A bout of volatility was seen in morning trade as the key benchmark indices trimmed initial losses in morning trade. The barometer index, the S&P BSE Sensex, was down 13.25 points or 0.06%, up 50.20 points from the day's low and off 13.97 points from the day's high. The market breadth, indicating the overall health of the market, was positive.
Tata Power surged after the company said that it has got relief from the Central Electricity Regulatory Commission (CERC) that has asked electricity procurers to pay Rs 329.45 crore as compensatory tariff for its Mundra Ultra Mega Power Project (UMPP) to partly offset escalation in the price of imported coal. Shares of state-run power generation major NTPC tumbled. L&T edged higher after the company said that the Foreign Investment Promotion Board (FIPB) has approved the proposal for issuance of equity shares, Compulsorily Convertible Preference Shares (CCPS) and /or Compulsorily Convertible Debentures (CCD) of Rs 1000 crore by L&T Infrastructure Development Projects (L&T IDPL) to a wholly owned subsidiary of CPP Investment Board (USRE III), Inc. which is under incorporation.
ICRA was locked at 20% upper circuit after the company announced after market hours on Friday, 21 February 2014, a conditional open offer has been announced by Moody's Singapore Pte along with Moody's Investment Company India and Moody's Corporation as persons acting in concert (PAC) with the acquirer Moody's Singapore Pte for acquisition of up to 26.5 lakh shares representing 26.5% of the total fully diluted voting equity share capital of ICRA at an offer price of Rs 2000 per share. Shares of Credit Analysis and Research (CARE) tumbled after the company said that IDBI Bank has informed the company that no bid was found acceptable to the selling shareholders for divesting their stake in CARE and all the bids have been rejected.
Key benchmark indices edged lower in early trade on weak Asian stocks. A bout of volatility was seen in morning trade as the key benchmark indices trimmed initial losses in morning trade.
The market may remain volatile this week as traders roll over positions in the futures and options (F&O) segment from the near-month February 2014 series to March 2014 series. The near month February 2014 F&O contracts expire on Wednesday, 26 February 2014. The stock market remains closed on Thursday, 27 February 2014, on account of Mahashivratri.
Foreign institutional investors (FIIs) bought shares worth a net Rs 603.41 crore on Friday, 21 February 2014, as per provisional data from the stock exchanges.
At 10:15 IST, the S&P BSE Sensex was down 13.25 points or 0.06% to 20,687.50. The index fell 63.45 points at the day's low of 20,637.30 in early trade. The index rose 0.72 points at the day's high of 20,701.47 in early trade.
The CNX Nifty was down 9.10 points or 0.15% to 6,146.35. The index hit a low of 6,130.80 in intraday trade. The index hit a high of 6,150.65 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 992 shares gained and 734 shares fell. A total of 109 shares were unchanged.
The total turnover on BSE amounted to Rs 485 crore by 10:15 IST, compared with Rs 119 crore by 09:25 IST.
Tata Power surged after the company said that it has got relief from the Central Electricity Regulatory Commission (CERC) that has asked electricity procurers to pay Rs 329.45 crore as compensatory tariff for its Mundra Ultra Mega Power Project (UMPP) to partly offset escalation in the price of imported coal. The stock was up 4.13% at Rs 81.95. The stock hit a high of Rs 84.50 and low of Rs 81.60 so far during the day. CERC has asked Gujarat, Rajasthan, Punjab, Haryana and Maharashtra Electricity boards to pay this extra amount for the period 1 April 2012 to 31 March 2013, Tata Power said during trading hours today, 24 February 2014. Tata Power further said that a compensatory tariff of Rs 0.524 per kWh has been granted for the project from 1 April 2013, as per CERC order. This order is in continuation of CERC's previous order of April 2013 and the high level committee's recommendations of August 2013.
