India’s Nifty Futures Rise Before September Contract’s Expiry


India’s benchmark index fell to a one-week low, led by utilities and metalmakers, amid concern a court decision to cancel coal mining permits and impose a $ 1.3 billion penalty may raise power generation costs.

Jindal Steel & Power Ltd. (JSP) headed for the lowest level in 5 1/2 years while aluminum maker Hindalco Industries Ltd. (HNDL) dropped the most in a month. State Bank of India tumbled to a one-month low, sending a measure of lenders to its third day of declines. Jaiprakash Associates Ltd. (JPA) plunged 15 percent after Reliance Power Ltd. (RPWR) ended talks to buy its hydro assets.

The S&P BSE Sensex (SENSEX) fell 0.5 percent to 26,610.71 at 1:10 p.m. in Mumbai, extending a two-day, 1.4 percent retreat. The Supreme Court yesterday canceled 98 percent of the coal-mining permits granted in the past two decades and told the government to auction the licenses. Coal generates 60 percent of India’s power and a reliable supply is critical for Prime Minister Narendra Modi’s pledge of unbroken electricity supply by 2022.

“Undoubtedly, the uncertainty due to the court decision is weighing on certain stocks and certain sectors,” Jan Dehn, the London-based head of research at Ashmore Group Plc, which has about $ 70 billion in emerging-market assets, told Bloomberg TV India today.

The court ruled that mines already in production will be allowed to operate until March 31. It ordered companies to pay 295 rupees a ton on the 273.6 million tons of the fuel mined so far, and a similar amount for the coal they extract through March 31, according to the order. Coal India Ltd. (COAL) may take over operations from April 1 until the are sold in auction, Attorney General Mukul Rohatgi said yesterday.

Jindal Steel had 10 of its mines scrapped. The company’s shares slid 8.1 percent to 174.2 rupees, the lowest price since March 2009. The stock tumbled 10 percent yesterday.

Bad Loans

Hindalco., controlled by billionaire Kumar Mangalam Birla, will lose permits to four mines including its operating mine in the eastern Odisha state. The shares slumped 7.1 percent, the most since Aug. 25.

State Bank lost 2.7 percent to the lowest since Aug. 20. The lender’s 42 billion rupees loans to the power and metal producers will be affected by the cancellation in mine permits, Managing Director Pradeep Kumar said in a phone interview today.

Coal India rose 0.8 percent to 354.1 rupees. Citigroup Inc. raised the stock to buy from neutral and kept the target at 385 rupees.

“We are headed into unchartered territory with widespread ramifications including a surge in power costs and uncertain fuel supply in the near future,” Sushil Maroo, chief executive officer of Essar Energy Plc, whose permit for mining coal was canceled by the court, said in an interview. “The auction of coal blocks would mean power costs would rise.”

Gas Prices

Oil & Natural Gas Corp. (ONGC) fell 2.7 percent while Reliance Industries Ltd. (RIL) lost 1.6 percent after the government deferred an increase in natural-gas prices for a third time. The companies are the nation’s biggest producers of the fuel.

The S&P BSE Mid-Cap Index lost 1.4 percent in a third day of losses, heading for a four-week low. The measure has risen 41 percent this year, versus a 26 percent gain in the Sensex.

The CNX Nifty Index (NIFTY) on the National Stock Exchange of India Ltd. fell 0.6 percent to 7,957.35 before the expiry of monthly derivatives contracts today.

Futures traders rolled over 62 percent of their CNX Nifty contracts as of yesterday, versus a six-month average of 53 percent a day before expiry, data compiled by Bloomberg show.

International investors sold a net $ 157 million of Indian stocks on Sept. 23, paring this year’s inflows to $ 14 billion, the most among eight Asian markets tracked by Bloomberg.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Ravil Shirodkar, Matthew Oakley

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