A PATHETIC SESSION

Indian benchmark indices staged a pathetic performance in Wednesday's volatile trade session, expunging all the gains accumulated in the previous session. The frontline indices which got off to an encouraging start squandered the opportunity of building on the momentum as disappointing earnings announcements by heavyweight's exerted selling pressure on the key gauges. The dismal close looked even distressing because of the fact that markets across the globe displayed energetic performance and rallied as speculations grew that US lawmakers will agree to increase the nation's debt ceiling while the strong corporate earnings by Apple Inc and International Business Machines Corp coupled with upbeat housing numbers too supported global sentiments. However, back home the upbeat reports of Indian agriculture production registering a record increase of around 11% during the 2010-11 agriculture season and Ministry of Finance approving 31 foreign direct investment (FDI) proposals worth Rs 3844.70 crore too were overlooked by market participants. The marketmen were busy punishing heavyweight stocks like Wipro - India's third-largest software firm, Dr. Reddy's Laboratories Ltd., the second-biggest drugmaker, LIC Housing Finance etc for announcing disappointing first quarterly earnings. The benchmarks were also weighed down by index heavyweight Reliance Industries' fall amid reports that Finance Ministry has approved the $7.2 billion deal between Reliance Industries and Britain's BP Plc, which includes BP's purchase of 30% stake in Reliance's 23 blocks, including India's largest gas field KG-D6. Investors awaited the RBI's next policy announcement due on July 26 for further direction amid expectations that inflation and interest-rate cycle would peak out soon. The indices drifted closer towards the psychological 5,550 and 18,500 levels as profit booking was evident in Power, Healthcare and Capital Goods pockets.
Meanwhile, the benchmark got off to a positive opening but the optimism fizzled out sooner than later and the key indices gradually kept on loosing traction. Losses for the key gauges widened in the second half of trade as investors resorted to across the board selling. Eventually the indices snapped the session in the negative territory around the session's lowest point. The NSE's 50-share broadly followed index Nifty, plunged close to a percent though above the crucial 5,550 support level while Bombay Stock Exchange's Sensitive Index, Sensex slipped by over one hundred fifty points and closed just above the psychological 18,500 mark. The broader markets too failed to show any kind of fervor and settled on a weak note. On the sectoral front, it was the Power counter that languished at the bottom of the table with 1.73% losses on reports that the Ministry of Coal is likely to cancel the allocations of coal block to private developers, as the development of the coal block is being delayed by private developers. The defensive Healthcare pack too remained under pressure losing 1.71% points after heavyweights like Sun Pharma and Dr Reddy's plunged 1.55% and 2.05% respectively. On the other hand, FMCG counter was the only one which managed to settle in the green terrain with moderate rise because of around a percent gains in bellwether ITC. The markets drifted on higher volumes of over Rs 1. 47 lakh crore while the turnover for NSE F&O segment also remained on the higher side compared to Tuesday at over 1. 33 lakh crore. The markets breadth remained negative as there were 1195 shares on the gaining side against 1696 shares on the losing side while 131 shares remained unchanged.
Finally, the BSE Sensex lost 151.49 points or 0.81% to settle at 18,502.38, while the S&P CNX Nifty slipped by 46.50 points or 0.83% to close at 5,567.05.
The BSE Sensex touched a high and a low of 18,765.60 and 18,473.90, respectively. The BSE Mid cap and Small cap indices were down by 0.88% and 0.36% respectively.
The top gainers on the Sensex were DLF up 1.63%, ITC up 0.93%, Maruti Suzuki up 0.09% and Hindustan Unilever up 0.03%.
On the flip side, Wipro down 3.95%, Hindalco Inds down 2.71%, Jaiprakash Associate down 2.51%, Tata Power down 1.98% and Hero Honda down 1.90% were the top losers on the index.
The only gainer on the BSE sectoral space was FMCG up 0.24% While Power down 1.73%, Health Care (HC) down 1.71%, Capital Goods (CG) down 1.45%, Auto down 1.42%and Bankex down 1.34% was the only loser on the BSE sectoral space.
Meanwhile, the Ministry of Coal is likely to cancel the allocations of coal block to private developers, as the development of the coal block is being delayed by private developers. This coal blocks being jointly developed by private developers -- world's largest steel maker Arcelor Mittal, Reliance Energy, Hyderabad-based Lanco Group, GMR Energy, Navbharat Power and Vedanta subsidiary Sterlite Energy.
In January 2008, Ministry of Coal had allocated the Rampia and Dip Side of Rampia coal block, located in Mahanadi Coalfields in Orissa, to these six private developers to meet the coal requirements of their captive end use plants; on the condition that the production of coal to be commenced by January 2011. The coal ministry is annoyed due to delay in development of the coal block.
"Allocates are hereby warned and directed to develop the block immediately. Any further delay would lead to necessary action including de-allocation of the block," Ministry of Coal cited in the communication to private developers.
In past two review meetings held in June 2009 and July 2010, Coal Ministry noted that private developers had not taken any serious efforts for the development for the coal block regardless of repeated assurances. The coal ministry had also issued two showcause notices to private developers in September 2009 and July 2010 for delay in development of coal block. Ministry of coal was not convinced by the reason for delays given by the private firms in their reply to the notices.
The coal ministry issued similar warning letters to the public sector company Metals and Minerals Trading Corporation (MMTC) for delay in development of Gomia coal block and Jharkhand State Mineral Development Corp for Patratu and Robodih coal blocks. Coal Ministry warned Jharkhand State Electricity Board and Bihar State Mineral Development Corporation for delays in the progress of Urma Paharitola block in Jharkhand.
Earlier in May, a ministerial committee had suggested to issue warnings to 29 coal and 3 lignite blocks holding companies. The committee also had recommended cancelling 14 coal blocks and one lignite block allocated to six public sector units, including NTPC and three private companies, for failing in development of coal blocks. This year, government had cancelled allocation of coal blocks to many firms including public sector firm NTPC, Damodar Valley Corporation and Andhra Pradesh Power Generation Corporation.
The S&P CNX Nifty touched high and low of 5,645.40 and 5,555.10, respectively.
The top gainers of the Nifty were DLF up 1.31%, Siemens up 0.71%, ITC up 0.69%, Hindustan Unilever up 0.56% and Infosys up 0.17%.
On the flip side, Wipro down 4.14%, Hindalco down 3.41%, Ranbaxy down 2.59%, JP Association down 2.51% and Kotak Bank down by 2.31% were the top losers on the index.
The European markets were trading in green. France's CAC 40 surged 1.43%, Britain's FTSE 100 soared by 1.09% and Germany's DAX up by 0.47%.

All the Asian equity indices barring shanghai composite finished the day's trade in the positive territory on Wednesday following strong gains on Wall Street overnight as progress in US debt ceiling negotiations boosting investor sentiment. Japanese Nikkei surged over a percent in the trade, with technology shares were lifted by stellar earnings results from US titans IBM and Apple while, benchmarks in South Korea and Taiwan too rose 1.16 percent and 2.13 percent respectively as makers of tablet and smart phone components posted strong gains. However, Chinese main share index Shanghai composite ended 0.1 percent lower as investors' mood dampened by falls in resource shares, on concerns over potential fallout in local government debt and the uncertain global economic outlook.