After declining sharply during the pre-noon trading session, strong selling activity led the markets to recover all their losses and end the day on a positive note. The BSE-Sensex closed the day with gains of about 28 points. The NSE-Nifty ended lower by a few points. Stocks from the information technology and metal sectors were amongst the top gainers while those from the consumer durables and realty sectors were the key under performers. As for midcaps and smallcaps, they ended the day on a weak note with the BSE Mid Cap and the BSE Small Cap indices both down by 1% each.
As regards global markets, Asian indices ended on a weak note. European indices opened on a weak note. The rupee was trading at Rs 68.12 to the dollar at the time of writing.
Stocks of real estate players ended the day on a weak note with HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. (HDIL), Anantraj Ltd and Godrej Properties Ltd leading the pack of losers. Weakness in stocks seems to be on account of possibility of prices falling considering the overall uncertainty surrounding the economy. As per a survey done by the National Housing Board, prices in as many as 22 major cities have declined in the quarter ended June as compared to the preceding quarter. With this it is expected that the speculators - the ones essentially responsible for the rise in prices- will exit the market which would eventually lead the long drawn real estate bubble bursting. However, what may be a sigh of relief for the developers is the demand from the non resident Indians on the back of the weak Rupee. However, given the large amount unsold apartments blocking inventory, it would not be surprising to see the price decline in the sector.
Stocks of power companies ended the day on a mixed note with Tata Power, Adani Power and National Thermal Power Corporation (NTPC) leading the pack of gainers, while National Hydroelectric Power Corp. (NHPC Ltd) and Power Grid Corporation were amongst the key underperformers today. As per rating agency ICRA, power distribution companies are likely to receive subsidies to the tune of Rs 600 bn from the government during the current financial year FY14. This would be the case despite the distribution companies receiving the benefits of financial restructuring. As per the agency, the reason for the same would be the increase in the cost of power. This would be on account of the weak rupee and imported coal prices, thereby leading to higher costs of power generation. Also with certain electricity boards looking at bearing the higher costs - and not passing on to the consumers - could possibly lead to defaults of the restructure package in itself. With this development it could only add to the deficit levels of the government and put all the more pressure on the power sector.