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Markets Recover to Finish Flat
Wed, 18 May Closing

After trading weak for majority part of the day, the Indian equity markets recovered in the final session to finish just below the dotted line amid weak global markets. At the closing bell, the BSE Sensex closed lower by 69 points, the NSE Nifty finished lower by 21 points. The S&P BSE Midcap finished flat while the S&P BSE Small Cap finished up by 0.2%. Losses were largely seen in auto and power stocks.

Asian markets finished broadly lower today with shares in Hong Kong leading the region. The Hang Seng is down 1.45% while China's Shanghai Composite is off 1.27%. Japan's Nikkei 225 is lower by 0.05%. European markets are lower today with shares in London off the most. The FTSE 100 is down 0.31% while France's CAC 40 is off 0.23% and Germany's DAX is lower by 0.23%.

The rupee was trading at 66.91 against the US$ in the afternoon session. Oil prices were trading at US$ 48.94 at the time of writing.

Selling activity was seen across various mining stocks with Vedanta Ltd and MMTC leading the losses. According to a leading financial daily, Coal India is looking to sell 120 million tonnes (mt) of coal this year to power and non-power entities that do not have fuel supply commitment. This move is buoyed by the excellent response to company's e-auction in April (Subscription Required). Coal India plans to allot 60 mt through forward e-auction over the next six months and could increase up to 120 mt if the company receives favorable response.

A bulk of this supply would go to the power sector where around 30,000 MW of plants do not have any coal supply agreement from Coal India. Coal India is looking to offer 8 mt of coal to power companies and 2 tonnes to other sectors every month.

At present, despite surplus coal, some 57,000 MW of thermal power units are fuel deprived since they do not have supply contract from Coal India. Reportedly, 9,000 MW of capacity is already achieved commercial operation with coal received on ad hoc sources and the rest (48,000 MW) of capacity is in various stages of construction. These plants would come up from this year onwards till 2020.

In another development, Coal India and NTPC have formally inked a joint venture agreement for the revival of now defunct gas-based Sindri and Gorakhpur plants of Fertilizer Corporation of India. The revival of these plants was estimated to cost about Rs 180 billion over the next four years. Gas for the plants will be supplied through the proposed Jagdishpur-Haldia pipeline. State utility GAIL has been reportedly asked to expedite the pipeline from Jagdishpur in Uttar Pradesh to Haldia in West Bengal. Having failed to revive the plants through auctions, the government asked NTPC and Coal India to take over the units. India's urea production touched a record 24.5 million tonnes in 2015-16. While the country's total demand is about 30 million tonnes, the rest is met through imports.

Coal India finished flat while NTPC closed on a negative note (down 0.6%) on the BSE.

Moving on to news from textile sector. According to The Economic Times, SRF is planning to invest Rs 35 billion over the next four years, 70% of which would go into its fast-growing chemicals business. SRF, which exports 90% of its chemicals and counts Syngenta, BASF, Bayer CropScience and other global biggies as its clients, has over the years steered its focus away from technical textiles to chemicals, where it has witnessed a rapid revenue growth and fat operating margins.

Reportedly, SRF will use internal resources to fund the planned investment as the company generates about Rs 10 billion of free cash flow every year. In four years, even as it completes its planned expansion, SRF's net debt-equity ratio will improve to 0.3 from 0.74 now.

SRF's shares have risen more than 25% in the past year as its focus on chemicals intensified. SRF is confident of capturing a larger share of the chemicals market because of its rising knowledge and technological capabilities (Subscription Required) in a world where increased demand for food and medicine require food and drugs companies to engage more with innovative chemicals suppliers.

SRF finished the day up by 0.2% on the BSE.

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Please Note: The stock price of Yes Bank on NSE-50 is not adjusted for face value split. Kindly refer to its BSE's quote today for the adjusted price.

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Sep 22, 2017 11:42 AM

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