Benchmarks enlarge losses; Bankex, FMCG decline

Indian equities enlarged losses to continue weak trade in the late afternoon session on account of selling in front line counters and taking cues from weak global parts. The sentiments remained on cautious mood and banking counters continue to trade under pressure on fourth day in a row on expectation of further hike in repo rate by Reserve Bank of India. Traders were seen piling positions in Power, Health Care and Capital Goods stocks, while selling was witnessed in Bankex, FMCG and Oil & Gas sector stocks. In scrip specific development, Financial Technologies India was trading weak after its auditor stated that the company’s financial statements for 2012-13 can no longer be relied upon. Oil marketing companies HPCL, BPCL and IOC were trading in red after Petroleum Minister Veerappa Moily stated that there are no immediate plans for a one-time diesel price hike. The market may remain volatile as traders may roll over positions in the futures & options (F&O) segment from the near month i.e. September 2013 series to next month i.e. October 2013 series. The September 2013 F&O contracts will expire tomorrow i.e. September 26, 2013.

On the global front, all the Asian markets barring Hang Seng were trading in red while the European markets were too trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,850 and 19,700 levels respectively. The market breadth on BSE was negative in the ratio of 793:1285 while 150 scrips remained unchanged. 

The BSE Sensex is currently trading at 19688.96 down by 231.25 points or 1.16% after trading in a range of 19978.49 and 19658.74. There were only 15 stocks advancing against 15 declines on the index.

The broader indices were too trading in red; the BSE Mid cap index was down by 0.56%, while Small cap index down by 0.39%.

The top gaining sectoral indices on the BSE was Power up by 0.78%, Health Care up by 0.37%, Capital Goods up by 0.21%, Consumer Durables up 0.13% and Metal up by 0.11%. While Bankex down by 2.25%, FMCG  down by 2.13%, Oil & Gas down by 2.02%, Realty down by 1.26%  and Auto down by 0.51% remained the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 5.25%, Hindalco Industries up by 2.14%, Tata Motors up by 1.84%, NTPC up by 1.51% and Bharti Airtel up by 1.47%. On the flip side, RIL down by 3.36%, Mahindra & Mahindra down by 3.32%, HDFC Bank down by 3.28%, Hindustan Unilever down by 2.84% and ITC down by 2.70% were the top losers on the Sensex.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) has approved the new methodology for auctioning coal blocks in order to provide upfront and production-linked payments and benchmarking of coal sale prices. The move will ensure greater transparency in auctioning the fully explored coal blocks and will also enable the government to allot coal mining licences through competitive bidding for the first time. The government will put coal blocks for auction after the environment ministry reviews and bidders approval to a minimum work programme.

It is reported that process of bidding of coal blocks will be started soon and six explored blocks with estimated reserves of over 2,000 million tonnes will be auctioned first. Under the new methodology, bidders have to provide production-linked payment on rupee per tonne basis, plus a basic upfront payment of 10 percent of the intrinsic value of the coal block. Meanwhile, intrinsic value will be calculated based on net present value (NPV) of the block arrived at through the discounted cash flow (DCF) method.

In order to benchmark the selling price of coal, the international freight-on-board (FoB) price from the public indices like Argus/Platts will be used by adjusting it with 15 percent to provide for inland transport cost. Further, the policy stated that to reduce short-term volatility in selling price, the average sale price of the past five years will be considered. To rationalise electricity tariffs, a 90 percent discount will be provided on the intrinsic value for the regulated power sector. The policy also stated that the bidders can also relinquish their blocks without penalty if they have carried out the minimum work programme stipulated in the agreement.

The CNX Nifty is currently trading at 5,820.00 down by 72.45 points or 1.23% after trading in a range of 5,910.55 and 5,811.10. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were BHEL up by 6.05%, Hindalco Industries up by 2.32%, Tata Motors up by 1.78%, Bharti Airtel up by 1.38% and NTPC up by 1.34%. On the flip side, BPCL down by 4.96%, IDFC down by 3.91%, Reliance Industries down by 3.48%, M&M down by 3.32% and Kotak Bank down by 3.16% were the major losers on the index.

Most of the Asian equity indices were trading in red; Jakarta Composite down by 2.14%, KLSE Composite down by 0.49%, Nikki 225 down by 0.76%, Shanghai Composite down by 0.41%, Seoul Composite down by 0.45% and Taiwan Weighted down by 0.18% while Hang Seng up by 0.13% was the sole gainer.

The European markets were trading in red; France’s CAC 40 was down 0.13%, Germany’s DAX lost 0.19% and UK’s FTSE 100 dropped 0.25%.