The BSE-Sensex is trading up by 69 points while NSE-Nifty is trading 17 points above the dotted line. The BSE Midcap and BSE Small cap indices are up by 0.2% and 0.4% respectively. The rupee is trading at 44.70 to the US dollar.
Aluminium stocks are currently trading weak with National Aluminum Company Limited (NALCO) and Hindalco leading the pack of losers. As per a leading financial daily, NALCO after going through the due diligence report, will decide on buying stake in an Indonesian coal mine by July end to ensure coal supplies for its aluminium smelter project. The company will need to secure coal supplies for proposed US$ 3.9 bn aluminum smelter projects in Indonesia. It plans to set up 0.5 m tonne per annum smelter and 1,250 MW coal based captive power plant at East Kalimantan province in Indonesia. The alumina smelter project would be funded with debt equity ratio of 70:30.
As per the management, after the acquisition of a minority stake in the coal mine, the company will seek the approval of the board for investment in the smelter project by March 2012. Indonesian government owned mining firm Pte Antam has already evinced interests to buy a minority stake in smelter project. The proposed facility was to be set up through a step down Nalco subsidiary.
Power stocks are trading mixed as well led by NTPC, Reliance Infrastructure and Coal India. PTC India and GVK Power are trading in the red. On account of coal shortage in country, the power ministry has expressed concerns that many new power plants are running at half their capacity and may default on loan repayment to banks if the fuel situation does not improve immediately. As per a power ministry official, the shortfall in coal supply has forced the companies to buy coal in spot market. The additional cost thus incurred is not a pass through in tariff. This has resulted in developers defaulting power purchase agreements (PPAs). If the problem persists, developers may even start defaulting in payments to banks and financial institutions. Such a default will adversely affect power sector financing which is already experiencing a crunch.