Benchmarks witness consolidation on Wednesday

Reversing all the early gains, key domestic benchmarks witnessed consolidation on Wednesday with both the gauges snapping the session on a flat note rather with negative bias, as investors booked profit ahead of advanced economic growth estimates for the current fiscal year (FY13) which will be released on February 7, 2013. The bourses traded in fine fettle for most part of the day buoyed by firm global cues. Moreover, some support also came in from interest rate sensitive realty space which extended recent gains as many banks cut lending rates after the Reserve Bank of India (RBI) announced a 25 basis points reduction in its key policy rate viz. the repo rate after a monetary policy review on January 29, 2013.

Supportive cues from US markets provided the much needed support to local markets in the first half. Investors’ morale got buttressed after the ISM report showed that activity in the US service sector continued to expand in the month of January. Moreover, Asian markets ended the session mostly in the green with Japanese market surging the most to near its four year high after Bank of Japan Governor Masaaki Shirakawa said that he will step down on March 19, three weeks before his term was due to expire, that may help Japanese Prime Minister Shinzo Abe’s campaign for aggressive easing. However, disappointing cues from European market took their toll on domestic sentiments in the second half and dragged the Frontline gauges near their pre-close level. Investors mainly resorted to profit booking following the weakness in European markets.

Back home, investors turned nervous in the late trade and sentiments got dampened as stocks from power sector turned negative after a decent run, despite Cabinet Committee of Economic Affairs (CCEA) giving an ‘in-principle’ nod for the coal pool pricing mechanism. While, in other development, Centre and the states agreed that states would invite open competitive bids for procuring electricity in the next six months to bridge the supply shortfall. Cautiousness in the markets also crept in after International Monetary Fund (IMF) said that Indian economy is growing at a rate of 4.5 per cent in 2012-13 (at market prices), much less than the big economies of ASEAN such as Indonesia and the Philippines, and even Bangladesh.

Selling got intensified in late trade as Jewellery stocks, viz, Rajesh Exports and Titan Industries declined after RBI said it would consider imposing value and quantity restrictions on gold imports by banks, which account for 60 percent of India’s imports of the yellow metal, under extreme conditions, as the world’s biggest consumer of gold battles a record high current account deficit. However, losses remained capped after sugar sector stocks witnessed traction on reports that food minister will seek a cabinet approval for sugar decontrol, a first proposal that will be taken to the highest decision-making body of the government since the sector was brought under strict regulation 50 years ago.

The NSE’s 50-share broadly followed index Nifty rose by just two points to end above the psychological 5,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by about twenty points to finish below the psychological 19,650 mark. However, broader markets traded with some traction today and ended the session slightly in the green.

The overall volumes stood above Rs 1.00 lakh crore, which remained on the lower side as compared to that on Tuesday. The market breadth remained in favor of advances as there were 1,165 shares on the gaining side against 1,017 shares on the losing side while 804 shares remain unchanged.

Finally, the BSE Sensex lost 20.10 points or 0.10% to settle at 19639.72, while the S&P CNX Nifty rose by 2.30 points or 0.04% to end at 5,959.20.

The BSE Sensex touched a high and a low of 19767.25 and 19611.27, respectively. The BSE Mid cap index up by 0.02% and Small cap index was up by 0.24%.

The top gainers on the Sensex were, Jindal Steel up by 2.69%, Maruti Suzuki up by 1.61%, HDFC up by 1.25%, TCS up by 0.82% and Hindalco up by 0.79%, while NTPC down by 2.12%, Coal India down by 2.03%, BHEL down by 1.72%, Hindustan Unilever down 1.60% and L&T down by 1.23% were the top losers on the index.

The top gainers on the BSE Sectoral space were Realty up 0.78%, IT up 0.62%, TECk up 0.60%, FMCG up 0.32% and Metal up 0.29%, while Capital Goods down 0.93%, PSU down 0.57%, Power down 0.49%, Bankex down 0.34% and Oil & Gas down 0.18% were top losers on the sectoral space.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) has given its in-principle approval for price pooling of coal by which prices of domestic and imported coal are averaged to get a uniform price for the fuel in the country.

Information and Broadcasting Minister Manish Tewari said 'the in-principle decision has been taken and there are some data that have to be put into these principles. The structure of the decision has been put in place and the ministries of coal and power would come back with the specifics. Basic principles and parameters have been identified and the plotting of real numbers has to be done'.

The CCEA would again deliberate on the issue, while both the power and coal ministries have appreciated the urgencies and they would be coming back as quickly as possible.

The decision on price pooling has been pending for long time because of the conflict between the coal and power ministries on how the impact of higher imported coal prices will be shared between state miner Coal India (CIL) and power companies. Earlier, the power ministry after consultation with the Central Electricity Authority (CEA) has suggested the Coal Ministry that the difference in cost of imported and domestic coal should be added to the cost of indigenous fuel at the time of finalising proposal for pooling coal prices.

However, coal India had said that price pooling was a mechanism to implement fuel supply agreement (FSA) and if price pooling is approved then 15 percent supply of imported coal ‘will be not in the cost plus method, but in pooling mechanism’. Coal India board had earlier approved the modified FSA without price-pooling with 65 percent domestic coal and 15 percent imported coal at cost plus basis. Till now, 48 companies have entered into fuel supply pacts with Coal India for receiving the fuel. According to the FSA, Coal India has to provide an assured supply of minimum 80 percent of the total quantity, if failing to which would be penalized.

The S&P CNX Nifty touched a high and a low of 5,990.90 and 5,953.15 respectively.

The top gainers on the Nifty were Kotak Bank up by 2.29%, Jindal Steel up by 2.22%, Ultratech Cement up by 1.80%, Maruti up by 1.73% and Ambuja Cement up by 1.71%.

The top losers of the index were JP Associates down by 3.55%, NTPC down by 2.38%, L&T down by 1.77%, Coal India down by 1.72% and Siemens down by 1.61%.

The European markets were trading mixed, France’s CAC 40 down by 0.67%, United Kingdom’s FTSE 100 up by 0.37% and Germany’s DAX down by 0.22%.

Asian equity markets recovered from earlier session’s losses and ended mostly higher on Wednesday as solid eurozone data relieved some worries arise by potential political turmoil derailing the region's efforts to resolve its debt crisis. Japan’s Nikkei went home with strong gains after touching 52-month high, as a prospect of a dovish new governor for the Bank of Japan (BoJ) weakened the yen. Shanghai Composite closed marginally higher, ahead of trade and inflation data out on Friday, while Hang Seng made a partial recovery from the sell-off on Tuesday and ended with gains.