Markets continue weak trade in afternoon session

Indian equity benchmarks continued their weak trade in afternoon session on account of weak global cues amid rising concerns of early QE tapering in the US. Selling was witnessed in index heavy weights such as Tata Motors, ONGC and BHEL. The depreciation in rupee value against the dollar also added to the pessimistic sentiments. Markets also shrugged off country’s better trade data as India’s trade deficit narrowed to $9.22 billion in November versus $10.56 billion a month ago and $17.2 billion, a year ago on the back of improved exports and falling imports. Capital goods was the top losing indices on BSE down by nearly 1.36% followed by oil and gas and banking stocks both down by over 1.00%. Meanwhile, Power stocks made a comeback after witnessing selling pressure in previous sessions due to the Central Electricity Regulatory Commission (CERC) draft sets stern norms for domestic power producers. On stock specific movement, Tata Motors, ONGC and BHEL were trading down by over 2.00%, while, NTPC, Jindal Steel and Bajaj auto were trading down by over 0.80 % on BSE.

Among other stocks, United Breweries was trading higher by 2% after the Dutch liquor giant Heineken hiked its stake in the company by over one percentage point through an open market transaction. Sabero Organic Gujarat, extending its past seven days rally, has rallied over 8% after the Gujarat Pollution Control Board (GPCB) revoked its closure order of the company’s Sarigam unit for a period of 3 months.

On global front, Asian markets were trading in red with Seoul Composite down by 0.89%, Hang Seng down by 1.39%, Straits Times down by 0.63% amid rising concerns over the US Fed tapering. Back home, the NSE Nifty and BSE Sensex were trading down their psychological 6,300 and 21,500 levels respectively. The market breadth on BSE was negative, out of 2,105 stocks traded, 861 stocks advanced, while 1,101 stocks declined on the BSE.  

The BSE Sensex is currently trading at 21,131.48 down by 123.78 points or 0.58% after trading in a range of 21,200.51 and 21,110.62. There were 10 stocks advancing against only 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.22%, while Small cap index up by 0.01%.

The gaining sectoral indices on the BSE were FMCG up by 0.39% and Consumer Durables up by 0.08%. While, Capital Goods down by 1.36%, Oil and Gas down by 1.18%, Bankex down by 1.05%, Realty down by 0.84%, and Auto down by 0.51% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.57%, Jindal Steel up by 1.48%, Bajaj Auto up by 0.89%, Maruti Suzuki up by 0.77% and ITC up by 0.57%. On the flip side, Tata Motors down by 2.60%, ONGC down by 2.35%, BHEL down by 2.11%, Gail India down by 2.00%, and L&T down by 1.63%. Meanwhile, in a big sign of disappointment to domestic power producers, the Central Electricity Regulatory Commission (CERC) announced draft tariff criteria for the power sector for 2014-19. The draft is likely to impact the domestic power companies such as NTPC, Sutlej Jal Vidyut Nigam and NHPC as the CERC has proposed to remove the tax arbitrage, which will ease power tariffs.

Furthermore, the CERC has also proposed tightening of operating norms for power producing and transmission companies by shifting incentives to their plant load factor (PLF) from the plant available factor (PAF). The proposed change is set to increase, bringing in relief for power generation companies through linking incentives to actual power generated and the PLF, the capacity at which the plant is operating. Meanwhile, it would adversely impact the state-run producers such as NTPC, whose existing incentives are linked to their available capacity for the State electricity boards (SEBs). The private power players have been permitted to raise tariffs. At presently, PLFs of most power generators have fallen below 70 percent due to coal availability issues. Meanwhile, the final guidelines will be prepared in early 2014, after getting the relevant industry feedback.

Concerned over the recently announced power tariff criteria, state run power produces NTPC stated that the regulator, which is a statutory body to encourage development of the power sector, will not dis-incentivise or de-motivate the largest power generating company in the country.  NTPC has been rated as number one company in the world in terms of capacity utilization and generates 27 per cent of electricity in the country with 18 per cent of the installed capacity.

The CNX Nifty is currently trading at 6,295 down by 37.50 points or 0.59% after trading in a range of 6,313.25 and 6,286.70. There were 12 stocks advancing against 38 declining on the index.

The top gainers of the Nifty were NTPC up by 2.46%, HCL Tech up by 1.70%, Jindal Steel up by 1.69%, Bajaj Auto up by 0.97% and Lupin up by 0.83%. On the flip side, Tata Motors down by 2.60%, ONGC down by 2.58%, Induaind Bank down by 2.40%, IDFC down by 2.37% and DLF down by 2.24% were the major losers on the index.

The Asian equity indices were trading in red; Seoul Composite down by 0.89%, Hang Seng down by 1.39%, Straits Times down by 0.63%, Nikkei 225 down by 0.52% and Taiwan Weighted down by 0.11%, Jakarta Composite down by 0.46%, Shanghai Composite down by 1.51% and KLSE Composite down by 0.03%.