Markets plunge further after PM’s speech; rupee slips to one month low level

Local equity markets, further succumbing to selling pressure, lost additional ground, registering loss of close to half a percent to trade below the crucial 20,800 (Sensex) and 6,200 (Nifty) levels respectively after Prime Minister’s Manmohan Singh speech that also pushed Rupee to a month’s low level at ‘62.55/$’. Trade took a turn for the worse even as the Prime Minister, pulling him out of the race of next PM, underscored that the economy was set for better time. He added that all emerging economies, including India, faced slowdown in the past couple of years but the global growth cycle is turning for the better. 

Nevertheless, sentiment right from the start of trade was downbeat after few reports suggested of government mulling hiking the quota of subsidized LPG cylinders to 12 per household in a year from the current limit of 9 per household, a move which on implementation would definitely increase the subsidy bill. Meanwhile, negative global set-up were also adding to the woes of ailing equity markets.

The sharp plunge of local bourses was mainly on account of across the board selling activities, with only exceptions being stocks from defesnsive Information Technology and Technology counters, which stand to gain the most with markets’ downturn. On the flip side, Power, Capital Goods and metal counters were the top laggards of the session, lost in the sea of red. Power stocks slipped after CCEA approved the proposal to amend the policy on mega power projects. As per the proposal, power generating firms can take benefit from this policy only after fulfilling certain mandatory conditions as the developer must tie up at least 65 percent of the installed capacity through competitive bidding and remaining 35 percent of the installed capacity should be through the regulated tariff. The overall market breadth on BSE is in the favour of declines which have thumped advances in the ratio of 1206:923; while 138 shares remained unchanged.

The BSE Sensex is currently trading at 20786.44, down by 101.89 points or 0.49% after trading in a range of 20,856.23 and 20,758.03. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices too succumbed to selling pressure; the BSE Mid cap and Small cap indexes down by 0.09% and 0.25% respectively

Amidst across the board selling activities, Power down by 1.85%, Capital Goods down by 1.65%, Metal up by 1.52%, Auto down by 1.01% and PSU down by 0.93% were the top losers. On the flip side, IT up by 1.47%, and Teck up by 1.33%, were the only gaining sectoral indices on the BSE

The top gainers on the Sensex were TCS up by 2.21%, Infosys up by 1.65%, Hero Motocorp up by 1.24%, HDFC Bank up by 0.78% and Maruti Suzuki up by 0.60%. On the flip side, Tata Power down by 5.26%, M&M down by 2.71%, Hindalco Inds down by 2.57%, Tata Motors down by 2.47% and L&T down by 2.10%.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) has approved the proposal to amend the policy on mega power projects. Meanwhile, power generating firms can take benefit from this policy only after fulfilling certain mandatory conditions as the developer must tie up at least 65 percent of the installed capacity through competitive bidding and remaining 35 percent of the installed capacity should be through the regulated tariff. Meanwhile, policy guidelines were also modified in 1998, 2002 and 2006 to encourage power development in the North Eastern region and Jammu & Kashmir.

According to the amended Mega Power Policy, in order to avail the benefits of duty-free imports of equipments for thermal power projects of capacity of 1,000 MW and above, and hydro power projects of 500 MW and above, provisional mega power project status certificate along with a fixed deposit receipt from any scheduled bank must be submitted as a security for a term of 60 months, which was earlier for 36 months. Mega Power Policy allows mega power projects to tie up electricity sales to distribution utilities through long-term power purchase agreements.

Further, to encourage power development in Jammu & Kashmir, CCEA approved construction of a 220 kv transmission system from Alusteng in the Srinagar valley to Leh and inter- connection system for various sub- stations in J&K at a cost of Rs 1,788.41 crore. The project will be implemented through Power Grid Corp within 42 months from the date of release of the first installment of funds and the project cost will be borne by the central government and the J&K Government in the ratio of 95:5. After commissioning of the transmission system, Operation & Maintenance (O&M) and other related activities will be carry out by J&K Government at their own cost.  

The CNX Nifty is currently trading at 6,187.25, down by 33.90 points or 0.54% after trading in a range of 6,209.05 and 6,178.85. There were 10 stocks advancing against 39 declining on the index, while 1 stock remained unchanged.

The top gainers of the Nifty were TCS up by 2.07%, Infosys up by 1.54%, Hero Motocorp up by 1.39%, Kotak Bank up by 0.78% and HDFC Bank up by 0.70%. On the flip side, Tata Power down by 5.32%, M&M down by 2.79%, BHEL down by 2.62%, Tata Motors down by 2.54% and Hindalco Industries down by 2.53% were the major losers on the index.

The Asian equity indices were trading in red; Seoul Composite plunged 1.07%, Hang Seng tumbled 2.10%, Straits Times slid 1.16%, Taiwan Weighted dropped 0.77%, Jakarta Composite sinked by 1.16%, Shanghai Composite stumbled 1.16% and KLSE Composite down by 0.70%.