Local bourses turnaround in red; broader indices continue to outperform

The undertone at Dalal Street has turned vigilant as domestic barometer gauges have slipped into the red zone ahead of the Fed meeting outcome. Investors which are fearful of a debt implosion in Europe are refraining to take any long position ahead of the outcome of the two-day policy meeting of the Federal Open Market Committee on US interest rates which began later on Tuesday, as investors world over expect the US Fed Reserve to unveil further measures to revive the US economy. However, regional counterparts have limited the further downside of the bourses as the Asia pacific stocks have moved marginally higher in Wednesday trade, on optimism for progress on Greece’s debt crisis as well as prospects for economic stimulus from the U.S. Federal Reserve. Asian stocks also rose, reversing earlier losses, after a gauge of economic indicators signaled that growth in China is withstanding Europe’s debt crisis and a faltering U.S. economy. Meanwhile, US stocks surrendered most of its intra -day gains and ended in a mixed mode on Tuesday. The US future indices too were pointing a mix start of the US markets. Back home, weakness into FMCG and IT counters along with Oil & Gas and Auto counters have mainly axed out gains of the bourses. Meanwhile, stocks from Capital Goods, Bankex and PSU counters performing well are lending some support to the bourses.  Shares of Public Oil Marketing Companies (POMC) dropped as crude oil prices rose first time in three days on fed stimulus optimism, while IT stocks too tumbled as rupee gained strength against its US counterparts, thereby making the exports costlier of the companies which derive a lion's share of revenue from exports. Sensex and Nifty despite surrendering gains have held onto their crucial psychological level i.e. 17000 and 5100 mark respectively. However, the broader indices outperforming the larger peers are ruling up over 0.40% respectively. The overall market breadth on BSE is in the favour of declines which have thumped advances in the ratio of 1374:820, while 90 shares have remained unchanged.

The BSE Sensex is currently trading at 17,081.38, down by 17.90 points or 0.10%. The index has touched a high and low of 17,191.12 and 17,057.17 respectively. There were 14 stocks advancing against just 16 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.44% and 0.43% respectively.

The top gaining sectoral indices on the BSE were, CG up by 0.68%, Bankex up by 0.50%, PSU up by 0.50%, HC up by 0.43% and Power up by 0.37%. While, Oil and Gas down by 0.88%, Auto down by 0.62%, FMCG down by 0.32% and IT down by 0.06% remained the only loser on the index.

The top gainers on the Sensex were Coal India up by 1.88%, Wipro up by 1.52%, Cipla up by 1.15%, ICICI Bank up by 1.14% and Jindal Steel up by 1.04%.

On the flip side, Hero Motocorp down by 1.51%, RIL down by 1.46%,  Hindalco Industries down by 1.40%, HUL down by 1.40% and Maruti Suzuki down by 1.36% were the top losers on the Sensex.

Meanwhile, the Group of Minister (GoM) is scrapping the Ministry of Environment and Forest’s (MoEF) policy, which categorize mining and non mining forest areas, well known as go and no go, saying the policy had no legal base. The go and no go policy had adversely affected the mining industry and other key industries like, power and steel etc. This move was expected by the central government as Jairam Ramesh, who introduced the policy, was replaced by Jayanti Natarajan. However, GoM headed by Finance Minister Pranab Mukharjee guided the Forest Survey of India (FSI) to scientifically demarcate pristine forests.

The industry has welcomed the move of government, as the policy was affecting the key sectors production and loss of opportunity cost. In the GoM meeting, Natarajan agreed with the suggestions made by B K Chaturvedi Committee, which said forest clearances should be based on the Forest Clearance Act instead of go and no go policy. The committee had argued that the go and no go policy had no legal sanctity and projects cannot be cleared or barred based on its guidelines.

In the meeting of GoM, Natarajan indicated that she would be taking up projects on a case to case basis, and in future no projects would be judged on the basis of go and no go policy guideline made by Jairam Ramesh. The GoM was created in February 2011, to clear difference on go and no go policy. The power, coal and steel ministries were against this policy.  

After the introduction of go and no go policy, around 203 coal blocks with reserve of more than 600 million tonne in nine major coalfields has been classified as no go areas for mining activities. These include many mines belonging to government owned Coal India , private sector companies like Essar and Hindalco, KSK Energy, and the Hasdeo Arand. The coal mines were located in the densely forested areas.

The GoM had also set up a committee under Planning Commission member Chaturvedi to resolve the issue of NTP’s North Karanpura power plant, which falls in a coal bearing area in Jharkhand. However, around eight coal blocks has got forest clearance from the panel created by the Prime Minister’s Office, headed by T K A Nair, principal secretary to the Prime Minister. As per the planning commission data, the power sector alone was losing potential production of 143,000 MW of power due to the MoEF’s policy.

The S&P CNX Nifty is currently trading at 5,133.35, lower by 6.85 points or 0.13%. The index has touched a high and low of 5,168.40 and 5,126.65 respectively.  There were 22 stocks advancing against just 28 declines on the index.

The top gainers of the Nifty were Wipro up by 1.61%, Reliance Communication up by 1.25%, ICICI Bank up by 1.24%, Jindal Steel up by 1.22% and Cipla up by 1.10%.

On the flip side, Sesa Goa down by 1.77%, Hero Motocorp down by 1.55%, Reliance Industries down by 1.47%, Maruti Suzuki down by 1.41% and Hindalco down by 1.37% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite gained 2.18%, KLSE Composite rose 0.74%, Nikkei 225 added 0.55%, Straits Times was up by 0.46%, Seoul Composite surged 1.70% and Taiwan Weighted gained 0.88%.

On the flip side, Hang Seng was down by 0.26% and Jakarta Composite was down by 0.70%.