Key benchmark indices alternately swung between positive and negative terrain near flat line in morning trade. The barometer index, the S&P BSE Sensex was up 5.36 points or 0.03%, up close to 30 points from the day's low and off about 55 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Shares of power generation firms rose as the Cabinet Committee on Economic Affairs on Tuesday approved the methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding to private companies. Realty stocks rose on renewed buying. Mahanagar Telephone Nigam (MTNL) surged after the company on Tuesday signed a memorandum of understanding with BSNL for sharing network and infrastructure for greater operational synergy and single window customer delivery.
A bout of initial volatility was witnessed as key benchmark indices alternately swung between gains and losses. The market moved in a narrow range in morning trade.
The market may remain volatile in the immediate future as traders roll over positions in the futures & options (F&O) segment from the near month September 2013 series to October 2013 series. The September 2013 F&O contracts expire tomorrow, 26 September 2013.
At 10:20 IST, the S&P BSE Sensex was up 5.36 points or 0.03% to 19,925.57. The index rose 58.28 points at the day's high of 19,978.49 in early trade. The index declined 23.06 points at the day's low of 19,897.15 in early trade.
The CNX Nifty was down 0.65 points or 0.01% to 5,891.60. The index hit a low of 5,885.45 in intraday trade. The index hit a high of 5,910.55 in intraday trade.
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The market breadth, indicating the overall health of the market, was positive. On BSE, 937 shares rose and 626 shares dropped. A total of 90 shares were unchanged.
Among the 30-share Sensex pack, 20 stocks rose and rest of them fell. Tata Motors (up 2.53%), Bhel (up 2.28%) and Hero MotoCorp (up 1.54%), gained.
Shares of power generation firms rose as the Cabinet Committee on Economic Affairs on Tuesday approved the methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding to private companies.
Shares of Coal India declined 0.56%.
Among power generation firms, GVK Power & Infrastructure (up 4.7%), Tata Power Company (up 1.98%), Adani Power (up 0.88%), NTPC (up 0.9%), Reliance Power (up 0.69%) and Torrent Power (up 0.42%), gained.
The Cabinet Committee on Economic Affairs (CCEA) approved the production-linked payment on rupee per tonne basis, plus a basic upfront payment of 10 per cent of the intrinsic value of the coal block. The intrinsic value of coal block will be calculated on the basis of net present value of the block arrived through Discounted Cash Flow (DCF) method.
The DCF method relates the value of an asset to the present value of expected future cash flows of the asset. It is based on the principle that for any initial investment an investor will assess future cash flows from that entity to provide a minimum return. To help benchmark the selling price of coal, the international freight-on-board price from the public indices like Argus/Platts will be used to calculate the mine mouth price. As a buffer against short-term volatility, the average sale price will be calculated by taking prices of the last five years.
For the power sector, the CCEA directed providing 90% discount on the intrinsic value for tariff-based bidding, which will help in rationalising the electricity tariff. To ensure early operationalisation of blocks, there would be an agreement between the coal ministry and the bidder to perform an agreed minimum work programmes at all stages. There would be development stage obligations in terms of milestones to be achieved such as getting mining lease, obtaining environment or forest clearances, etc. The bidder will have to give performance guarantee during the developmental stage. The successful bidder will get two years for exploration and five years for block development.
The new auction blueprint allows relinquishment of a block without penalty, provided the bidder has carried out minimum work programme. The environment ministry will review the details of the coal blocks before they are up for auction. However, final approval will be subject to the statutory clearances under the law.
Realty stocks rose on renewed buying. DLF (up 0.21%), HDIL (up 0.92%), D B Realty (up 0.35%) and Unitech (up 1.2%), gained.
Mahanagar Telephone Nigam (MTNL) surged 5.81% after the company after market hours on Tuesday, 24 September 2013, said it has signed a memorandum of understanding (MoU) with BSNL for sharing network and infrastructure of each other for greater operational synergy and single window customer delivery. This will result into greater synergy between the two organizations, MTNL said. BSNL operates mobile, fixed-line and Internet services in 20 of India's 22 telecommunications zones, while MTNL operates in the key Delhi and Mumbai zones.
Ashoka Buildcon jumped 4.78% after the company secured four orders aggregating to Rs 494.50 crore for turnkey contracts for electrification work. The announcement was made after trading hours on Tuesday, 24 September 2013.
Ashoka Buildcon received four orders valued at Rs 494.50 crore for turnkey contracts for electrification work for Mahavitaran Infrastructure plan Phase-II floated by Maharashtra State Electricity Distribution Company (MSEDCL).
The company had on 6 August 2013 announced that it has emerged as the lowest bidder for turkey contract for electrification work for Mahavitaran Infrastructure plan Phase - II floated by Maharastra State Electricity Distribution Company (MSEDCL).
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.575, compared with its close of 62.7525/7625 on Tuesday, 24 September 2013.
Asian stocks dropped on Wednesday, 25 September 2013, as concern that US lawmakers will fail to arrange a budget deal preventing a government shutdown next week weighed on sentiment. Key benchmark indices in Indonesia, Japan, Singapore, Taiwan and South Korea were off 0.08% to 1.26%. Key benchmark indices in China and Hong Kong rose 0.13% to 0.27%.
Trading in US index futures indicated a flat opening of US stocks on Wednesday, 25 September 2013. US stocks ended mostly lower on Tuesday, 24 September 2013, as a drop in consumer confidence and worries over a Washington debt-ceiling fight outweighed a rise in home prices and easing concerns over the Middle East.
Investors are worried about the latest squabbling in Washington over a new budget for the fiscal year that starts on 1 October 2013 and, more importantly, over whether to lift the debt ceiling. Ratings firm Moody's Investors Service on Tuesday said a failure by the US government to raise the country's debt limit would result in a worse outcome for financial markets than a government shutdown.
The Conference Board's index of US consumer confidence slumped in September to a four-month low and a separate report showed a gauge of manufacturing in the region covered by the Federal Reserve Bank of Richmond shrank in September. The Case-Shiller report on US home prices showed prices rose in July, but at a slower pace.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus.
US President Barack Obama on Tuesday said that the US is committed to finding diplomatic solutions for the Syria conflict and for the ongoing dispute with Iran over its nuclear program.
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