Weak global cues drag markets lower in early deals

Pressurized by weak global cues, Indian equity benchmarks are trading lower in early deals on Monday with frontline gauges tumbling below their crucial 6,200 (Nifty) and 20,800 (Sensex) levels. The US markets ended lower in last trading session after Bernanke’s speech acknowledging that economy has a long way to go to return to normal. Moreover, most of the Asian equity indices were trading in the red at this point of time as weak services sector economic data from China dampened the sentiments. Meanwhile, Japanese Nikkei too declined around two percent as yen strengthened against the dollar.

Back home, some concern also came in after a study report by industry body Assocham, said that uncertainty over the outcome of the upcoming Lok Sabha elections is likely to cast a shadow on the economy. Traders also remained cautious ahead of India’s services PMI to be announced later in the day. Sentiments also remained somber after the rupee depreciated and was trading at 62.43/44 versus its close of 62.16/17 on Friday tracking the dollar’s broad gains versus major currencies.

On the sectoral front, consumer durables witnessed the maximum gain in trade followed by capital goods and healthcare, while banking, realty and metal remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 736 shares on the gaining side against 474 shares on the losing side while 39 shares remain unchanged.

The BSE Sensex opened at 20913.79; about 62 point higher compared to its previous closing of 20851.33, and has touched a high and a low of 20913.79 and 20740.63 respectively. The index is currently trading at 20790.39, down by 60.94 points or 0.29%. There were 11 stocks advancing against 29 declines on the index.

The overall market breadth has made a strong start with 59.58% stocks advancing against 37.01% declines. The broader indices were trading in green; the BSE Mid cap and Small cap indices up by 0.21% and 0.74% respectively. 

The top gaining sectoral indices on the BSE were, Consumer Durables up by 0.74%, Capital Goods up by 0.73%, Healthcare up by 0.46%, Auto up by 0.31% and PSU up by 0.19%, while Bankex down by 0.99%, Metal down by 0.41%, Realty down by 0.40%, IT down by 0.37% and Power down by 0.31% were the top losers on the sectoral index. 

The top gainers on the Sensex were ONGC up by 2.25%, Tata Motors up by 1.36%, BHEL up by 0.51%, Gail India up by 0.49% and Sun Pharma up by 0.37%. On the flip side, Tata Power was down by 1.96%, ICICI Bank  was down by 1.50%, RIL was down by 1.16%, SBI was down by 0.88% and SSLT was down by 0.83% were the top losers on the Sensex.

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 opened at 6,220.85; about 9 points higher as compared to its previous closing of 6,211.15, and has touched a high and a low of 6,224.70 and 6,176.15 respectively. The index is currently trading at 6,192.90, down by 18.25 points or 0.29%. There were 18 stocks advancing against 32 declines on the index.

The top gainers of the Nifty were ONGC up by 2.03%, Tata Motors up by 1.53%, Lupin up by 1.43%, Ranbaxy up by 1.35% and BHEL up by 1.06%. On the flip side, Tata Power down by 1.84%, ICICI Bank down by 1.56%, NMDC down by 1.48%, PNB down by 1.19% and SBI down by 1.12% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined 40.13 points or 1.93% to 2,043.01, Hang Seng dropped 136.51 points or 0.60% to 22,680.77, Jakarta Composite shed 42.39 points or 1.00% to 4,215.27, Nikkei 225 tumbled 304.74 points or 1.87% to 15,986.57, Straits Times slipped 0.47 points or 0.02% to 3,131.00 and Taiwan Weighted was down by 28.44 points or 0.33% to 8,518.10.

On the flip side, KLSE Composite increased 0.38 points or 0.02% to 1,835.12 and Seoul Composite was up by 12.69 points or 0.65% to 1,958.83.