Benchmarks turn green after a sluggish start

Indian equity benchmarks made a negative start on Friday tracking sluggish global cues. The US markets ended modestly lower overnight, there was profit taking in somewhat subdued day of trade that led the markets lower, while all the Asian equity benchmarks, barring Jakarta Composite, were trading in the red at this point of time as investors remained worried by how much the US Federal Reserve will cut its monthly stimulus at next week’s monetary meeting. Back home, depreciation in rupee too was dampening the sentiments. The rupee was trading at Rs 64.03 compared to its previous close of Rs 63.54 per dollar.

However, markets after initial sluggishness, took U-turn and entered into green terrain and are trading in fine fettle as sentiments remained up-beat with the industrial production rebounding to 2.6% in July from a year earlier, much better than the general street expectation of marginal contraction-to-flat numbers and far better than -2.2% figure of the last month. In other development, retail or CPI inflation, eased slightly to 9.52% in August over the previous month’s 9.64%, following softening in prices of almost all commodities, except vegetables.

Meanwhile, shares of India’s aviation companies viz, Spicejet and Jet Air India edged higher on the back of air fare hikes. SpiceJet pioneered the hike in fares this season and was followed by other entities, listed as well as non-listed, in the range of 25-30%. On the sectoral front, capital goods witnessed the maximum gain in trade followed by power and realty, while software, technology and banking remained the few losers on the BSE sectoral space. The broader indices were trading in fine fettle with a gain of arounf half a percent, while the market breadth on the BSE was positive; there were 796 shares on the gaining side against 347 shares on the losing side while 54 shares remain unchanged.

The BSE Sensex opened at 19744.54; about 37 points lower compared to its previous closing of 19781.88, and has touched a high and a low of 19899.37 and 19702.21 respectively. The index is currently trading at 19830.43, up by 48.55 points or 0.25 %. There were 23 stocks advancing against 7 declines on the index.

The overall market breadth has made a strong start with 66.50% stocks advancing against 28.99% declines. The broader indices were trading in green; the BSE Mid cap up by 0.49% and Small cap indices up by 0.59%. 

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.68%, Power up by 1.35%, Realty up by 1.09%, Health Care up by 1.08% and PSU up by 1.06%, while IT down by 0.40%, Teck down by 0.35% and Bankex down by 0.14% were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 3.26%, Sun Pharma up by 2.29%, L&T up by 2.25%, Tata Power up by 2.02% and Coal India up by 1.86%.  On the flip side, ICICI Bank was down by 0.85%, Infosys was down by 0.76%, HDFC was down by 0.74%, HDFC Bank was down by 0.74% and Wipro was down by 0.69% 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 opened at 5,828.00; about 12 points lower as compared to its previous closing of 5,850.70, and has touched a high and a low of 5,884.30 and 5,822.90 respectively.

The index is currently trading at 5,865.40, up by 14.70 points or 0.25%. There were 40 stocks advancing against 9 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were BHEL up by 2.71%, L&Tup by 2.12%, JP Associate up by 2.09%, Sun Pharmaceuticals up by 2.07% and DLF up by 1.98%. On the flip side, HCL Tech down by 1.49%, BPCL down by 1.40%, UltraTech Cement down by 1.12%, ICICI Bank down by 1.11% and Infosys down by 0.75% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined by 23.00 points or 1.02% to 2,232.60, Hang Seng shed 117.36 points or 0.51% to 22,836.36, KLSE Composite dipped 5.64 points or 0.32% to 1,766.76, Nikkei 225 decreased 105.64 points or 0.73% to 14,281.63, Straits Times slipped 2.52 points or 0.08% to 3,118.56, Seoul Composite decreased 9.51 points or 0.47% to 1,994.55 and Taiwan Weighted was down by 51.24 points or 0.62% to 8,174.12.

On the flip side, Jakarta Composite was down by 5.31 points or 0.12% to 4,361.92.