Sensex, Nifty close flat; metals rebound, banks cut losses
26 August 2014
03:30pm Market Closing
It was another day of consolidation for equity benchmarks as investors remained cautious after Supreme Court's verdict on coal block allocation case. August series expiry on Thursday also caused volatility in the market.
Indices fell nearly half a percent intraday before showing recovery in late trade. The 30-share BSE Sensex advanced 5.79 points to 26442.81 while the 50-share NSE Nifty managed to hold the 7900 level, down 1.55 points to close at 7904.75.
03:20pm Benchmarks recover
The market recovered in late trade led by further buying in steel stocks and cutting losses in banks and oil & gas stocks.
The Sensex declined 2.16 points to 26434.86 and the Nifty dipped 2.35 points to 7903.95. About 1035 shares have advanced, 1869 shares declined, and 130 shares are unchanged.
02:55pm Reliance Power in News
Reliance Power announced that the fifth 660 MW unit of its 3,960 MW Sasan ultra mega power project has commenced generation.
With this, the total operational capacity of the Sasan plant in Madhya Pradesh has reached 3,300 MW, Reliance Power said in a release.
Last unit is in advanced stages of construction and will be commissioned over the next few months, the statement added.
After the completion of the fifth unit of Sasan, Reliance Power's generation capacity has increased to 5,185 MW which includes 5,100 MW of thermal capacity and 85 MW of renewable energy based capacity.
However, the stock lost another 7 percent in addition to 4 percent in previous session after the Supreme Court on Monday disallowed exploitation of captive mines by ultra mega power projects.
Slamming media reports according to which the Shipping Corporation of India (SCI) is looking to exit its container shipping business, chairman and managing director Arun Gupta says the reports are totally unfounded.
Speaking to CNBC-TV18, Gupta said the company, on the contrary is working towards restructuring it in order to make it viable.
''We are not exiting that line of business. Within that we will restructure it and try and make it profitable. If, however, that doesn't happen, then we may think of exiting it. But as of now, we are very much in the container business,'' says Gupta.
On the company's business, Gupta says that the entire shipping industry is under pressure and its margins are very thin.
The country's largest ocean liner reported a net profit of Rs 49.60 crore for the first quarter ended June 2014. It had reported a net loss of Rs 98.70 crore during April-June quarter of the last fiscal.
But Gupta is hopeful of a better Q2 as the container segment, he adds, is seeing slight positivity.
The company has an outstanding of Rs 7300 crore but Gupta rules out selling any ship in order to pare its debt.
''We have a strong restruring plan in place and it will service our debt efficiently,'' he adds.
02:00pm The market fell further in afternoon trade weighed down by oil & gas, banks, capital goods and power stocks. However, the buying in technology, FMCG, healthcare and select metals stocks capped downside.
The Sensex plummeted 69.25 points to 26367.77 and the Nifty declined 25.85 points to 7880.45. The broader markets saw major fall compared to benchmarks; the BSE Midcap and Smallcap indices dipped 0.8 percent and 1.3 percent, respectively.
About 901 shares have advanced, 1916 shares declined, and 113 shares are unchanged.
JSPL extended losses, down 7 percent on the back of Supreme Court order on coal allocation. Other power companies too take a beating. Power Finance Corporation and Rural Electrification saw further selling after brokerages say pure power financing companies will get hit more while experts say it's too early to panic, must wait till first September to assess the full impact.
Tata Steel was among the top Nifty gainers as its operational captive coal mines were allocated long before 1993. Morgan Stanley believes the stock is more attractive after the unfair stock reaction it saw yesterday.
Auto stocks were under pressure after the CCI imposed a Rs 2,545 crore penalty on 14 car makers for indulging in unfair practices in the spare parts market. Tata Motors faced maximum fine of Rs 1,346 crore while Maruti and M&M have a fine of Rs 471 and Rs 292 crore, respectively.
Globally, Asian markets closed lower as tensions over Ukraine took the shine off the S&P crossing 2000 mark. European markets were also mixed. Investors will keenly watch for cues from the Ukrainian president meeting with Russian leader, Vladimir Putin later today.
01:59pm Tata Steel on buyers' radar
Shares of Tata Steel saw excellent rebound, up more than 3 percent intraday after brokerages said the Supreme Court (SC) order on coal block allocation case will not have any major impact on the company. However, the stock fell nearly 5 percent in previous session.
"Tata Steel India gets 40 percent of its coking coal needs through captive coal mines; however, all these coal mines (mainly in West Bokaro and Jharia regions) were allocated pre-1993," said Goldman Sachs.
CLSA agreed with Goldman, saying there is no impact on Tata Steel since its captive coking coal mines were allocated pre 1993.
