Sideways improvement continues: Though the one-way rally has been put on hold, the Indian equity market is still not in any deep correction. Instead, it is now undergoing periodic correction and Nifty has been moving sideways for the past two weeks. Several factors are contributing to this and the most important of them is the uncertainty about the next course of action of the US Fed. As US inflation numbers are already at several-decade highs, there are fears that the US Fed may accelerate monetary policy faster than expected. Industry and market-friendly actions by the Government of India, such as the decision to increase ethanol blending by 20%, are also supporting the market. As per the plan, it will start from April 2023 and achieve 20% target by 2025. Apart from supporting the sugar sector, it will also reduce our dependence on imported crude. A large number of corporate results are also hitting the market now and hence, it is natural for the market to take time to digest them.

There are also technical factors behind this movement. After breaking above the 20-day moving average, the 50-day average is providing solid support. Vikas Jain, Senior Research Analyst, Reliance Securities says, “Nifty is respecting the 50-day moving average and taking its support since last 1 year and the positive bias can be sustained. In fact, Nifty has tested the rising 50-day average twice during the last two weeks. Wave wise analysis is also showing sideways move for some more time. “I am not expecting any move beyond 18,300 anytime soon. We are in the final stages of correction and new highs are possible only after the 5th wave,” says Sachchidanand Utekar, Deputy VP, Trade Bulls Securities, to Nifty. Placed between 17,700 to 18,200. Short term investors and traders should be careful in sideways moving periods as any breakout from this short range could be bullish.

(Narendra Nathan / ET Office)

Macro Update: Coal

Demand likely to exceed supply

total coal production

There is an increase of 28.2% to 63.8 Million Tonnes (MT) during October 2021 as compared to October 2019 (Non-Covid year) and 14.7% over October 2020 (Covid year). Coal production also improved significantly on a month-on-month (monthly) basis, and increased by 23.4% due to a pick-up in mining activities due to the fall in the monsoon season. During the month, Coal India Limited (CIL) produced 49.8 MT of coal, 26.4% higher than in October 2019. Singareni Collieries Company Limited (SCCL) produced 5.3 MT of coal, which is 4.7% higher as compared to October 2019. Captive coal production increased by 63.8%.

On a cumulative basis, India’s coal production during the period April 2021 to October 2021 increased by 12.2% over the same period last year (2020) and 7.8% as compared to the same period of 2019. CIL produced 299.6 MT of coal during this period. From April 2021 to October 2021 which is 45% of the annual production target of 670 MT for the whole year 2021-22.

coal dispatch

The total coal dispatch in the month of October 2021 stood at 70.4 MT as compared to 59.9 MT and 50.5 MT in October 2020 and October 2019 respectively. Coal deliveries to the power sector and captive power plants increased by 42% and 44% respectively during October 2021 as compared to October 2019, while coal supplies to other sectors such as cement, steel, sponge iron were given priority. To ensure uninterrupted power supply to starved power plants. Coal dispatch to other sectors including fertilisers, textiles, chemicals etc. increased by 39% but declined by 38% as compared to October 2019.

stock in power plants

There has been a marginal improvement in coal stocks in power plants, with the average daily stock in 135 coal-fired thermal power plants rising to six days on 1 November 2021, compared to nearly four days seen in mid-October 2021. However, this is still much less than the 22 days fuel stock prescribed by the Central Electricity Authority (CEA). 71 power plants with a total installed capacity of 84,511 MW have total coal reserves of less than six days (critical level).

Outlook

While domestic demand for coal from the power sector rose from August 2021 onwards as commercial and economic activities revived as the country was locked down by the second wave of the Covid-19 pandemic, supplies from coal mines were disrupted due to the extended monsoon. Is. However, going forward, India’s coal production is expected to pick up. On the other hand, the demand for coal is expected to exceed the supply as rising international coal prices will keep a tab on imports into the country. In order to achieve the annual production target and meet the rising demand conditions, domestic coal companies including CIL and SCCL will have to significantly increase production from October 2021.

(care rating)