Benchmarks cool off from day’s high on profit-booking

Indian equity benchmarks, after trading firm up-till afternoon deals have now pared some of their gains on profit-booking activities by market-participants ahead of January trade deficit data, which is expected to remain around $10 billion in January, the same as the previous month. Nevertheless, the overall mood of bourses continue to remain bullish thanks to positive regional counters which were holding high on underlying optimism that the Federal Reserve's new head will signal the central bank's commodity-friendly monetary policy is to remain for now. Off day’s high, Sensex has come off the crucial 20,400 level, while the Nifty was holding above the psychological 6050 mark with gains of over quarter a percent. Additionally, broader indices in-line with larger peers too has trimmed some of their early gains and were trading with gains of around two tenths of a percent.

On the BSE, while most the sectoral indices were trading in green, stocks from Information Technology, Consumer Durables, Auto and banking counters were outperforming. IT stocks vaulted after Nasscom’s guidance for the sector.  As per an industry lobby group Nasscom, the Indian IT outsourcing sector is expected to see exports growing 13-15 percent in the fiscal year starting in April, with improving US and European economies driving growth. Additionally, banking and auto stocks were in demand ahead of CPI data on Wednesday, which is expected to have eased to 9.40 per cent from a year earlier, compared with 9.87 per cent in December, which could reinforce expectations that the Reserve Bank of India will leave interest rates on hold at its April 1 review after surprising investors with a 25 basis points hike last month.  Besides, sugar stocks like Shree Renuka, Balrampur Chini Mills  and  Bajaj Hindusthan were on buyers’ radar ahead of Cabinet Committee on Economic Affairs (CCEA) meeting on sugar subsidy. The government is likely to decide on subsidy for export of 4 million tonnes of raw sugar.  On the flip side, stocks from Power, Realty and Oil and Gas counters, witnessing much of the selling pressure were eating into market’s gains. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 952:818; while 57 shares remained unchanged.

The BSE Sensex is currently trading at 20397.72, up by 63.45 points or 0.31% after trading in a range of 20,443.35 and 20,353.41. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices too pared their gains; the BSE Mid cap index was up by 0.18%, while Small cap index was up by 0.25%.

The gaining sectoral indices on the BSE were IT up by 1.10%, Consumer Durables up by 1.00%, Teck up by 0.79%, Auto up by 0.68% and Bankex up by 0.51%. While, Power down by 0.65%, Realty down by 0.57%, Oil and Gas down by 0.14%, Healthcare down by 0.21% and Metal down by 0.08% were the losing indices on BSE.   

The top gainers on the Sensex were Tata Motors up by 2.62%, Tata Steel up by 1.57%, TCS up by 1.17%, Tata Power up by 1.13% and ONGC up by 1.07%. On the flip side, Hindalco Inds down by 1.92%, Bharti Airtel down by 1.64%, Hero Moto Corp down by 1.37%, Coal India down by 1.20% and NTPC down by 1.03%.

Meanwhile, amid concerns over rising natural gas prices and scarcity of gas for power plants, Power Ministry has sought a subsidy of Rs 5,000 crore over the next two years to support state distribution companies, as they will have to pay double for natural gas prices from April 1.

Earlier, in June’13, the government had approved Rangarajan Committee formula for pricing of all domestically produced gas at an average of international hub rates and cost of imported LNG. Such averaging pricing will raise the effective gas price to $11.43 per million British thermal unit (mmBtu) from $4.2 per mmBtu, leading to cost of electricity generation of around Rs 10.47 per unit. The power ministry has then said that gas based power stations would need to be supported by the government through an appropriate subsidy mechanism. As per ministry proposal, subsidy to state discoms should be the difference in actual tariff and Rs 5/unit for Rs 2014-15 and Rs 5.50 for 2015-16. The subsidy to be borne by government would be about Rs 3,621 crore in 2014-15 and Rs 2,056 crore in 2015-16 in order to support administered price mechanism for gas-based power plants.

India’s total installed power generation capacity is 225,793 MW, of which 20,000 MW or nearly 8 percent, is gas-based. With the hike in the natural gas price as per the approved formula, the cost of gas-based power will shoot around Rs 10 per unit, making it unattractive for state discoms as such a high cost of electricity cannot be absorbed by consumers. Meanwhile, the present cost of power produced with blended imported coal comes to about Rs 3.45 per unit.

Furthermore, Power Ministry also asked for three years moratorium and waiver of penal interest for projects that are operating on low plant load factor on account of less availability of natural gas in the country. Presently, around 6,000 MW of the total 20,000 MW installed gas based capacity in the country is stranded because of unavailability of natural gas. 

The CNX Nifty is currently trading at 6,070.45, up by 17.00 points or 0.28% after trading in a range of 6,081.85 and 6,053.25. There were only 27 stocks advancing against 23 declining stocks on the index.

The top gainers of the Nifty were HCL Tech up by 2.67%, Tata Motors up by 2.61%, Tata Steel up by 1.53%, BPCL up by 1.40% and TCS up by 1.26%. On the flip side, Hindalco down by 2.01%, Ultratech Cement down by 1.72%, Bharti Airtel down by 1.63%, PNB down by 1.62% and Hero MotoCorp down by 1.45% were the major losers on the index.

The Asian equity indices were trading in green; Seoul Composite up by 0.46%, Jakarta Composite up by 0.42%, KLSE Composite up by 0.27%, Taiwan Weighted up by 0.46%, Shanghai Composite up by 0.83%, Straits Times up by 0.53% and Hang Seng up by 1.90%.