Divergent trend on the bourses

A divergent trend was witnessed among various index constituents in early trade. At 9:20 IST, the barometer index, the S&P BSE Sensex was up 1.43 points or 0.01% at 24,686.85. The Nifty 50 index was currently down 2.65 points or 0.04% at 7,543.80.

In overseas stock markets, Asian stocks edged lower tracking overnight decline on Wall Street. US stocks closed lower yesterday, 7 April 2016, with financials leading declines on profit-taking in an overall risk-off environment ahead of earnings season.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 482 shares rose and 364 shares fell. A total of 41 shares were unchanged. The BSE Mid-Cap index was currently up 0.05%, outperforming the Sensex. The BSE Small-Cap index was currently off 0.04%, underperforming the Sensex.

Telecom stocks edged lower. Idea Cellular (down 0.32%) and Reliance Communications (down 2.19%) declined. Bharti Airtel (up 0.24%) edged higher.

Hindustan Unilever (HUL) rose 0.2% at Rs 862.30 after the company announced that it has completed the acquisition of Masons Group flagship hair oil brand Indulekha. The announcement was made after market hours yesterday, 7 April 2016. It may be recalled that in December 2015, HUL had announced signing an agreement with Masons Group for acquisition of its flagship Indulekha brand.

Tata Power rose 1.01% at Rs 64.75. The company announced after trading hours yesterday, 7 April 2016, that the Appellate Tribunal for Electricity (APTEL) has decided against providing compensatory tariff to the company's 100% subsidiary, Coastal Gujarat Power (CGPL). CGPL controls the 4,000 MW Ultra Mega Power Project (UMPP) at Mundra, Gujarat.

APTEL, while pronouncing the order, also remarked that Central Electricity Regulatory Commission (CERC) has no power to grant compensatory tariffs. However, APTEL, has thrown back the case to CERC. It has asked the commission to decide the tariff as per power purchase agreements (PPAs) and under 'force majeure' or 'change in law'. CERC has also been directed to conclude the exercise as expeditiously as possible, but certainly within a period of 3 months from 7 April 2016.

The case was being fought in APTEL between Tata Power and Adani Power with state utilities of Gujarat, Rajasthan, Maharashtra, Punjab and Haryana. The three-year-old tariff pertains to pass through of cost escalation due to change in imported coal prices and regulations in the Indonesian coal market. Both Tata Mundra UMPP and Adani power plant run on imported coal.

In an order dated February 2014, CERC decided a compensatory tariff to be paid by the states procuring power to the two power companies with effect from the commissioning date of the units. The compensatory tariff was over and above the tariff agreed in the power purchase agreement.

Tata Power's Mundra UMPP in Mundra was awarded compensatory tariff at 52 paise per unit over the remaining life of the project.

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