A Supreme Court ruling that all coal block allocations made since 1993 are illegal pulled key indices off record highs. Just before the apex court's ruling which hit the market in mid-afternoon trade, a rally had taken the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty to record high. A setback in mining, metal and power generation stocks pulled key indices off record highs after the Supreme Court ruling. The 50-unit CNX Nifty provisionally closed in the red and the barometer index, the S&P BSE Sensex, gave away almost entire intraday gains. The Sensex was provisionally up 4.52 points or 0.02% at 26,424.07. The market breadth turned negative from positive on BSE in late trade. IT stocks gained.
Earlier, key indices had surged to record high in mid-afternoon trade after provisional data showed that foreign funds were net buyers of Indian during the previous trading session.
In overseas markets, European stocks rose after comments from European Central Bank President Mario Draghi indicated that further stimulus could be on the way for the region. Asian stocks ended higher. Crude was slightly higher.
As per provisional figures, the Sensex was up 4.52 points or 0.02% at 26,424.07. The index jumped 211.19 points at the day's high of 26630.74 in mid-afternoon trade, a lifetime high for the index. The index shed 17.91 points at the day's low of 26,401.64 in late trade.
The CNX Nifty was down 10.75 points or 0.14% to 7,902.45, as per provisional figures. The index hit a high of 7,968.25 in intraday trade, a lifetime high for the index. The index hit a low of 7,897.95 in intraday trade, its lowest level since 21 August 2014.
The total turnover on BSE amounted to Rs 2850 crore, slightly higher than Rs 2841.44 crore on Friday, 22 August 2014.
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The market breadth indicating the overall health of the market turned negative from positive in late trade. On BSE, 1,617 shares fell and 1,402 shares rose. A total of 80 shares were unchanged.
The BSE Mid-Cap index was down 59.77 points or 0.64% at 9,281.10. The BSE Small-Cap index was down 47.14 points or 0.42% at 10,255.38. Both these indices underperformed the Sensex.
Ranbaxy Laboratories declined 1.05%. The company clarified during market hours that it is not aware of any demand for fine for violation of the type referred to in the news item "Ranbaxy faces Rs.242 Crores fine in US for violations at Toansa". The company said it is in discussion with authorities in the US for certain other matters, for which the company believes, it has made adequate provision in its financial statements declared in Q1 June 2014.
Recent media reports had said that the company will have to pay a Rs 242 crore fine to the US authorities due to violations found at its Active Pharmaceutical Ingredient (API) manufacturing factory in Toansa, Punjab. The facility is currently banned from supplying products to the American market, reports had added.
IT stocks gained. TCS (up 2.15%), Infosys (up 0.55%), Tech Mahindra (up 0.04%) and HCL Technologies (up 0.37%) gained. Wipro fell 0.28%.
Metal, mining and power generation stocks declined after the Supreme Court today, 25 August 2014, termed the method of allotment of coal blocks between 1993 and 2011 as illegal but stopped short of deallocating the blocks that were awarded during the United Progressive Alliance (UPA) regime. Among metal stocks, JSW Steel (down 3.52%),Jindal Steel & Power (down 15.14%), Sesa Sterlite (down 4.22%), Tata Steel (down 5.2%), NMDC (down 1.89%), National Aluminum Company (down 6.89%), Hindustan Copper (down 0.51%) and Hindustan Zinc (down 3.31%), edged lower.
In a ruling that may come as a blow to several companies, the Supreme Court deemed all coal block allocations made since 1993 as illegal. The allocations had no objective criteria and no fair and transparent procedure, the judges said, adding they were impermissible. The quashing of these allocations still remains to be decided in further hearings. The court suggested the appointment of a panel of retired apex court judges to help the court in this matter. The case will he heard on 1 September next. The Supreme Court further disallowed exploitation of captive mines by ultra mega power projects, adding that captive mines cannot be used for commercial purposes.
