Indian stock mkts recoup early losses

Tue, 15 May 11:30 am

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Indian stock markets have reversed their early morning losses and are trading in the positive. The sectoral indices are trading mixed with software and capital goods sectors leading the gainers and Auto and PSU stocks registering maximum losses.

The BSE-Sensex is trading higher by 52.2 points and NSE-Nifty is trading up by7.5 points. However, BSE Mid Cap and BSE Small Cap indices are down by 0.1% and 0.2% respectively. The rupee is trading at 53.87 to the US dollar.

Mining stocks have been trading mixed with Gujarat NRE Coke and Sesa Goa Ltd. leading the gainers and Ashapura Minechem Ltd. and National Mining Development Corp Ltd. (NMDC) trading the weakest. As per a leading financial daily, Power Minister Mr. Shinde has sought Prime Minister's Office (PMO) interference regarding the mandate as per which Coal India Ltd.(CIL) has to sign Fuel Supply Agreement (FSA) within a month in its 2009 format. The minister has expressed concern that FSA that suggests penalty of 0.01 % with zero penalty for the first three years unduly favours CIL and has triggered concerns among power utilities. He has suggested that the agreement is lopsided as unlike in 2009 version wherein all disputes were referred to the Centre, as per the fresh agreement, the company will decide the issue on its own. Besides FSA, he has suggested that issues like re-gradation of coal, force majeure and automatic sampling are loaded against power producers and likely to cause uncertainty. The minister wants that if the penalty provision is to be at the level proposed by CIL, the trigger level of disincentive should be restored to 90 % as was the clause in 2009 (wherein CIL has been supplying at a trigger level of 90% and a penalty level in proportion to its failure to supply the contracted quantity).The stock was trading in the red.

Auto stocks are trading mixed with Eicher Motors and Tube Investments witnessing maximum gains and Maruti Suzuki and Ashok Leyland leading the losers. As per a leading financial daily, Eicher Motors has signed a Memorandum of Understanding (MOU) with the Tamil Nadu government to make a capital investment of Rs 3.5 bn in the state over a five-year period. The investment will be utilised to expand production capacity of the Royal Enfield motocycles in Chennai to service the growing demand. The new plant will scale the production capacity of Royal Enfield to 1.5 lakh units per annum in the first phase and is expected to be completed by the first quarter of FY13. The Tamil Nadu Government had allotted land to Eicher Motors in July 2011, in the SIPCOT Industrial Growth Centre, Oragadam, near Chennai, for the set up a new plant to manufacture the entire product range of Royal Enfield motorcycles.