Indices lose steam towards end of trade

Wed, 6 Feb Closing

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The Indian stock markets started the day on a strong positive note, but this positive momentum did not last throughout the session. Indices continued their upward trend till the afternoon session. However, in the final hour of trade, they started moving lower and finally closed the day marginally in the red. The BSE-Sensex closed negative, lower by around 20 points (0.1%). The NSE-Nifty closed higher by around 2 points. The smaller indices had a positive day on the bourses. The BSE Mid Cap index and the BSE Small Cap index closed 0.02% and 0.2% higher respectively. Most sectoral indices closed in the red today with capital goods and PSU stocks leading the losses. On the other hand realty and IT stocks closed positive.

As regards global markets, Asian indices had a mixed outing today. European indices opened the day on a positive note. The rupee was trading at Rs 53.21 to the dollar at the time of writing.

The Coal Ministry received 17 applications from a number of consultancy and finance firms including McKinsey, KPMG, Ernst & Young, Deloitte and Crisil in response to the bids for appointment of advisors to restructure Coal India Ltd (CIL). Last month the Coal Ministry had invited bids for the same. The Planning Commission and a number of high-level panels, were of the view that the company needed to be restructured keeping in mind the rapidly increasing demand of coal and the need for enhancing production so as to make the coal sector more competitive. The Planning Commission had earlier suggested spinning off CIL subsidiaries into separate entities so that each one of them can pursue its own goals, amid growing supply deficit of coal. The coal miner CIL has seven subsidiaries including Bharat Coking Coal Ltd (BCCL), Central Coalfields Ltd (CCL), Eastern Coalfields Ltd (ECL) and Central Mine Planning and Design Institute Ltd. The coal miner has 371,000 employees.

The Cabinet Committee on Economic Affairs also in-principle approved the averaging of prices (price pooling) of domestic and imported coal in order to get a uniform price in the country. This will help ensure the 80% supply of fuel to power plants as per various fuel supply agreements (FSAs). However, the Coal and Power Ministry will have to get back with specifics of the proposal.

The country's largest mortgage lender HDFC reduced its benchmark lending rate by 0.1% making funds cheaper for home loan borrowers. Now interest rates on home loans up to Rs 30 lakh will come down to 10.15% while those above Rs 30 lakh will be 10.40%. The new rates would be effective from today. The RBI has been trying to improve liquidity in the system as well as reduce policy rates in the system. Over the past few months we have seen a drop in the Cash Reserve Ratio and cut in repo rate. This has resulted in cost of funds becoming cheaper for HDFC, thus it has decided to pass on the benefits to its existing customer base. Besides HDFC, a whole host of lenders, including State Bank of India (SBI), Punjab National Bank, Bank of India, Union Bank and Bank of Baroda, have cut their lending rates, following easing of monetary policy by the Reserve Bank.