Tata Power said that the management of the company finds the order balanced keeping in view the beneficiaries and consumer interests. The decision of CERC was awaited to make Mundra viable, which had got impacted due to no fault of itself, but due to change of law at Indonesia as also other coal exporting countries and an unprecedented rise in coal prices which could not have been perceived, Tata Power said. This will help in resolving a major impasse affecting imported coal based power projects in the country that got impacted due to uncontrollable extraneous factors, Tata Power said. The order provides partial relief to Mundra UMPP, which has been contributing to the nation by way of about 2-3% of the gross generation, Tata Power said.
Mundra UMPP has since inception been delivering to its full potential across the five beneficiary states albeit with tremendous fiscal pain and this challenge of keeping Mundra UMPP viable had continued far too long, Tata Power said. Coastal Gujarat Power -- the wholly owned subsidiary of the company in which this UMPP is housed -- will continue to honour its commitment towards the nation's energy security by providing reliable and competitive power supply through the project, Tata Power said in a statement.
Shares of India's largest power generation firm by capacity NTPC lost 9.53% to Rs 119.55.
Adani Power rose 0.82%. The company during market hours today, 24 February 2014, said that the Central Electricity Regulatory Commission on 21 February 2014 has decided the methodology for determination of compensatory tariff for Adani Power's 4,620 megawatt Mundra thermal power plant, in continuation to its previous order of April 2013. Despite facing huge financial losses, Mundra power plant has been supplying power to the states of Gujarat and Haryana, Adani Power said. This order will facilitate in sustaining operations at Mundra and enable the company to continue honouring PPA commitments, Adani Power said. The order shall mitigate hardships to some extent on account of impact of enactment of Indonesian regulation and shortage of domestic coal supplies from Coal India (CIL), Adani Power said.
The order has been passed by CERC considering the views of all the relevant shareholders and is balanced in the interest of the State Discoms, consumers, generation companeis, financial institutions and the nation as a whole, Adani Power said. Power supply from Mundra shall continue to remain competitive even with compensatory tariff, in comparison to other sources of procurement of power by the State of Gujarat and Haryana, Adani Power said. When the power sector is facing a multitude of issues, this order shall go a long way in reviving investor confidence and will provide sustainable energy security for the country, the company said in a statement.
Reliance Power rose 1.27%. Commenting on the order of the CERC on Reliance Power's 3,960 MW Sasan Ultra Mega Power Project (UMPP), a Reliance Power Spokesperson said: "Reliance Power welcomes the order of the Hon'ble CERC recognising that the unprecedented and unforeseen foreign exchange rate variations beyond the control of the company and beyond the normal expectations may need to be considered for quantification and compensation by the procurers appropriately". Reliance Power made the announcement during market hours today, 24 February 2014.
The Hon'ble Commission has observed that the rate quoted by the company is the lowest not only amongst all supercritical/contemporary power projects, but also compared to the cost of generation of hydro power projects generally, Reliance Power said. Considering the extremely competitive rate at which the procurers are getting power from the company, there may be a case for the procurers to share a part of the burden on account of depreciation of the rupee.
Reliance Power said that the management of the company is grateful to the Hon'ble Commission for specifying a fast track 8 week schedule to examine relevant facts, before giving any final directions in this regard under Section 79(1)(b) of the Electricity Act in the interest of the project as well as consumers of the procurer states.
The Sasan Ultra Mega Power Project is the world's largest integrated coal mine and power project having six units of 660 MW each. Two units have already been commissioned and the third unit has achieved boiler-light-up. Also, coal production has already commenced from the 20 million tonnes per annum capacity Moher and Moher-Amlohri coal mines.
L&T edged higher after the company said that the Foreign Investment Promotion Board (FIPB) has approved the proposal for issuance of equity shares, Compulsorily Convertible Preference Shares (CCPS) and /or Compulsorily Convertible Debentures (CCD) of Rs 1000 crore by L&T Infrastructure Development Projects (L&T IDPL) to a wholly owned subsidiary of CPP Investment Board (USRE III), Inc. which is under incorporation. The stock was up 2.32%. The investment is subject to finalisation and execution of definitive agreements with the investor and receipt of necessary regulatory and other approvals, L&T said.
