Benchmarks hit 1-1/2-week low on renewed Fed-tapering worries

Weakness continued on the benchmarks in late morning trade as faster US economic growth fueled concern the Federal Reserve may reduce monetary stimulus for the US economy sooner than expected. The US central bank currently buys bonds worth $85 billion a month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. Domestic sentiment was also dampened as global credit rating agency Standard and Poor's had warned on Thursday that it may lower India's rating to speculative grade from investment grade next year if the government that wins the general election fails to provide a credible plan to reverse the country's low economic growth. A weak rupee and European Central Bank's rate decision, also affected the domestic sentiment

On the global front, all Asian equity benchmarks were trading in the red with some of the indices trading lower by around a percent. Chinese market was down ahead of the release of industrial production, inflation and retail sales data tomorrow. Back home, traders were buying, Auto, Health Care and IT while selling were seen in Consumer Durables, Oil & Gas and PSU on the BSE.

The market breadth on BSE remains negative with advances to declines in the ratio of 794: 850. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively.

The BSE Sensex is currently trading at 20744.57, down by 78.20 points or 0.38% after trading in a range of 20821.01 and 20645.64. There were 10 stocks advancing against 20 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.11% and Small cap index gained 0.02%.

The top gaining sectoral indices on the BSE were, Auto up by 0.54%, Healthcare up by 0.50%, IT up by 0.40%, Teck up by 0.37%, and Metal up by 0.22%. While Consumer Durables down by 1.15%, Oil & Gas down by 0.96% , PSU down by 0.60%, Bankex down by 0.58% and  Capital Goods down by 0.39%  were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 2.30%, Tata Steel up by 1.36%, Bharti Airtel up by 1.02%, SSLT up by 1.01%,  and BHEL up by 0.93%. On the flip side, HDFC was down by 2.12%, ONGC was down by 1.85%, Gail India was down by 1.75%, Coal India was down by 1.15%, and Maruti Suzuki was down by 1.03%, were the top losers on the Sensex.

Meanwhile, amid rising concerns over the low domestic coal production, Coal Secretary S K Shrivastava said that lack of adequate transportation infrastructure has been impacting India’s coal production. Despite the world's fifth largest in terms of reserves and third-largest producer of coal, India's domestic output has failed to keep pace with demand over the past few years. At present, Indian domestic coal demand is around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from Indonesia, South Africa and Australia. In the previous fiscal, India imported $16 billion worth of coal.

S K Shrivastava further said that if transportations issues are addressed, through extending more railway lines to coal-rich areas such as Chhattisgarh and Jharkhand, domestic coal production can be increased to 50-60 million tonnes by the end of the 12th five year plan and 200-250 million tonnes by the end of the 13th plan. Meanwhile, coal secretary said that coal ministry is in talks with the Indian Railways to end these transportation woes.

Presently, Coal India is the only producer of domestic coal, which is also struggling to meet domestic requirement. Acute coal shortages in the country has become primary reason for power deficit in the country as coal-fired plants account for 57% of India's installed electricity capacity. Meanwhile, in order to meet India’s growing coal demand, the government has planned to invite bids from private players to start coal mining in a public-private partnership (PPP) mode in the country, which would also end the monopoly of public sector unit Coal India. The government is likely to auction 10 coal blocks in the month of March next year.

The CNX Nifty is currently trading at 6,167.95 down by 19.30 points or 0.31% after trading in a range of 6,185.15 and 6,139.85. There were 19 stocks advancing against 31 declines on the index.

The top gainers of the Nifty were Tata Motors up by 2.43%, HCL Tech up by 2.21%, Lupin up by 1.77%, Tata Steel up by 1.45% and Bharti Airtel up by 1.29%. On the flip side, HDFC down by 2.17%, Axis Bank down by 2.01%, ONGC down by 1.83%, ACC down by 1.67% and GAIL down by 1.51% were the major losers on the index.

The Asian equity indices were trading in red; Shanghai Composite was down by 22.68 points or 1.06% to 2,106.72, Hang Seng lost 134.50 points or 0.59% to 22,746.53, Jakarta Composite was down by 17.67 points or 0.39% to 4,468.44, KLSE Composite was down by 1.03 points or 0.06% to 1,805.58, Nikkei 225 shed 149.28 points or 1.05% to 14,079.16, Straits Times was down by 15.00 points or 0.47% to 3,187.10, Seoul Composite was down by 10.87 points or 0.54% to 1,993.17, and Taiwan Weighted lost 43.67 points or 0.53% to 8,240.04.