Indian benchmarks crawl sideways to finish around Tuesday’s closing level

Vulnerable Indian stock markets appear to be losing steam session after session amid the growing uncertainties in the global markets and dispiriting domestic macro-economic headwinds. Wednesday's session remained another such day when the benchmarks appeared exhausted and refrained from moving either ways, since they could only manage to crawl sideways to finish around Tuesday's closing level. Markets are reacting to speculative reports and discounting good ones as investors remained cautious amid the low volume trades. The underperformance by broader markets too remained a cause of concern as they were the ones which showed some resilience off late, indicating that investors' optimism on local markets is fading. The local bourses also remained worried that the foreign institutional investors, who are highly perturbed by the fact that headwinds like slowing economic growth rate, rising borrowing costs and towering inflation numbers are going to make it difficult for an emerging market like India to outperform the global markets, are ploughing back substantial portion of funds from Indian shares. But the indices seemed unwilling to capitulate to the selling pressure on expectations that the markets have already bottomed out while investors are waiting for a catalyst to open long positions in the beaten down but fundamentally strong counters. However, reports that monsoon rains in India will be "below normal" for the second time in three years weighed limited the upside chances as marketmen feared that it may potentially lower farm output and accelerate inflation. Meanwhile leads from the markets across the globe remained mixed as majority of Asian markets shut shops on a positive note while the European counterparts showed lackluster performance thereby giving little support to the local frontline indices.

Back home, the key indices drifted to the lowest point in the session in late trades as investors resorted to across the board position squaring however, some buying in the dying minutes ensured that the frontline gauges go home without much of damage and finish around the important psychological 5,300 and 17,550 levels. The NSE's 50-share broadly followed index Nifty, only managed marginal gains and settled above the crucial 5,250 support level while Bombay Stock Exchange's Sensitive Index, Sensex closed with single digit loss around the important psychological 17,550 level. The broader markets witnessed hefty bouts of profit booking and the midcap index slipped by 0.84% points while the smallcap index shed 0.84% point. On the sectoral front, it was the Oil and Gas counter which settled as the top gainer with 0.28% gains as majors like ONGC and GAIL climbed 2.05% and 1.04% respectively. Buying interests were also seen in Capital Goods pocket as heavyweight L&T rose by about half a percent on bagging order worth Rs 1,366 crore from GCC countries. On the other hand it was the Consumer Durables pack which languished at the bottom of the table with 3.83% losses as majors like Titan and Blue Star dived by 6.23% and 2.85% respectively. While the high beta Realty counter too bore the brunt of selling pressure and shaved off 2.29% as heavyweight HDIL and Unitech prolonged their down trend and sank by 3.05% and 3.70%. The markets consolidated on weaker volumes of over Rs 1.09 lakh crore while the turnover for NSE F&O segment also remained on the lower side compared to Monday at over 0.98 lakh crore. Market breadth remained abysmal as there were 1036 shares on the gaining side against 1797 shares on the losing side while 127 shares remained unchanged.

Finally, the BSE Sensex slipped by 9.67 points or 0.06% to settle at 17,550.63  while the S&P CNX Nifty lost 2.45 points or 0.05% to settle at 5,278.30.

The BSE Sensex touched a high and a low of 17,678.86 and 17,492.19 respectively. The BSE Mid cap and Small cap index were down by 0.84% each.

The major gainers on the Sensex were Mahindra & Mahindra up 2.39%, ONGC up 2.05%, Cipla up 1.99%, Bajaj Auto up 1.68% and Tata Power up 1.60%.

On the flip side, Hindustan Unilever down 3.42%, Maruti Suzuki down 2.39%, Bharti Airtel down 2.32%, TCS down 1.86% and Jindal Steel down 1.46% were the top losers on the index.

The major gainer on the BSE sectoral space were Oil & Gas up 0.28%, Capital Goods (CG)up 0.24%, Bankex up 0.06%, IT up 0.02% and Power up 0.02%. While the major losers in the space were Consumer Durables (CD) down 3.83%, Realty down 2.29%, FMCG down 0.67%, TECk down 0.47% and Metal down 0.26%.