GMR Infrastructure rose 0.25%. GMR, Temasek and IDFC Alternatives led consortium of Investors (IDFC Consortium) have agreed to restructure their existing investment in GMR Energy (GEL). These investors had invested Rs 1395 crore in Compulsorily Convertible Preference Shares (CCPS) in GEL in 2010. GMR Group and the investors have now agreed to restructure the terms taking into account the interest of both the parties. The announcement was made after market hours on Friday, 21 February 2014.
Subject to satisfaction of conditions precedent, GMR Infrastructure (GIL) will issue CCPS worth Rs 788.8 crore to Temasek and Rs 347.8 crore to the IDFC Consortium through a preferential allotment. The residual investment of the investors in GEL will continue, GMR Infrastructure said.
Compulsorily Convertible Preference Shares ("CCPS") to be issued by GMR Infrastructure to Tamasek and IDFC consortia amounting to Rs 1136.6 crore would be converted into equity shares of GIL after 17 / 18 months i.e. during September - October, 2015 based on the price to be determined as per Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 [SEBI (ICDR) Regulations] at the time of conversion i.e. higher of the average of the weekly high and low of the closing prices of the GIL equity shares during the 26 weeks or the average of the weekly high and low of the closing prices of the GIL equity shares quoted on a recognised stock exchange during the 2 weeks ending with 30 days prior to date of conversion.
GMR Group Chairman, Mr. G. M Rao has said, "We are extremely happy to have Temasek and the IDFC Consortium as shareholders of GIL. This is the culmination of the long term partnership with the Investors and demonstrates their confidence in the Group. We are confident that together with the support from the Investors, we will build a strong Energy portfolio. This will also pave way for value creation at GMR Energy and GIL as the Power portfolio has almost reached the peak of its capex cycle and is getting into the operational phase".
Mr. Satish Mandhana, Managing Partner & Chief Investment Officer at IDFC Alternatives commented that "GMR Energy has been our 4th investment with the GMR group in the past 10 years. This step is a clear demonstration of how the investors and GMR worked together to forge a win-win solution by being considerate of partnership obligations, in a very difficult and challenging external environment for the power sector. We look forward to a successful IPO of GEL in near future"
PSU OMCs edged higher. BPCL (up 0.69%) and Indian Oil Corporation (up 1.28%) gained. HPCL shed 0.28%.
ICRA was locked at 20% upper circuit at Rs 1,913, also its record high, after the company announced after market hours on Friday, 21 February 2014, a conditional open offer has been announced by Moody's Singapore Pte along with Moody's Investment Company India and Moody's Corporation as persons acting in concert (PAC) with the acquirer Moody's Singapore Pte for acquisition of up to 26.5 lakh shares representing 26.5% of the total fully diluted voting equity share capital of ICRA at an offer price of Rs 2000 per share. This offer is a conditional offer and is subject to a minimum level of acceptance of 21.49 lakh shares representing 21.5% of the voting share capital of ICRA. If the number of shares tendered in terms of the offer is less than 21.49 lakh shares, the acquirer will not accept any shares tendered.
The offer is being made to the shareholders of ICRA as a result of the decision/intention of the acquirer to increase the shareholding of the acquirer and the PAC in ICRA by way of acquisition of upto 26.5% of the voting share capital, which together with the present shareholding of the acquirer and the PAC in ICRA, would result in them holding up to 55.009% of the voting share capital which is more than the 5% creeping acquisition limit available to the acquirer under Regulation 3(2) of the takeover regulations. This offer is conditional on the acquirer acquiring atleast 21.5% of the voting share capital (which together with the present shareholding of the acquirer and the PAC in ICRA, would result in the acquirer and the PAC holding at least 50.00001% of the voting share capital) which will make the acquirer along with the PAC the majority shareholders of ICRA and consequently in control of the company.
The offer price of Rs 2,000 per share represented a premium of 25.45% over the closing price of Rs 1,594.20 on Friday, 21 February 2014.
