Indian stocks fell in choppy trade after the government once again deferred a decision on revising gas prices and as investors assessed the repercussion of previous day's Supreme Court verdict cancelling most coal block allocations made since 1993 due to irregularities in the allotment. Banking, oil and gas and metal stocks led the decline.
High volatility was witnessed in late trade as key benchmark indices trimmed losses after a sharp slide pushed them to their lowest level in more than four weeks. High volatility in late trade materialized as traders rolled over positions in the futures & options (F&O) segment from September 2014 series to October 2014. The September F&O contracts expired today, 25 September 2014. The 50-unit CNX Nifty fell below the psychological 8,000 mark. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit their lowest closing level in more than four weeks.
The Sensex shed 276.33 points or 1.03% to settle at 26,468.36. Foreign portfolio investors (FPIs) sold shares worth a net Rs 793.65 crore yesterday, 24 September 2014, as per provisional data. A number of side counters fell. There were more than three losers for every gainer on BSE. The BSE Mid-Cap index lost 2.4%. The BSE Small-Cap index lost 3.21%. Meanwhile, Reserve Bank of India Governor Raghuram Rajan reportedly said in a speech in Mumbai that India suffered from persistent inflation and we have got to break this persistence.
IT stocks edged higher on weak rupee. Most pharma stocks were up as rupee weakened against the dollar. Capital goods stocks edged lower. Bank stocks extended Wednesday's losses on concerns of bad loans due to their exposure to coal mines after the Supreme Court's decision cancelling most coal block allocations since 1993. Shares of gas production firms fell after the government once again deferred a decision on revising gas prices. PSU OMCs dropped. Jindal & Steel and Power and Hindalco Industries which have been hit adversely by yesterday's decision of the Supreme Court to cancel most coal block allocations since 1993 tumbled.
Meanwhile, Prime Minister Narendra Modi today, 25 September 2014, launched the Make in India initiative with an aim to boost India's manufacturing sector. Addressing the event, Modi said that gloom prevalent among India's business community over the last few years has lifted in the past few months. The Prime Minister said that no Indian business should feel a compulsion to leave the country under any circumstances.
In overseas markets, European stocks edged higher after European Central Bank (ECB) President Mario Draghi said the ECB could use additional unconventional policy measures if it felt that its inflation target was under threat. Japanese stocks rose on the yen's weakness against the dollar while overall trend in Asian markets was mixed. US stocks jumped in a broad advance on Wednesday, 24 September 2014, with the S&P 500 index snapping a three-day losing streak after data showed new home sales jumped sharply in August.
Brent crude oil prices edged lower as abundant supply continued to drag on prices.
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In the foreign exchange market, the rupee weakened past 61 against the dollar on month-end dollar demand from importers for paying month-end import bills.
The Sensex shed 276.33 points or 1.03% to settle at 26,468.36, its lowest closing level since 26 August 2014. The index tumbled 395.14 points at the day's low of 26,349.55 in late trade. The index rose 69.51 points at the day's high of 26,814.20 in early trade.
The CNX Nifty shed 90.55 points or 1.13% to settle at 7,911.85, its lowest closing level since 26 August 2014. The index hit a low of 7,877.35 in intraday trade. The index hit a high of 8,019.30 in intraday trade.
The total turnover on BSE amounted to Rs 3609 crore, lower than Rs 3653.04 crore on Wednesday, 24 September 2014.
The market breadth indicating the overall health of the market was weak, with more than three losers for every gainer on BSE. On BSE, 2,280 shares fell and 681 shares rose. A total of 89 shares were unchanged.
The BSE Mid-Cap index lost 230.11 points or 2.4% to settle at 9,350.72. The BSE Small-Cap index lost 346.65 points or 3.21% to settle at 10,444.79.
Among the BSE Sectoral indices, the S&P BSE Bankex index (down 2.69%), Capital Goods index (down 1.91%), Metal index (down 3%), Oil & Gas index (down 3.08%), Power index (down 2.8%), and Realty index (down 3.21%), underperformed the Sensex.
