Benchmarks continue weak trade; IIP, inflation data eyed

Indian equity markets continuing their weak trade in the late afternoon session enlarged losses, on account of selling in front line counters ahead of Industrial production numbers and August retail inflation data to be released later in the day. The sentiments remained under pressure after Moody’s Investors Service stated that some companies could see the quality of their debt decline, as higher global borrowing costs and a sharply weaker rupee take their toll. Moody’s added that some companies will remain highly leveraged over the next 12 months because of weak industry dynamics and resulting constraints on cash flows. Investors even ignored the statement of newly appointed central bank Governor Raghuram Rajan who told that India’s slowing economy and its massive current account and fiscal deficits are not structural problems and can be fixed with modest reforms. Traders were seen piling positions in Realty, Power and FMCG stocks, while selling was witnessed in Consumer Durables, IT and Metal sector stocks. In scrip specific development, IDFC was trading in green after central bank withdrew restrictions placed on purchase of the company’s shares by foreign investors. Mahanagar Telephone Nigam (MTNL) was locked at upper circuit limit ahead of the Group of Ministers meet this evening where revival of MTNL and BSNL will be considered.

On the global front, all the Asian markets barring Nikkei 225 ended in green, while the European markets made a mixed start. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,900 and 19,900 levels respectively. The market breadth on BSE was positive in the ratio of 1179:988, while 138 scrips remained unchanged. 

The BSE Sensex is currently trading at 19823.20 down by 174.25 points or 0.87% after trading in a range of 20052.05 and 19787.43. There were only 9 stocks advancing against 21 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.40%, while Small cap index was up by 0.71%.

The top gaining sectoral indices on the BSE were, Realty up by 1.30%, Power up by 0.26%, FMCG up by 0.17% and Health Care up by 0.05%. While, Consumer Durables down by 1.77%, IT down by 1.58%, Metal down by 1.53%, Bankex down by 1.51% and TECK down by 1.40% were the losing indices on BSE.

The top gainers on the Sensex were, Tata Power up by 3.76%, ITC up by 1.82%, Gail India up by 1.30%, NTPC up by 1.20% and Cipla up by 1.12%.

On the flip side, Coal India down by 3.21%, ONGC down by 3.15%, Hero MotoCorp down by 3.09%, Hindustan Unilever down by 2.17% and Infosys down by 2.11% were the top losers on the Sensex.

Meanwhile, concerned over the scarcity of gas for power plants and rising gas prices, the power ministry has moved a draft note to Cabinet Committee on Economic Affairs (CCEA) with a proposal of about Rs 11,000 crore payout to subsidise costlier power.The proposal is for averaging the price of cheaper domestic gas with costlier imported liquid gas or LNG to have a uniform rate for all gas-based electricity generation stations and the Power ministry has urged the CCEA to consider the approved pricing formula of natural gas.

Earlier, in June, the government had approved the pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG. Such averaging pricing will raise the effective gas price to $11.43 per million British thermal unit (mmBtu) from $4.2 per mmBtu, leading to cost of electricity generation of Rs 10.47 per unit. The power ministry has argued that such a high cost of electricity cannot be absorbed by consumers and so the government should subsidise any cost over and above Rs 5.50 per unit.

India’s total installed power generation capacity is 225,793 MW, of which 18,714 MW or nearly 8 percent, is gas-based. At present, power plants in the country get just 17.25 million standard cubic metres per day of gas from domestic fields as against an allocation of 71.29 mmscmd on account of declining gas supplies from Reliance Industries' eastern offshore KG-D6 fields. However, in August, the Empowered Group of Ministers (EGoM) decided that any surplus natural gas left after meeting the needs of urea plants would be supplied to fuel-starved electricity generating stations.

The CNX Nifty is currently trading at 5,862.80 down by 50.35 points or 0.85% after trading in a range of 5,932.00 and 5,854.05. There were 16 stocks advancing against 32 declines while 2 stocks remained unchanged on the index.

The top gainers of the Nifty were Tata Power up by 5.43%, IDFC up by 4.77%, Ranbaxy Laboratories up by 1.98%, NTPC up by 1.74% and Lupin up by 1.70%.

On the flip side, JP Associate down by 7.37%, Ambuja Cemnet down by 3.25%, Hero MotoCorp down by 3.17%, Coal India down by 3.11% and IndusInd Bank down by 3.03% were the top losers on the index.

Most of the Asian equity indices were trading in green; Seoul Composite up by 0.01%, KLSE Composite up by 0.17%, Shanghai Composite up by 0.64%, Taiwan Weighted up by 0.20%, Jakarta Composite up by 0.07%, Straits Times up by 0.49% and Hang Seng up by 0.07% while Nikkei 225 down by 0.26% was the sole loser.

The European markets were trading mixed; France’s CAC 40 was down 0.27%, Germany’s DAX lost 0.03% and UK’s FTSE 100 added 0.05%.