Shares of Credit Analysis and Research (CARE) tumbled after the company said that IDBI Bank has informed the company that no bid was found acceptable to the selling shareholders for divesting their stake in CARE and all the bids have been rejected. The stock was off 9.03%.
United Bank of India surged 6.57%. The state-run bank before market hours today, 24 February 2014, said that its board of directors at its meeting held on Saturday, 22 February 2014, has accorded its approval to create, offer, issue and allot by conversion of up to 80000 PNCPS of Rs 100,000 each into such number of equity shares of Rs 10 each at an conversion price as may be determined in accordance with the Regulation 76(1) of SEBI ICDR Regulations on preferential basis to Government of India in one or more tranches.
The Board further approved issuance and allotment by conversion of PNCPS up to 11 crore equity shares of Rs 10 each at such price as may be determined in accordance with the Regulation 76(1) of SEBI ICDR Regulations on preferential basis to the President of India within 31 March 2014.
The approvals of the Board are subject to all applicable approvals/consents from various Regulators and specific approval by the Central Government in this regard.
The Reserve Bank of India next undertakes monetary policy review on 1 April 2014. Citing price pressures, the Reserve Bank of India raised its key lending rates by 25 basis points after Third Quarter Review of Monetary Policy for 2013-14 on 28 January 2014.
Asian stocks edged lower on Monday, 24 February 2014, after a Chinese state-owned newspaper said some Chinese banks curbed loans to property developers. Key benchmark indices in Japan, Singapore, Indonesia, Taiwan, China, Hong Kong and South Korea fell by 0.38% to 2.03%.
Industrial Bank Co. and other unidentified banks have curbed lending to the property sector and related industries such as steel and cement, Shanghai Securities News reported as China said new home prices rose in 69 of 70 cities last month from a year before. But the growth in new-home prices in China's first-tier cities slowed in January, National Bureau of Statistics data today showed.
US stocks edged lower in choppy trade on Friday, 21 February 2014, after the latest data showed existing-home sales in January showed a bigger-than-expected decline. In other economic news on Friday, Dallas Federal Reserve President Richard Fisher said the central bank should continue to taper its bond-buying program that's boosted stocks.
Richmond Fed President Jeffrey Lacker on Friday, 21 February 2014, said the 2008 Federal Open Market Committee transcripts released earlier in the day show "me and several other consumers of economic research grappling with some very difficult policy decisions." In prepared comments at Arizona State, he said there wasn't enough discussion during the crisis about specific models of banking and financial markets that there could have been, and there wasn't enough discussion about long-term consequences. Lacker said he still opposes the Fed's credit market interventions and said he remains "deeply skeptical about the advisability of those actions." Speaking of the market for asset-backed commercial paper, he said markets were responding in a plausibly efficient manner to significant revisions in expectations about the underlying economic fundamentals. Lacker also said the Fed's emergency lending program simply reallocated credit and was not like the "lender of last resort" that Henry Thornton and Walter Bagehot wrote about in the 1800s.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review on 18-19 March 2014. After a monetary policy review, the FOMC on 29 January 2014 announced it will reduce monthly bond purchases by another $10 billion to $65 billion.
Finance leaders from the world's biggest economies leaned on central banks and governments to help spur growth, reverting to the global economy's playbook of recent years, in an effort to safeguard a fragile recovery. Group of 20 officials ended their two-day summit on Sunday, 23 February 2014, saying they would look to boost world growth by more than $2 trillion over the next few years under a strategy crafted by the International Monetary Fund.
Under the G-20 plan, advanced economies would continue with their easy-money policies while emerging markets would seek to restructure their economies and tame inflation. In addition, governments everywhere would be expected to channel private-sector finance into new infrastructure projects.
The G-20's final communiquhighlights agreement among central banks to communicate their stimulus-exit strategies clearly and in a timely fashion. The communiquwarned that the global economy faces a period of potential "excessive volatility" harmful to growth as countries adjust their economic policies. "We do not want any surprises," Joe Hockey, Australia's treasurer and G-20 host, said at the conclusion of the summit on Sunday.
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