Meanwhile, with the sudden change of rule in Indonesia, which accounts for 50% of India's coal import, is likely to affect the Indian power developers who have sought government's intervention as a new law in Indonesia, makes imports economically unviable. Indonesia has said it would not allow exporting companies to sell coal at prices below notified rates after September 23. Previously, there were no regulations by Indonesian government on coal pricing.

Few days ago, Australia issued a draft mining law to impose tax on coal and iron ore projects from next year, it accounts for 5% of country's coal import. Association of Power Producers (APP), a group of 13 private companies, has asked for the government intervention, they have requested Power Ministry to set up an expert committee to find appropriate solution to tackle rise in import rates. Power producers representing companies like Tata Power, Reliance Power, Adani Power, Lanco Infratech and Essar Power, has demanded modification in power purchase agreements (PPAs) so that they get the flexibility to increase tariff that allows pass through of fuel prices to their buyers.

At present, most of PPAs under competitive bidding are based on the fixed cost of production, which is not viable after the sudden change in Indonesian coal prices. The power producers want a suitable tariff structure be worked out, which holds power companies responsible for plant efficiency (heat rate) and fuel availability. As per the senior power ministry official, the government was considering the demand made by power producers. APP's director general, Ashok Khurana said, the current contractual framework does not protect power companies from coal price changes triggered by any change in law in the exporting country.

Power project worth 43, 000 Mega Watt (MW) honored under the power purchase agreements are in construction, about 13,000 MW or 30% is based on the imported coal. The power producers have offered bids based on their agreements with fuel suppliers predominantly in Indonesia, if companies are not able to meet their commitments, then it will be big concern for banks and consumers. Indonesia and Australia account for 55% of India's import of coal, the APP said, power producers will not be able to honor long-term commitments as the new mining law in Indonesia provides for annual alignment of coal prices with international rates.

Along with this, India's dependence on imported coal is expected to increase as country's largest coal suppler Coal India has not been able to increase the production as per the demand made by the power producers. Coal mining and power sectors are straggling with environment related issues. The change in pricing method is expected to make coal costlier by Rs 1,500 a ton for Indian power producers, after implementation of Australia's tax on the coal and iron ore mining, the price of Australian coal is expected to increase by $20-25 per ton, and it is also expected that the mining companies will pass increase in tax to consumers. 

The S&P CNX Nifty touched high and low of 5,310.50 and 5,262.50, respectively.

The top gainers of the Nifty were M&M up 2.29%, Tata Power up 2.13%, Cipla up 2.03%, Bajaj Auto up 1.79% and ONGC up 1.56%.

On the flip side, HUL down 3.61%, Ranbaxy down 3.11%, Bharti Airtel down 2.45%, TCS down 2.25% and Maruti down 1.90% were the major losers on the index.

European markets were trading in red. France's CAC 40 declined 0.29%, Britain's FTSE 100 lost 0.40% and Germany's DAX was unchanged.

Most of the Asian equity indices finished the day's trade in the positive terrain on Wednesday after Greece's Prime Minister George Papandreou had survived a crucial confidence vote in Parliament supported regional sentiment. Moreover Japanese Nikkei remained the biggest gainer among all the Asian peers; rose about 1.80 percent in the trade as investors are expecting a solution to Greece's debt problem. However, Chinese main stock index ended flat on Wednesday as investor remained concerned over tightening liquidity and higher inflation.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,648.98	2.49	0.09
Hang Seng	21,859.97	9.38	0.04
Jakarta Composite	3,821.83	26.89	0.71
KLSE Composite	1,567.35	6.56	0.42
Nikkei 225	9,629.43	169.77	1.79
Straits Times	3,042.83	-10.68	-0.35
Seoul Composite	2,063.90	15.73	0.77
Taiwan Weighted	8,621.04	23.42	0.27

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