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Global Rout Drags the Market
Mon, 18 Jan Closing

The Indian equity markets continued to bleed through the day, ending on a weak note. Most of the decline was attributable to crude prices, which fell to their lowest since 2003. The sentiments were also hurt as domestic data showed India's merchandise exports fell 14.75% in December from a year earlier. Stocks across the board ended on a weak note with those from the oil & gas, realty, and capital goods sectors facing the maximum selling pressures. The BSE-Sensex today lower by 267 points, while the NSE-Nifty closed lower by 87 points. Midcaps and small caps fared the worst. While the S&P BSE Mid Cap index closed lower by 2.7%, the S&P BSE Small Cap index closed the day with losses of 4%.

Asian markets fell on Monday amid continued unease over China's economic outlook and the slide in crude oil prices. The Nikkei fell 1.1% to its lowest figure in a year. The Shanghai Composite gained 0.44%, while the Hang Seng fell by 1.45%. Meanwhile, European markets are lower today with shares in Germany off the most. The DAX is down 0.27% while London's FTSE 100 is off 0.21% while France's CAC 40 is lower by 0.06%. The rupee was trading at 67.59 against the US$ at the time of writing.

According to a leading financial daily, the Finance Ministry wants state-run NALCO to buy back 25% of its shares from the government worth Rs 32.5 billion (US$481 million), as the government's plans to raise about US$10 billion from asset sales fall way short of targets.

Reportedly, the Finance Ministry wrote to the Mines Ministry last week seeking help to raise more much-needed funds. The government has managed to raise less than a fifth of the roughly $10 billion it had projected in divestments for 2015-2016. Mines Ministry controls the government's 89% holding in NALCO.

In other news, wind turbine maker Suzlon Group has bagged two 50.4 megawatt (MW) orders from Hindustan Petroleum Corporation Ltd (HPCL) and NALCO for installation additional wind power capacity. NALCO's cumulative Suzlon powered wind portfolio will increase to 100.80 MW post completion of this project.

On another note, global margins of aluminum companies have been under severe pressure due to concerns over Chinese aluminum exports and global meltdown in commodity prices (Subscription Required). Moreover, domestic aluminum companies are also struggling with higher fuel costs. Aluminum companies were forced to source coal from the open markets in the wake of cancellation of the captive coal blocks allotted to them by the Supreme Court last year. And price hikes taken to pass on the cost has further dented their competitiveness in the global markets. This has all been reflected in the weakening financial performance during the first half of FY16 (Subscription required).

Power stocks languished in red today as the index representing the sector finished the trading day down by over 2%. Selling activity was witnessed across majority of the stocks with Adani Power and Torrent Power faring the worst. According to a leading financial daily, Power Grid in a board meeting has approved investments proposals worth over Rs 25 billion.

Reportedly, the board has approved system strengthening in the southern region at an estimated cost of Rs 14.55 billion. The board has also approved investments in transmission systems across select states including Madhya Pradesh and Andhra Pradesh among others.

The condition of State Electricity Boards (SEBs) in India is very critical and poor as they face issues like failure to pass on tariff hikes, power theft, infrastructure issues, over capacity and others. SEBs are in a dismal financial health with huge losses accumulated over the years. In FY14, the state electricity utilities had a negative net worth of Rs 1.06 trillion. As a result, the SEBs are caught in a vicious circle of high debt and operational losses. Hence to bring a turnaround in these companies, the Ministry of Power announced a new scheme - Ujwal DISCOM Assurance Yojna or UDAY. The scheme will support financial turnaround and revival of power distribution companies.

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Mar 16, 2018 (Close)