The Supreme Court verdict terming all coal block allocation since 1993 as illegal will have major implications on all parties related. Besides mining, power and metal space, it is likely to impact banks as well which have exposure to power sector.
In an interview to CNBC-TV18, Ranjan Dhawan, Executive Director, Bank of Baroda, said the bank's exposure to the power sector stands below 7 percent, while in iron and steel sectors it is around 5.25 percent.
Dhawan does not think the impact of SC ruling will be too profound, but feels investors should wait and watch. He expects SC's September 1 order to give further clarity on the matter.
He said the government is focused on reviving and resolving the issues in the power sector, thus he does not see a permanent status quo being maintained on the coal block issue.
01:25pm Snowman Logistics IPO opens
Snowman Logistics (SLL), an integrated temperature-controlled logistics services provider, has opened its 4.2 crore shares initial public offer (IPO) for subscription on August 26.
The company has fixed price band at Rs 44-47 per share for the issue, which will be opened till August 28. Retail investors can apply for up to 10 percent of the total issue size and 15 percent portion is reserved for non-institutional investors while the balance 75 percent is available for qualified institutional buyers.
Bids can be made for minimum 300 equity shares and in multiples of 300 shares thereafter. Accordingly, the retail investors can apply for maximum 4200-4500 equity shares (at given price band).
The largest cold chain solutions provider aims to raise Rs 197 crore (at higher end of price band) through this issue, which will be used for setting up new temperature controlled and ambient warehouses, and long term working capital.
The company, which operates 23 temperature-controlled warehouses across 14 locations in India (including Kolkata, Mumbai, Delhi, Chennai and Bengaluru), proposes to set up another such 6 and 2 ambient warehouses at 6 cities at the cost of around Rs 140 crore.
It has a pan-India presence with warehousing capacity of 58,543 pallets and 3,000 ambient pallets, which is expected to increase to 85,000 pellets in current financial year (FY15) and further to 1 lakh pellets by FY16, said the company in its prospectus.
01:00pm The market remained in negative terrain with the 50-share NSE Nifty struggling at 7900 weighed down by banks, capital goods, power and oil & gas stocks. However, healthcare, FMCG and technology stocks continued to see buying interest.
The Sensex fell 44.48 points to 26392.54 and the Nifty declined 18.40 points to 7887.90. Declining shares outnumbered advancing ones by a ratio of 1676 to 1012 on the Bombay Stock Exchange.
Hindalco Industries, Jindal Steel, Tata Steel, Kotak Mahindra Bank, Dabur India, HDFC and State Bank of India were the most active shares.
ONGC and Tata Power kept top position in the selling list, down over 3 percent followed by L&T, SBI, Axis Bank, Maruti Suzuki, NTPC, BHEL and Coal India with 1-2 percent. However, shares of Sun Pharma, Hindustan Unilever, Tata Steel, Hindalco, Cipla and GAIL gained 1-2.5 percent.
12:59pm Ceat approves fund raising plan
Tyre maker Ceat has approved raising of an amount not exceeding Rs 500 crore through further issue of securities including equity shares or foreign currency convertible bonds or American depository receipts or global depository receipts or fully or partly convertible debentures, non convertible debentures, preference shares convertible into equity shares or any other equity linked securities, by way of one or more public or private offerings (including through a qualified institutions olacement).
This is subject to the approval of the shareholders of the company at the ensuing annual general meeting.
12:40pm Havells India in News
The scrip of Havells India is quoting ex-split today. It rallied more than 12 percent intraday to touch a 52-week high of Rs 279.50 on the National Stock Exchange after the sub-division of existing equity shares from every one share of Rs 5 each into five shares of Re 1 each.
The electrical equipments manufacturer has fixed August 27, 2014 as the record date for the sub-division of shares. The board of directors of the company had announced split in shares on June 30, 2014.
12:20pm Market Expert
There are currently no clear buy ideas in the market and there is no easy money to be made right now, believes Rahul Singh, head- Equity Research, Standard Chartered Securities who adds that the market is unlikely to see a short-term correction.
Speaking to CNBC-TV18, Singh says a steep fall will only be seen if geopolitical cues worsen.
Singh further adds that the SC's decision of declaring the post-1993 coal blocks illegal does not come as a surprise.
''It was always in the works and it also can be compared to the government's cancellation of the 2G licenses a few years ago. While it is a near-term uncertainity, it also provides the government an opportunity to clear up the mess and start afresh by inviting bidders, '' he adds.
12:00pm Equity benchmarks slipped marginally amid volatility. The Sensex declined 29.53 points to 26407.49 and the Nifty fell 14.70 points to 7891.60. About 1028 shares have advanced, 1509 shares declined, and 112 shares are unchanged.
