New-look sensex spells turbulence
Bulk consumers want less of DVC power

Mumbai, April 9: 
When the sensex is revamped into a more representative barometer of trading fervour from today, it will not be an unmixed blessing. As it the embraces the shares of new-age companies and shows the door to others who have not been able to keep pace with their nimbler rivals in the trading ring, it will have to grapple with an in-built problem: sharper swings and greater risks.

For a market which has been brutally capricious in recent weeks, the four scrips that are coming on board — Satyam Computer, Zee Telefilms, Reliance Petroleum and Dr Reddy’s Labs — will inject a greater degree of volatility into the 30-share index. Even so, that is a price operators appear ready to pay for the makeover, which will push IDBI, Indian Hotels, Tata Chemicals and Tata Power off the deck.

Fears of greater volatility do not spring from an element of nostalgia about those that have been discarded. They are genuine and logical. For one, the four new entrants account for roughly 10 percent of BSE’s total market capitalisation.

The total market cap of the sensex, measured when Dalal Street wrapped up Friday’s trading, stood at Rs 2,91413.63 crore. When operators return to work today, they will be gazing at an index that is heavier by a whopping Rs 79,845.57 crore. The outgoing scrips had a combined market cap of Rs 6785.01 crore while the ones that will take their place are valued at Rs 1,07,929.43 crore. “There will be days when the sensex ramps up by three figures and occasions when it goes into a scuba dive,” said a dealer who is affiliated to a institutional brokerage.

BSE officials say the four scrips were picked up because they have high liquidity, massive trading volumes and a wide investor base. The sensex revamp — the first after early 1999 when Infosys Technologies was included — came after Sebi asked the BSE board to make it a more representative index. A highly volatile scrip like Zee Telefims will enjoy the third-largest weightage after Infosys and Hindustan Lever. Unlike Satyam and Dr Reddy’s which are included in the NSE’s 50-share CNX Nifty, this is the first time that the media major has found a place in a popular index — a measure of just how much trading and investor perceptions have changed.

The index committee included Reliance Petroleum, which recently commissioned its 27-million tonne refinery at Jamnagar in Gujarat. to maintain a balance between the old and new economy stocks.    

Calcutta, April 9: 
Damodar Valley Corporation is facing a fall in the contract demand for power from all its major consumers.

Tisco, its main bulk client based in Jamshedpur, plans to stop drawing power from the DVC over the next few years. The contract demand is to be reduced substantially to 205 mva by next month, which will be slashed to 145 mva by April 2001 and ultimately stopped in 2005. Tisco’s supply cut is linked to the steel major setting up its own captive power plant in Jojobera.

Steel Authority of India Ltd’s (SAIL) Bokaro Steel Plant too has substantially reduced power purchase to 175 mva from 200 mva, as has the Durgapur Steel Plant. CESC, its other major client, has decided to cut down on power purchase, with its own 500 MW Budge Budge power plant being commissioned.

All these comprise DVCs main consumers apart from South Eastern Railways and some divisions of the Eastern Railways, Coal India Ltd subsidiaries and the state electricity boards of Bihar and Bengal. With contract demand having already begun its downward trend in 1999-2000, from its position in 1998-99, DVC officials are perturbed over the fact that there are no major steel projects coming up in the region either. Coupled with this is the payment defaults faced by the corporation. While defaults of coal companies can be adjusted, new defaulters like CESC add to DVC’s woes.

Contract demand is a fixed power purchase pact (specifying the upper limit) and is a sought after option for power companies to maximise plant load factor.

Last year DVC had projected a growth in contract demand despite the general recessionary trend in the steel industry. It said that it had received applications from new industrial consumers in growth centres in Durgapur, Kalyaneswari-Maithon complex, Mejia-Barjoria, Barhi-Kodarma, Giridih, Ramgarh-North Karanpura complex. This obviously has not materialised. Admitting that the contract demand in 1999-2000 has in fact fallen below that of even 1998-99, secretary A.K. Misra said that the corporation was confident of finding other avenues.    


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