PROFIT BOOKING

Weakness increased in the market with significant losses in the rate-sensitive sectors. Sensex and Nifty were down sharply in the red. Investors were trading cautiously tracking weak global cues and pressing sales in several blue chip stocks from across various sectors. Worries about the global economy rose followed by slower than expected US GDP growth in the October-December quarter. Profit taking after previous week's strong gains also contributed to the weak start. On sectoral front all were trading in red. Capital goods, power, metal and bank stocks were among the major losers in opening trades. On the global front, Asian markets were slipped deeper into the red in late morning trade. Back home, the market breadth favoring the negative trend; there were 1,037 shares on the gaining side against 1,346 shares on the losing side while 109 shares remained unchanged.

The BSE Sensex is currently trading at 17,013.95, down by 220.03 points or 1.28%. The index has touched a high and a low of 17,138.04 and 16,994.22 respectively. There were 8 stocks advancing against 22 declining ones on the index.

The broader indices also following the benchmarks; the BSE Mid cap and Small cap indices were trading down by 0.56% and 0.54% respectively.

There were no gaining sectoral index on the BSE. While, CG down by 2.70%, Power down by 1.72%, Bankex down by 1.67%, Auto down by 1.25% and CD down by 1.19% were the top losers on the index.

The top gainers on the Sensex were Sun Pharmaceuticals up by 1.91%, Jindal Steel up by 0.87%, Bajaj Auto up by 0.64%, GAIL up by 0.60% and Hero MotoCorp up by 0.60%.

On the flip side, BHEL down by 8.35%, Sterlite Industries down by 3.95%, Bharti Airtel down by 3.48%, M&M down by 2.72% and ICICI Bank down by 2.66% were the top losers on the Sensex.

Meanwhile, India's premier apex chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM), has sought exception from basic customs duty and countervailing duty on thermal or steam coal from the finance ministry. In a communication to the ministry, ASSOCHAM secretary general D S Rawat has stated that the demand for coal far exceeds its supply and hence it needs to be imported in large quantities. 

Thermal generation (coal, lignite and gas) of power still constitutes 65% of total generation capacity and domestic coal supply is just not sufficient to meet these requirements. Additionally, environment stipulations make it essential for coal companies to import high quality coal for blending with lower grades of indigenous coal.

Imposing customs duty not only raises the cost on imports but also has a cascading effect on the demand for all goods and services in the economy. Amid global recessionary trends, it is imperative that the Indian economy maintains a steady and accelerated rate of growth and for this the power sector has to play its legitimate and designated role. But this was hampered due to the high customs duties which lead to an increase in the power tariff by 25 paise per unit, and go against the basic tenets of ensuring long-term fuel sustainability and energy security.

Imported coal is subject to imposition of 7.55% customs duty for imports from Indonesia and 10.83% for imports from other countries. In addition, there is countervailing duty of 5%. This distorts the field in favour of domestic coal based projects and discourages investments in imported coal based projects, threatening shortages. Moreover, risk profiles of independent power producers are adversely affected due to volatility in prices of imported coal, unpredictable long-term pricing arrangements, instability in shipping and exchange rates, logistical and infrastructural constraints for moving imported coal from ports to power stations.

ASSCHOM suggested that to bridge the gap in demand and supply, emphasis should be on importing thermal coal or acquiring new mines abroad. It has further predicted that shortage of domestic coal is likely to continue to persist over the medium term as the additional coal generation programme is not likely to catch up with the growing demands of capacity addition to align with economic growth targets.

The S&P CNX Nifty is currently trading at 5,134.85, lower by 69.85 points or 1.34%. The index has touched a high and a low of 5,166.15 and 5,128.80 respectively. There were 13 stocks advancing against 36 declines and one remained unchanged on the index.

The top gainers of the Nifty were RPower up by 3.55%, Sun Pharma up by 2.12%, RCOM up by 0.88%, Jindal Steel up by 0.83% and GAIL up by 0.82%.

On the flip side, BHEL down by 8.24%, Sterlite Industries down by 4.35%, JP Associates down by 3.46%, Bharti Airtel down by 3.30% and M&M down by 2.98% were the major losers on the index.

Most of the Asian equity indices were indicating a somber sentiment; Shanghai Composite lost 0.87%, Hang Seng slid 0.77%, Jakarta Composite plunged 1.89%, Nikkei 225 surrendered 0.58%, Straits Times skid 0.73% and Seoul Composite plummeted 1.26%.

On the flip side, Taiwan Weighted up by 2.40% was the lone gainer amongst the Asian pack.