The BSE Auto index (down 0.97%), Consumer Durables index (down 0.82%), FMCG index (down 0.45%), Healthcare index (up 0.15%), IT index (up 1.12%), and Teck index (up 0.94%), outperformed the Sensex.
Shares of gas production firms fell after the government once again deferred a decision on revising gas prices.
Reliance Industries fell 3.36% at Rs 929.40.
ONGC lost 3.36% at Rs 399.65.
Hindalco Industries slumped 4.32% at Rs 149.55. Hindalco Industries after market hours today, 25 September 2014, issued a clarification with regard to the Supreme Court cancelling coal block allocations. The company said that at a suggested levy of Rs 295 per tonne on coal, the total one time impact on the company would be around Rs 500 crore. In any case, the company was not expecting the captive coal immediately and it has plans to operate on purchased coal. The only incremental impact because of the cancelation of coal blocks would be on the cost of production at Hirakud smelter starting April 2015, which is not expected to be significant, Hindalco Industries said.
Hindalco Industries said during market hours that the company had been allocated four coal blocks namely, Mahan coal block jointly with Essar Power, Tubed coal block jointly with Tata Power, Talabira II & III coal blocks jointly with Mahanadi Coal Fields and Neyveli Lignite Corporation and Talabira I coal block. Mahan, Tubed and Talabira II & III Coal blocks are not yet in operation while Talabira I coal block feeds coal to the power plant which supplies power to company's Hirakud Smelter.
With respect to the media report titled "Hindalco might sell land in Mumbai" the company clarified during market hours that it constantly evaluates various value optimization options with respect to the non-productive assets of the company including the land located at Kalwa, Thane.
Jindal Steel & Power (JSPL) slumped 7.83% to Rs 174.85, with the stock extending Wednesday's sharp slide. The stock hit 52-week low of Rs 170 in intraday trade. The stock has been hit adversely by the Supreme Court's decision to cancel most coal blocks allocated since 1993 as the company has operating coal blocks which stand cancelled. JSPL after trading hours said that the management is in the process of evaluating the impact of the Supreme Court's decision.
The Supreme Court in its verdict yesterday, 24 September 2014, cancelled the allocation of 214 out of 218 coal blocks it had already declared illegal due to irregularities in the allocation of the blocks. Of these, licenses for 172 coal blocks which weren't in production stand canceled immediately, while licenses for 42 blocks which were producing coal or were close to starting production would stand canceled after six months, the court said. The six months' time has been allowed to ensure coal supplies don't get affected until the government comes out with a fresh policy for auctioning the canceled coal blocks. Coal India will take over operations of the cancelled coal blocks until they are re-auctioned.
The court also slapped a penalty of Rs 295 per tonne on operating coal blocks for coal already extracted from the operating coal blocks.
PSU OMCs dropped. BPCL (down 3.61%), HPCL (down 4.04%) and Indian Oil Corporation (IOCL) (down 3.29%) declined.
IT stocks edged higher as rupee weakened against the dollar. TCS (up 2.43%), Infosys (up 1.21%), Tech Mahindra (up 0.94%), and HCL Technologies (up 0.09%) gained. Wipro (down 1.38%) declined.
A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Most pharma stocks gained as rupee weakened against the dollar. Aurobindo Pharma (up 8.38%), Dr Reddy's Laboratories (up 2.52%), Cipla (up 1.33%), and GlaxoSmithkline Pharmaceuticals (up 0.37%) gained. Sun Pharmaceutical Industries (down 0.84%), Ranbaxy Laboratories (down 1.17%), and Lupin (down 0.04%) declined.
Weakness in rupee could boost sales of pharma companies in rupee terms as pharma firms derive substantial revenue from exports.
Bank stocks extended Wednesday's losses on concerns of bad loans due to their exposure to coal mines after the Supreme Court's decision cancelling most coal block allocations since 1993. Bank of India (down 8.01%), Punjab National Bank (down 6.16%), Yes Bank (down 4.04%), Canara Bank (down 4.63%), Axis Bank (down 4.64%), ICICI Bank (down 3.28%), Bank of Baroda (down 1.94%), IndusInd Bank (down 2.13%), Kotak Mahindra Bank (down 0.8%) and HDFC Bank (down 0.31%) declined.