Hindalco industries lost 9.91%. As per report, the Central Bureau of Investigation (CBI) has decided to close a coal scam case against Kumar Mangalam Birla and a former top bureaucrat that surfaced in 2012 after a government auditor's report. The CBI filed the case against Birla and former coal secretary P.C. Parakh late last year in relation to a block allocated in 2005 to Hindalco Industries, part of the $40 billion Aditya Birla Group. Kumar Mangalam Birla is the chairman of the group.
Among power generation and power distribution companies GVK Power & Infrastructure (down 3.03%), Tata Power Company (down 3.47%), NTPC (down 2.96%), NHPC (down 2.96%), Adani Power (down 4%), Reliance Infrastructure (down 4.4%), JSW Energy (down 4.82%), Power Grid Corporation of India (down 1.3%) and Reliance Power (down 4.3%) declined.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 302.06 crore on Friday, 22 August 2014, as per provisional data from the stock exchanges.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month August 2014 series to September 2014 series. The near-month August 2014 F&O contracts expire on Thursday, 28 August 2014.
Meanwhile, news reports said that the Reserve Bank of India (RBI) may relax its recently issued norms related to lending against shares to allow non-banking finance companies (NBFCs) to lend against all categories of shares. On 21 August 2014, RBI announced that NBFCs can lend only against Group 1 shares. The latest RBI directive could deprive small businessmen from raising money by pledging their holdings to fund their business. Group 1 shares include a limited set of top-grade shares. As per reports, the list includes 694 stocks traded on the NSE and 817 stocks traded on the BSE.
RBI has mandated loan to value (LTV) ratio of 50% with regard to lending against shares. The RBI had also said that all NBFCs with asset size of Rs 100 crore and above shall report on-line to stock exchanges, information on the shares pledged in their favour by borrowers for availing loans.
Lower crude oil prices augur well for India as the country imports about 80% of its crude oil requirement. Brent for October settlement was up 28 cents at $102.57 a barrel. The contract decreased 34 cents to settle at $102.29 a barrel on Friday, 22 August 2014.
Indian and Pakistani troops reportedly intensified firing across the border over the weekend killing at least four, straining ties between the arch rivals who recently called off top-level diplomatic talks. Last week India said its foreign secretary would not meet with her Pakistani counterpart as scheduled on 25 August 2014 because of plans by Pakistan to consult separatists from the border state of Jammu and Kashmir ahead of the meeting.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.4925, compared with its close of 60.47 on Friday, 22 August 2014.
European stocks rose today, 25 August 2014, after comments from European Central Bank President Mario Draghi suggesting that further stimulus could be on the way for the region. In Germany, the DAX index was up 1.03% while France's CAC 40 index was up 0.9%. Financial markets in the UK are closed today, 25 August 2014, for a Bank Holiday.
Speaking at the Kansas City Federal Reserve's annual symposium in United States, Draghi called on European politicians to pivot away from tight budget policies that have held back euro-zone growth and pledged additional central-bank steps if needed to spur growth. Draghi said European central bankers and politicians both have a role to play in boosting demand and reducing joblessness. It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, he said. Expectations of future inflation in Europe exhibited significant declines at all horizons in August, he said.
German business confidence declined for a fourth month, reflecting a faltering euro-area economy that European Central Bank President Mario Draghi says might need more stimulus. The Ifo institute's business climate index, based on a survey of 7,000 executives, fell to 106.3 in August from 108 in July.
Asian stocks rose today, 25 August 2014, as investors weighed comments from central bank leaders for clues to monetary policy ahead of conflict negotiations between Russia and Ukraine. Key benchmark indices in Japan, Hong Kong, Taiwan, Singapore and South Korea were up 0.11% to 0.48%. Key benchmark indices in Indonesia and China were off 0.27% to 0.51%.
Trading in US index futures indicated that the Dow could gain 51 points at the opening bell on Monday, 25 August 2014.
In her speech at US Federal Reserve's annual symposium in Jackson Hole, Wyo, Yellen on Friday, 22 August 2014, said that the US economy has made considerable progress in recovering from the largest and most sustained loss of employment since the Great Depression. She said that these developments are encouraging, but at the same time it speaks about the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover. Yellen reiterated that early rate hikes are possible, but it will depend on how the economy evolves in the next few months.
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