Share prices overcome negatives: Tuesday Closing Report

Nifty to see the level of 5,210 if it closes strongly above 5,060

The market closed higher for a second day in a row, despite news that the country's GDP grew at its slowest pace in the past six quarters. The indices made higher highs, higher lows and even closed higher from the previous day.

The current uptrend may sustain in case the indices are able to maintain their intra-day highs for a few more trading sessions. The market may see a volatile upmove till 5,100 on the Nifty. However, if the index closes strongly above 5,060, we can see it reach the 5,210 level.

The market was supported by large volumes amounting to over 650 million shares, which was above the 10-day moving average.

Taking cues from the global markets, the Indian market started the day higher, with the Nifty up 25 points at 4,915 and the Sensex at 16,338, up 53 points. Realty, technology, banking and metal stocks boosted the upmove in early trade.

News about the fall in economic growth to 7.7% in the June quarter, from 8.8% in the previous corresponding quarter, saw the indices give up most of their early gains and they fell to their intra-day lows around noon. The Nifty fell to 4,928 and the Sensex to 16,443 at the day's low.

However, buying in select sectors lifted the momentum to a higher trajectory again in post-noon trade. The market continued its upward journey amid a fair bit of volatility. The Nifty crossed its psychological level of 5,000 to touch the day's high at 5,016 in the closing minutes of trading and the Sensex scaled to its mid-session high a short while earlier at 16,715.

The market finished trade a tad below those levels, with the Nifty gaining 81 points at 5,001 and the Sensex closing at 16,677, up 260 points.

The Indian market will be closed over the next two days for the local holidays and reopen on Friday.

The advance-decline ratio on the National Stock Exchange (NSE) was a strong 1203:475.

The broader indices also had an almost equal share in today's rally as the BSE Mid-cap index gained 1.44% and the BSE Small-cap index rose 1.10%.

BSE Metal (up 3.74%), BSE Realty (up 3.62%), BSE Bankex (up 2.24%), BSE IT (up 2.08%) and BSE TECk (up 1.71%) were the top sectoral gainers today. BSE Fast Moving Consumer Goods (down 0.32%) was the lone loser.

The major gainers on the Sensex were DLF (up 6.42%), Jindal Steel (up 5.34%), Sun Pharma (up 5.16%), Tata Steel (up 4.79%) and Hindalco Industries (up 4.34%). The major losers were ONGC (down 4.29%), ITC (down 0.97%), Tata Power (down 0.35%), Larsen & Toubro (down 0.31%) and Bharti Airtel (down 0.16%).

Sesa Goa (up 11.05%), DLF (up 6.78%), HCL Technologies (up 6.03%), Jaiprakash Associates (up 5.92%) and Jindal Steel (up 5.19%) topped the Nifty list, while ONGC (down 4.09%), GAIL (down 0.83%), ITC (down 0.77%), BPCL (down 0.76%) and Bharti Airtel (down 0.35%) ended at the bottom of the index.

Markets in Asia, with the exception of the China, settled higher on support from positive economic news from the US overnight and the report of the merger of two Greece banks. The easing of slowdown worries following a slew of good economic news has boosted investor sentiment.

The Hang Seng jumped by 1.71%, the Nikkei 225 gained by 1.16%, the Seoul Composite put on 0.78% and the Taiwan Weighted climbed 0.90%. But the Shanghai Composite was weaker by 0.38%. Markets in Singapore, Malaysia and the Philippines were closed for a local festival holiday.

Back home, foreign institutional investors were net buyers of stocks worth Rs366.19 crore on Monday. On the other hand, domestic institutional investors were net sellers of equities worth Rs325.50 crore.

HCL Technologies has entered into a partnership with Basware Corporation for induction of the Finnish software provider's purchase-to-pay solutions to help improve its own customer delivery processes and achieve cost reductions. HCL will leverage Basware's invoice automation, procurement and connectivity solutions for process enhancement and increased cost reduction to help its clients improve productivity. The stock rose 6.03% to close at Rs414 on the NSE.

Kolkata-based FMCG firm Emami said it is setting up a new plant in the north-east of the country at an investment of up to Rs40 crore as part of its expansion plan. Construction work on the new plant is likely to start in the next two months, the company said, and added that it is expected to be operational within two years. The stock settled at Rs464.50, up 1.17% on the NSE.

Anil Ambani group company Reliance Power has sought the approval of shareholders to raise funds through the sale of up to 25% of its equity to institutional investors for funding projects. It has also sought their nod to mop up funds through the issue of securities in international markets, the company said in its annual report for 2010-11. Reliance Power closed 1.92% higher at Rs85.05 on the NSE.


Former top bureaucrat alleges fraud in grant of environment clearances for private power projects

EAS Sarma, former power and finance secretary writes to prime minister demanding project-by-project probe into the coal linkages for these projects and the dubious nature of the companies

Former power and finance secretary EAS Sarma has urged the prime minister to order an investigation into the granting of environment clearances for private power projects, as most of these have been secured by private companies through dubious means.

"The entire private power capacity in the pipeline is concentrated in the hands of a few influential industrial families who have formed a strong cartel to twist the arm of the government and its regulators, to reopen projects on highly questionable grounds," Mr Sarma said in his letter to the prime minister. He has alleged that the process of gaining power purchase agreements (PPAs) is opaque and fraudulent, and that the ministers concerned are all party to it.

Moneylife has reported on the huge number of power projects that have been approved by the ministry of environment and forests over the past five years. (Read, 'Thermal power generation: Clearance has been given for 2,00,000MW of additional power, but has the government considered the environmental consequences?')

"I have information with me to the effect that most of the private developers who have obtained environment clearances for such a large generation capacity have done so on the basis of dummy coal linkages," Mr Sarma says. Similarly, many of these companies have come up with dummy ash disposal agreements. A new clearance is required if a thermal power plant changes the quality of coal for its operations.

Mr Sarma said the Ministry of Environment and Forests should institute a realty check on the actual coal linkages vis-a-vis the linkage stipulated in the environment clearance and review all the clearances where there is a deviation. "While domestic coal has a higher ash content, imported coal has higher sulphur content. Either way, they affect the environment, though in different ways," he says.

Most of these private thermal power companies, Mr Sarma says, have invested illegally in coal mines and shipping contracts abroad, and they route money through dubious routes to fund their domestic operations. Mr Sarma had written to the cabinet secretary earlier, urging an inter-departmental team to investigate the issue. "A random check of the funding of some of these projects and the antecedents of those that cleared them will throw light on the above," he says. Mr Sarma believes that all the clearances that were granted during the tenure of A Raja as environment minister must be investigated.

Taking cognizance of Mr Sarma's complaint, Nelcast of Nagarjuna Construction Company (NCCL) was issued a notice by the environment ministry in December 2010 over its plans to change the coal linkage for the power plant it is setting up in Nellore district.

"The Ministry of Environment and Forests should undertake a project-by-project evaluation and bring down the number of new projects to a rational, environment-friendly and socio-economically acceptable level urgently," he says.

In view of this situation, the former IAS officer has urged the government to put an embargo on thermal project clearances, and rescind clearances for those projects which have seen little progress on the ground. "The clearances that have lapsed should not be renewed."


Reliance and BP commence strategic alliance for India

Reliance and BP will form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas

Reliance Industries Ltd (RIL) and BP today announced the completion of BP's acquisition of a 30% stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, chairman and managing director, Reliance Industries, said "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

On Tuesday, RIL ended 3.64% up at Rs781.50 on the Bombay Stock Exchange, while the benchmark Sensex closed 1.59% up at Rs16,676.75.


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