BackSensex, Nifty fall to one-month low; record derivatives turnover on expiry day
The Sensex ended lower by 1% at 26,468.36 points, while the Nifty shed 1.1% to 7,911.85, the lowest level since 26 August
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Mumbai: The benchmark stock indices S&P BSE Sensex and CNX Nifty tumbled to a one-month low, with the exchanges recording the highest turnover on the expiry of monthly derivatives contracts. The Supreme Court’s decision to cancel coal block allocations weighed heavily on power, metal and bank stocks.
The 30-share Sensex ended lower by 1%, or 276.33 points, at 26,468.36 points, while the National Stock Exchange’s broader barometer 50-share Nifty shed 1.1%, or 90.55 points, to close at 7,911.85 points. Both the Indices closed at their lowest level since 26 August.
“I would not read more in high turnover—it’s just expiry playing up," said Gautam Trivedi, managing director and head of equities (India) at Religare Capital Markets Ltd.
In intra-day trade, Sensex and Nifty had plummeted 426 points and 125 points, respectively. Total market turnover aggregated to more than ₹ 8.5 trillion, the highest ever, boosted by a surge in derivatives trade. The NSE futures and options (F&O) segment clocked a record turnover of ₹ 5.3 trillion, while the BSE F&O segment recorded its second-highest turnover at ₹ 2.9 trillion.
The Supreme Court on Wednesday scrapped the allocation of all but four of the 218 coal blocks awarded between 1993 and 2010.
While the move gives the government an opportunity to make a fresh start and put in place a transparent rules-based regime in the allocation of coal, it also triggers problems of unwinding investments and loans already made in some of these projects.
“The Supreme Court has finally settled the long-pending issue. Now, a policy can be set up and a plan can be chalked about what next," said Trivedi of Religare.
“However, in the near term, we could see a further downside in the stocks directly impacted by the SC decision," he added.
Metal and power shares ended lower. Bhushan Steel Ltd fell 5%, Jindal Steel and Power Ltd 7.8%, NMDC Ltd 5.1%, Hindustan Zinc Ltd 1%, JSW Steel Ltd 3%, Tata Steel Ltd 2.8% and Sesa Sterlite Ltd 2.7%.
In the power sector, GMR Infrastructure Ltd lost 4.4%, PTC India Ltd 6.1%, CESC Ltd 5%, Torrent Power Ltd 2.1%, Thermax Ltd 3.1%, Adani Power Ltd 8.7%, Reliance Power Ltd 7.4%, JSW Energy Ltd 6.1%, Reliance Infrastructure Ltd 5.9% and Tata Power Co. Ltd 2.1%.
Banking shares also fell on fears that loans given to companies that held these coal blocks may turn bad. Allahabad Bank declined 12.3%, Union Bank of India 7.4%, IDBI Bank Ltd 11%, Oriental Bank of Commerce 8%, Punjab National Bank 6.2%, Andhra Bank 11.7%, Syndicate Bank Ltd 8.5%, Bank of India 8%, and Canara Bank Ltd 4.63%, Bank of Baroda 2%, Axis Bank Ltd 4.6%, State Bank of India 4.4% and ICICI Bank Ltd 3.3%.
Among gainers, Tata Consultancy Services Ltd (TCS) was up 3.1%, Dr Reddy’s Laboratories Ltd 2.2% and GAIL India Ltd 1.9% to ₹ 451.40.
Among other losers, Hindalco Industries Ltd fell 4.2%.
Among the S&P BSE sectoral indices, the IT index bucked the trend and was the top gainer, up 1.1%, followed by the teck and healthcare indices which were up 0.9% and 0.2%, respectively. The realty index was the top sectoral loser, down 3.2%, followed by the oil and gas and metal indices, which slipped 3.1% and 3%, respectively. The power and bankex indices were down 2.8% and 2.7%, respectively. The capital goods, auto and consumer durables indices were down 1.9%, 1% and 0.8%, respectively.
Oil and Natural Gas Corp. Ltd (ONGC) fell 3.4%, while Reliance Industries Ltd (RIL) fell 3.7% to ₹ 929.40 after the government postponed a decision on gas pricing till 15 November.
Jaypee Group companies fell after Reliance Power on Wednesday called off discussions with the company to buy its three hydropower projects, citing regulatory uncertainties. Jaiprakash Power Ventures Ltd (JPVL) fell 13.9%, Jaiprakash Associates Ltd tumbled 19.2% and Jaypee Infratech Ltd lost 13.5%.
Punjab Alkalies and Chemicals Ltd rose as much as 17.9% after the company said in a notice to BSE that it will meet on 2 September to consider the divestment of 44.26% stake in the company by the Punjab government.
Since the beginning of this year, the Sensex has gained 25.02%, while foreign institutional investors have bought $14.02 billion from local equity markets.
All eyes are now set on the Reserve Bank of India’s (RBI’s) monetary policy which will be unveiled on 30 September. The RBI is widely expected to keep interest rates unchanged as it aims to bring down Consumer Price Index (CPI)-based inflation to 6% by January 2016.
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