State Bank of India lost 4.38% at Rs 2,378.35. The state-run bank after market hours on Wednesday, 24 September 2014, said that the central board of the bank at its meeting held on Wednesday, 24 September 2014, approved a 10-for-1 stock split.
Andhra Bank tumbled 11.67% at Rs 63.55 on reports the bank has a loan exposure of Rs 4346 crore to companies that have been ordered by the Supreme Court to return coal blocks.
Capital goods stocks edged lower. Siemens (down 5.09%), Crompton Greaves (down 3.69%), Thermax (down 2.95%), ABB (down 1.6%), and L&T (1.13%) declined.
Bharat Heavy Electricals (Bhel) lost 4.1% at Rs 203.30. With respect to the media report titled "Bhel wins 2 power plant deals from Telangana", Bhel clarified after market hours on Wednesday, 24 September 2014, that it has not announced the same as no firm order has been placed with the company.
Mahindra & Mahindra (M&M) lost 0.58% at Rs 1,351. The company during market hours said it has unveiled a new generation Scorpio in Mumbai. It is competitively priced at Rs 7.98 lakh (ex-showroom Mumbai for S2 variant).
In the foreign exchange market, the rupee edged lower against the dollar on month-end dollar demand from importers for paying month-end import bills. The partially convertible rupee was hovering at 61.37 compared with its close of 60.97 during the previous trading session.
The Sensex fell for a third straight day today, 25 September 2014. From recent high of 27,206.74 on 22 September 2014, the Sensex has lost 738.38 points or 2.71%. The Sensex has lost 169.75 points or 0.63% in this month so far (till 25 September 2014). The Sensex has gained 5,297.68 points or 25.02% in calendar year 2014 so far (till 25 September 2014). From a record high of 27,354.99 on 8 September 2014, the Sensex has declined 886.63 points or 3.24%. From a 52-week low of 19,264.72 on 1 October 2013, the Sensex has risen 7,203.64 points or 37.39%.
Brent crude oil prices edged lower as abundant supply continued to drag on prices. Brent for November settlement was off 18 cents at $96.77 a barrel. The contract had risen 10 cents a barrel or 0.1% to settle at $96.95 a barrel yesterday, 24 September 2014.
Meanwhile, Reserve Bank of India (RBI) Governor Raghuram Rajan reportedly said in a speech in Mumbai that India suffered from persistent inflation and we have got to break this persistence. "Once we do it we can be much more comfortable," he said. His comments come just a few days ahead of a monetary policy review on 30 September 2014.
Prime Minister Narendra Modi leaves for a five-day visit to the United States today, 25 September 2014. The Indian Prime Minister will meet US President Barack Obama at the White House on 29-30 September 2014. The two leaders will discuss a range of issues of mutual interest in order to expand and deepen the US-India strategic partnership. They will discuss ways to accelerate economic growth, bolster security cooperation, and collaborate in activities that bring long-term benefits to both countries and the world.
European stocks edged higher after European Central Bank (ECB) President Mario Draghi said the ECB could use additional unconventional policy measures if it felt that its inflation target was under threat. Key indices in Germany and France were up 0.33% to 0.48%. In London, the FTSE 100 index lost 0.07%.
Draghi's comments, due to be published today, 25 September 2014, in a Lithuanian publication, leave the door open for the central bank to embark on large-scale purchases of government bonds, or quantitative easing, something it has largely resisted.
Japanese stocks rose today, 25 September 2014, on the yen's weakness against the dollar while overall trend in Asian markets was mixed. Key benchmark indices in Hong Kong, South Korea, and Taiwan fell 0.08% to 0.96%. Key benchmark indices in China, Indonesia, Singapore, and Japan rose by 0.01% to 1.28%.
Trading in US index futures indicated that the Dow could gain 4 points at the opening bell on Thursday, 25 September 2014. US stocks jumped in a broad advance on Wednesday, 24 September 2014, with the S&P 500 index snapping a three-day losing streak after data showed new home sales jumped sharply in August.
The data showed yesterday, new-home sales in US surged in August to the highest level in more than six years.
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