Weak trade prevails; Power, Capital Goods drag

Indian equities continued weak trade in the late afternoon session on account of selling in frontline counters. Investors took note of Prime Minister Manmohan Singh speech who expressed concern about the failure in controlling persistent inflation. Manmohan Singh, who pulled himself 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. Traders were seen piling positions in IT, TECK and Health Care stocks while selling was witnessed in Power, Capital Goods and Metal sector stocks. Hectic activity was witnessed in power stocks 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. In scrip specific development, Tata Teleservices (Maharashtra) was trading firm on reports that Vodafone is in preliminary discussions with the Tata Group to acquire its majority stake in Tata Teleservices.

On the global front, the Asian markets were trading in red, while the European markets were trading on mixed note. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 6,200 and 20,800 levels respectively. The market breadth on BSE was negative in the ratio of 922:1351 while 140 scrips remained unchanged.

The BSE Sensex is currently trading at 20784.00, down by 104.33 points or 0.50% after trading in a range of 20,856.53 and 20,731.33. There were 8 stocks advancing against 22 stocks declining on the index.

The broader indices too succumbed to selling pressure; the BSE Mid cap and Small cap indexes were down by 0.07% and 0.33% respectively.

Amidst across the board selling activities, Power down by 1.98%, Capital Goods down by 1.83%, Metal down by 1.68%, Oil & Gas down by 1.48% and PSU down by 1.38% were the top losers. On the flip side, IT up by 2.04%, TECK up by 1.75%, Health Care up 0.04% and Consumer Durables up 0.03% were the only gaining sectoral indices on the BSE

The top gainers on the Sensex were TCS up by 2.85%, Infosys up by 2.38%, Hero Motocorp up by 1.01%, Bharti Airtel up by 0.53% and Wipro up by 0.52%. On the flip side, Tata Power down by 5.03%, M&M down by 3.14%, Tata Motors down by 2.94%, L&T down by 2.40% and BHEL down by 2.33%.

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 6,188.55, down by 32.60 points or 0.52% after trading in a range of 6,209.05 and 6,171.25. There were 18 stocks advancing against 32 declining on the index.

The top gainers of the Nifty were TCS up by 2.63%, Infosys up by 2.14%, Lupin up by 1.51%, Hero Motocorp up by 1.17% and Ultratech Cement up by 0.94%. On the flip side, Tata Power down by 4.87%, M&M down by 3.17%, Tata Motors down by 3.05%, BPCL down by 2.93% and BHEL down by 2.77% were the major losers on the index.

The Asian equity indices were trading in red; Seoul Composite plunged 1.07%, Hang Seng tumbled 2.24%, Straits Times slid 1.36%, Taiwan Weighted dropped 0.77%, Jakarta Composite sunk by 1.30%, Shanghai Composite stumbled 1.24% and KLSE Composite down by 0.89%.  Japan’s Stock Exchange was closed for the day.

The European markets were trading on a mixed note; France’s CAC 40 was up 0.21%, Germany’s DAX was down 0.26% and UK’s FTSE 100 lost 0.26%.