State-controlled oil major ONGC extended losses in noon trade, down 3 percent followed by L&T, ICICI Bank, Reliance Industries, State Bank of India, NTPC, BHEL and Maruti Suzuki with 0.7-1.9 percent.
Tata Power remained under pressure, falling another 3 percent after the Supreme Court stayed Aptel's interim order on compensatory tariff while Jindal Steel hit 52-week low of Rs 23 on the back of Supreme Court order which termed all captive coal blocks allocated since 1993 as illegal.
Morgan Staley believes the potential hit could be approximately 34 percent on JSPL's fair value while it could hit FY16 earnings per share by 29 percent.
However, aluminium major Hindalco Industries and steel producer Tata Steel gained strength, up over 2 percent. Both crashed in previous session on SC order in coal block allocation case.
Shares of ITC, TCS, Sun Pharma, HUL, Cipla, Bharti Airtel, GAIL, Bajaj Auto and Dr Reddy's Labs gained 0.5-1.8 percent.
11:59am Coal block allocation scam impact on power sector
The Supreme Court's decision to pronounce the terms under which coal blocks were allocated post 1993 as illegal is unlikely to disrupt operations of power players at the moment, says Vinayak Chatterjee, chairman, Feedback Infrastructure.
According to Chatterjee, the SC ruling is only one more impetus to clean up the system. The apex court has been cautious enough in not deallocating coal blocks and will take the decision on September 1, he adds.
He urges investors not to trigger a panic reaction to the SC ruling.
P Pradeep Kumar, MD - Corporate Banking, at SBI adds to the discussion saying that the bank has around Rs 92,000 crore of exposure to the power sector and some of it is likely to get affected. However, agreeing with Chatterjee, he too believes market should not panic and wait for a final decision by the apex court until September 1.
11:25am JP Associates in focus
JP Associates continues with its plans to pare down debt. In its latest move, the company has sold its cement grinding unit in Panipat to Shree Cements for a consideration of Rs 360 crore at a valuation of USD 40 per tonne.
Rahul Kumar, CFO, Jaiprakash Associates says the value of the latest deal is not at all comparable with the value at which the other deal was done about six months back.
''There was the Bokaro joint venture because different plants, different locations have different markets and the profitability of each plant varies. Also, the Bokaro grinding unit also had two critical long-term raw material contracts. It had a 30-year clinker contract and a 30-year slag contract that added to the value of that deal and so, the deals are really not comparable,'' he elaborated.
Kumar further says that the Panipat grinding unit capacity was an additional capacity over what the company actually required in its north zone to fully utilize the clinker from its clinkerisation plant in Himachal Pradesh.
So even after Panipat, the company had three grinding units, two in Himachal Pradesh and one in Uttarakhand.
11:00am The market remained rangebound ahead of August series expiry scheduled on Thursday. The Sensex rose 2.73 points to 26439.75 while the Nifty fell 3.50 points to 7902.80.
About 1060 shares have advanced, 1290 shares declined, and 107 shares are unchanged.
Public sector lenders declined on concerns of asset quality due to their exposure to the coal mines deemed illegal by the Supreme Court. Credit Suisse said State Bank of India (down 1 percent), Power Finance Corporation (down 4.7 percent) and Rural Electrification Corporation (down 3.65 percent) appear to have the highest exposure to these coal mines.
The Supreme Court on Monday held terms of allotment of coal blocks as illegal but stopped short of deallocating coal blocks. JSPL lost 4.7 percent.
Tata Power dropped 3 percent as SC stayed Aptel's interim order on compensatory tariff, which allowed companies like Tata Power and Adani Power to charge higher tariffs from discoms on a prospective basis. Additionally the stock reacted negatively to the fuel and contractual uncertainty which has intensified for the power sector post the SC order on coal blocks.
However, Tata Steel gained 3 percent as its operational captive coal mines were allocated long before 1993. Morgan stanley believes the stock is more attractive after the unfair stock reaction it saw in previous session.
10:50am Auto companies under pressure
Competition Commission of India slapped a penalty of Rs 2,545 crore on 14 car makers, including Maruti Suzuki and Tata Motors, for violating trade norms in the spare parts and after services market.
Honda Siel Cars India, Volkswagen India, Fiat India Automobiles, BMW India, Ford India, General Motors India, Hindustan Motors, Mahindra and Mahindra, Mercedes-Benz India, Nissan Motor India, Skoda Auto India and Toyota Kirloskar Motor have also been penalised.
For each entity, the individual fine amounts to 2 percent of their average turnover. The penalty is to be deposited within 60 days of receipt of the order.
