Benchmarks trade lower in morning deals on F&O series expiry day

Indian equity indices have made a weak start and are trading choppy in the morning deals on Thursday as investors remained sideways ahead of January derivatives contract expiry. The risk appetite also remained frail after the Reserve Bank of India in its third-quarter monetary policy review made further rate cuts conditional on government moves to control fiscal deficit. However, the losses remain capped as some support came in from oil and gas counters which edged higher as the Cabinet’s panel for promoting investment by cutting red tape has asked the oil and defence ministries to resolve within a month their differences over allowing oil hunt in 47 blocks and seek fresh approval. Some strength was also provided by sugar sector as stocks like, Shree Renuka Sugar, Bajaj Hindustan, Balrampur Chini, EID Parry and Rana Sugar all rallied as a government panel is likely to approve nearly a 25% hike in sugarcane prices that the mills have to pay to farmers in a season in which plantings are expected to be lower than that of last year's.

However, global cues remained sluggish as the US markets ended lower overnight weighed down by Federal Reserve’s statement that growth in economic activity has paused in recent months largely due to weather-related disruptions and other transitory factors. Adding further pressure, GDP unexpectedly fell by 0.1 percent in the fourth quarter after surging up by 3.1 percent in the third quarter. While, most of the Asian equity indices were trading in the red at this point of time with Japanese Nikkei losing the most after the country’s industrial production rose less than expectation, suggesting that a recovery in the nation’s manufacturing sector is lagging.

Back home, realty witnessed the maximum gain in trade followed by public sector undertaking and power while, metal, auto and banking remained the top losers on the BSE sectoral space. The broader indices, however, were trading slightly in the green while, the market breadth on the BSE was positive; there were 948 shares on the gaining side against 840 shares on the losing side while 89 shares remain unchanged.

The BSE Sensex opened at 19,987.28; about 17 points lower compared to its previous closing of 20,005.00, and has touched a high and a low of 20,008.83 and 19,938.94 respectively.

The index is currently trading at 19,959.86, down by 45.14points or 0.23%. There were 7 stocks advancing against 23 declines on the index.

The overall market breadth has made a strong start with 50.63% stocks advancing against 44.87% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.14% and 0.01% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 0.62%, PSU up by 0.50%, Power up by 0.20%, FMCG up by 0.16% and Oil & Gas up by 0.05% while, Metal down by 0.28%, Auto down by 0.26%, Bankex down by 0.14%, Capital Goods down by 0.13% and Health Care down by 0.12% were the only losers on the index.

The top gainers on the Sensex were ONGC up by 1.92%, BHEL up by 1.19%, Bajaj Auto up by 1.02%, ITC up by 0.58% and Gail India up by 0.50%.

On the flip side, RIL was down by 1.12%, Tata Motors was down by 1.04%, Hindustan Unilever was down by 0.78%, Bharti Airtel was down by 0.77% and Tata Power was down by 0.72% were the top losers on the Sensex.

Meanwhile, the government has extended the last date for receipt of applications for allotting 17 coal mines to public sector firms under the new bidding regime. On the request of state government companies, coal ministry has extended the last date of receipt of application to February 8. However, the ministry has clarified that under no circumstances, any further extension will be given for the submission of applications after 8 February, 2013.

The government wants to allocate 54 blocks to public and private companies under the auction by Competitive Bidding of Coal Mines Rules notified in February 2012. Initiating the process of allocation of mines, the Coal Ministry had in December 31 invited proposals from PSUs for allotment of 17 coal mines to them, mostly for captive power plants. Presently, 17 blocks with 8.5 billion tonne (BT) reserves on offer are not explored yet. The 17 coal blocks include 14 acreages earmarked for companies to set up end-use plants in the power sector and three blocks for allocation to mining companies.

However, so far, not a single company has submitted an application for block allocation, which is showing uncertainty over the future cash flow from these coal reserves. While, to calculate the reserve price for coal blocks, the coal ministry has planned to ask selected companies to carry out exploration themselves owing to the dismal pace of exploration by Coal India’s subsidiary Central Mine Planning and Design Institute (CMPDI). After this, the government would calculate reserve prices for auction by linking it either to global coal prices or using Coal India prices as benchmarks.

The S&P CNX Nifty opened at 6,045.65; about 10 points lower as compared to its previous closing of 6,055.75, and has touched a high and a low of 6,058.05 and 6,042.30 respectively. The index is currently trading at 6,046.70, down by 9.05 points or 0.15%. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were ONGC up by 1.79%, BHEL up by 1.47%, BPCL up by 1.40%, Asian Paints up by 1.40% and HCL Technologies up by 1.31%.

On the flip side, Sesa Goa down by 1.34%, Reliance Industries down by 1.23%, Tata Motors down by 1.15%, Hindustan Unilever down by 0.84% and Jaiprakash Associates down by 0.80% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng lost 123.87 points or 0.52% to 23,698.19, Jakarta Composite declined 8.65 points or 0.19% to 4,444.32, KLSE Composite slipped 1.40 points or 0.09% to 1,626.33, Nikkei 225 dropped 81.32 points or 0.73% to 11,032.63, Straits Times dipped 3.73 points or 0.11% to 3,282.17, KOSPI Composite decreased 6.63 points or 0.34% to 1,957.80 and Taiwan Weighted was down by 8.92 points or 0.11% to 7,824.06. 

Shanghai Composite was up by 2.40 points or 0.10% to 2,384.87.