindalco down by 4.24%, JSW Steel down by 3.83%, Vedanta down by 3.69%, Tata Steel down by 2.99% and ONGC was down by 2.87% were the top losers.

Asian Markets were trading in red; Straits Times trembled 29.87 points or 0.94% to 3,151.16, Hang Seng decreased 433.46 points or 1.59% to 26,875.35, Shanghai Composite declined 12.52 points or 0.41% to 3,027.15, KOSPI fell 77.10 points or 3.56% to 2,085.74, Taiwan Weighted dropped 151.48 points or 1.3% to 11,534.87 and Jakarta Composite was down by 70.09 points or 1.19% to 5,812.17.