India's largest auto companies Tata Motors, Maruti Suzuki, and Mahindra and Mahindra faced the maximum fine of Rs 1,346 crore, Rs 471 crore and Rs 292 crore, respectively. The more interesting factor in case Tata Motors is that the CCI calculated penalty on clubbing Jaguar Land Rover revenue with Tata Motors.
10:25am Muthoot Finance in News
Shares of Muthoot Finance rallied nearly 2 percent on acquisition of 30 percent equity stake in Sri Lanka-based company.
Gold loan financing company on Monday acquired 16,77,85,600 existing equity shares (representing 29.98 percent stake) of Asia Asset Finance PlC from Asia Capital PLC, a major shareholder, through Colombo Stock Exchange at a total value of LKR 268 million (approximately USD 2.1 million), said the company in its filing.
AAF, which is listed in DiriSaviBoard of Colombo Stock Exchange, is in lending business and offers retail finance, hire purchase and business loans. It has 11 branches across Sri Lanka.
"Muthoot is seeking synergies by helping the AAF to operationalise loan against gold ornaments in Sri Lanka drawing on the expertise of Muthoot Finance in this field," said the company.
10:00am Equity benchmarks continued to consolidate in morning trade with the Sensex rising 8.11 points to 26445.13 and the Nifty falling 3.65 points to 7902.65.
About 1020 shares have advanced, 1077 shares declined, and 87 shares are unchanged.
Defensives like FMCG and healthcare remained on buyers' radar with ITC, Sun Pharma, Dr Reddy's Labs, Hindustan Unilever and Cipla rising 1-2 percent. Housing finance company HDFC, top telecom operator Bharti Airtel and software services exporter TCS gained 0.8-1 percent.
Steel producer Tata Steel rebounded today after 4.8 percent fall in previous session, up 1.6 percent as Morgan Staley believes Tata Steel, SAIL, Coal India and NMDC are less exposed to regulatory risks after Supreme Court order on coal block allocation while JSPL and Hindalco are mostly impacted.
However, Jindal Steel tanked 6.4 percent and Tata Power lost over 3 percent. ONGC, L&T, Reliance Industries, SBI, BHEL and NTPC declined 0.7-1.8 percent.
Tata Motors, Mahindra and Mahindra, and Tata Motors slipped 0.6-1 percent after Competition Commission of India imposed penalty of Rs 2544.64 crore on 14 auto companies.
09:45am FII View
Neelkanth Mishra, Credit Suisse says with the market at an all-time high, many investors are turning cautious. ''We, however, still believe risks to the market remain global, not local. India has primarily gained from a global expansion of P/E multiples. Elections just reduced tail risks,'' he adds.
According to him, index EPS growth could pick up to 11-12 percent from 7-8 percent, and a 30 percent return for the index over two years is quite likely even if the investment cycle disappoints. ''We highlight Maruti Suzuki, TCS, Axis Bank, HCL Technologies, Reliance Industries, ITC, Titan Company, IndusInd Bank, Shriram Transport and Emami as our picks,'' says Mishra.
09:15am Equity benchmarks opened lower on Tuesday following consistent nervousness due to Supreme Court order on coal block allocation case. The Sensex fell 25.27 points to 26411.75 and the Nifty lost 12.60 points to 7893.70.
About 548 shares have advanced, 500 shares declined, and 43 shares are unchanged.
Tata Power shed another 4.1 percent and Jindal Steel lost 6 percent, in addition to 3.4 percent and 14 percent fall in previous session on coal block allocation scam.
BHEL, Sesa Sterlite, Tata Motors, M&M and PNB slipped 1-1.5 percent while Tata Steel, Coal India, HDFC, ITC and HUL gained 0.6-1.7 percent.
The Indian rupee opened flat at 60.52 per dollar on Tuesday as against previous day's closing value of 60.56 a dollar.
Ashutosh Raina of HDFC Bank said, ''The risk-on sentiment remains buoyant despite fluid geopolitical scenario. The increased FII flows into Indian equity and bond markets have resulted in rupee gaining and touching 60.50/dollar after recent losses. We expect the rupee to trade in the 60-61/dollar range.''
The euro stayed on the back foot, having extended its decline. Meanwhile, weakness in the euro helped the dollar index, which remained close to its September 2013 peak of 82.671.
Globally, S&P 500 finally hit 2000 intraday but closed just shy of the psychological mark. Europe had a stellar rally with major indices up nearly two percent on hopes of further easing. Shares closed higher, boosted by hopes of further monetary steps to boost the economy. The German DAX and French CAC closed with around 2 percent gains. Asian markets were mixed.