Benchmarks trim gains; trade continues in green

Indian equity benchmarks trimmed gains but continue to trade in green, hovering near the lowest point of the day. The market trimmed their gains after the HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit stood at 51.3 in April, similar to the March level.The street took no note of Finance Minister P Chidambaram’s statement asserting that India’s economic growth is likely to recover and achieve 6% growth level in FY15 on back of sound economic policies and a pick-up in investment. Traders were seen piling up positions in IT, HealthCare and TECK stocks, while selling was witnessed in Capital Goods, Metal and Auto sector stocks. In scrip specific development, IDBI Bank was trading in green after its March quarter operating profit rose 16% to Rs 1,850 crore, while net interest income grew 9% to Rs 1,574 crore.

On the global front, the Asian markets were trading mostly in red, while the European markets traded mostly on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,700 and 22,400 levels respectively. The market breadth on BSE was in green in the ratio of 1321:1219 while 125 scrips remained unchanged.

The BSE Sensex is currently trading at 22424.83, up by 7.03 points or 0.03% after trading in a range of 22575.62 and 22414.42. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices too pared gains; the BSE Mid cap index was up by 0.41%, while Small cap index was up by 0.55%.

The gaining sectoral indices on the BSE were IT up by 1.18%, HealthCare up by 0.93%, TECK up by 0.87%, Consumer Durables up by 0.70% and PSU up 0.42% while, Capital Goods down by 1.47%, Metal down by 1.13%, Auto down by 0.57%, Bankex down by 0.13% and Power down by 0.03% were the top losing indices on BSE.   

The top gainers on the Sensex were Tata Power up by 2.18%, Coal India up by 1.75%, Cipla up by 1.37%, Infosys up by 1.33% and HDFC up by 1.25%.

On the flip side, Hindalco Industries down by 2.49%, L&T down by 2.27%, Tata Steel down by 1.90%, Maruti Suzuki down by 1.62% and M&M down by 1.54%.

Meanwhile, concerned over acute liquidity crunch faced by the Indian fertiliser sector, Fertiliser Ministry is likely to ask the government for more funds under the special banking arrangement for subsidy payment to indigenous urea manufacturers. Under the special banking arrangement, banks provide loans to pay subsidies and a major part of interest are paid by the Fertiliser Ministry.

So far this year, government has released about Rs 28,122 crore for fertiliser subsidy out of which Rs 13,173 crore allotted for indigenous urea which has almost been finished and the ministry is now cash-strapped. The Finance Ministry, in its interim budget, had allocated Rs 65,970 crore for fertiliser subsidy against the estimated bill of Rs 1.05 lakh crore including last year's arrears.

Presently urea is sold at a maximum retail price (MRP) of Rs 5,360 per tonne to farmers and the difference between production cost and MRP is reimbursed to manufacturers in the form of subsidy. The government has recently approved the modified New Pricing Scheme (NPS) III for urea under which it has increased fixed cost of urea by up to Rs 350 per tonne. The move is likely to increase in subsidy burden to government by about Rs 900 crore.

Urea is the only fertilizer whose 80% demand is met through the domestic production. Presently, there are around 30 large size urea plants in the country comprising installed capacity of around 21 million tonnes. India was self sufficient in urea production till 2001-02, however with the rising demand and the lack of major investments, domestic demand has outpaced the production. India produces about 22 million tonnes of urea in a year, as against the demand of over 30 million tonnes. The remaining demand is met through the imports.

The CNX Nifty is currently trading at 6,702.45, up by 6.05 points or 0.09% after trading in a range of 6,737.65 and 6,696.20. There were only 22 stocks advancing against 28 declining ones on the index.

The top gainers of the Nifty were NMDC up by 2.66%, Tata Power up by 2.43%, Lupin up by 2.32%, Asian Paints up by 2.02% and BPCL up by 1.95%.

On the flip side, Jindal Steel down by 6.62%, Hindalco Industries down by 2.12%, L&T down by 2.02%, Maruti Suzuki down by 1.92% and Bank of Baroda down by 1.73% were the major losers on the index.

Asian equity indices were trading in red; Jakarta Composite was down by 0.05%, Nikkei 225 was down 0.19%, Straits Times down by 0.56% and KOSPI was down by 0.12% were the losers amongst Asian pack. On the other hand, Hang Seng added 0.57% and Taiwan Weighted advanced 0.86%.

The European markets were trading mostly in green; France’s CAC 40 was down 0.30%, Germany’s DAX added 0.12% and UK’s FTSE 100 gained 0.11%.