Benchmarks trade slightly higher in early deals

Indian equity benchmarks made a flat to positive start as investors remained cautious ahead of release of the consumer price index (CPI) inflation data for May and the Index of Industrial Production (IIP) data for April due on June 12. Though, sentiments remained up-beat on report that foreign portfolio investors (FPIs) bought shares worth Rs 682.26 crore net on June 10, 2014, as per provisional data from the stock exchanges. However, gains remained capped as monsoon concern keep looming large with the country expected to receive a below-normal monsoon rainfall of 93 percent this year, which could drag down GDP growth.

On the global front, the US markets ended flat going through another choppy trade in last session. The Asian markets were trading mostly in the red terrain at this point of time and some of the indices fell from a three-year high after the World Bank cut its global economic growth forecast.

Back home, on the sectoral front, software, technology and healthcare witnessed maximum gains in trade, while fast moving consumer goods, metal and capital goods remained the top losers on the BSE sectoral space. The broader indices, however, were outperforming benchmarks, while the market breadth on the BSE was positive; there were 1573 shares on the gaining side against 527 shares on the losing side while 57 shares remain unchanged.

The BSE Sensex opened at 25583.69; flat compared to its previous closing of 25583.69, and has touched a high and a low of 25690.19 and 25575.23 respectively. The index is currently trading at 25616.75, up by 33.06 points or 0.13%. There were 14 stocks advancing against 16 declines on the index.

The overall market breadth has made a strong start with 72.93% stocks advancing against 24.43% declines. However, the broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices up by 0.80% and 1.37% respectively. 

The top gaining sectoral indices on the BSE were, IT up by 2.79%, TECk up by 2.28%, Healthcare up by 1.00%, Consumer Durables up by 0.88% and Realty up by 0.61% while FMCG down by 0.60%, Metal down by 0.41%, Capital Goods down by 0.26%, Oil and Gas down by 0.19% and Auto down by 0.15% was the top losers on the sectoral index.

The top gainers on the Sensex were Infosys up by 5.32%, Wipro up by 2.10%, GAIL up by 1.73%, Cipla up by 1.61% and SBI up by 1.31%. On the flip side, SSLT was down by 1.33%, HDFC was down by 1.12%, L&T was down by 1.09%, HUL was down by 1.08% and Bajaj Auto was down by 1.02% were the top losers on the Sensex.

Meanwhile, in a disappointment to the fertilizer companies, the fertilizer ministry has clarified that so far there has been no proposal of urea price hike. The clarification came on the heels of the rumors suggesting of government considering a proposal for raising urea prices by at least 10%, in order to contain huge subsidy costs that are straining the budget. As per reports, two options of price hike were being considered, with the first one being of price hike included in the budget announcements in July and the other one being approved by the Cabinet.

Though, as per the fertilizer ministry urea price hike is inevitable given a marginal increase in urea price over a decade and projected rise in the fertilizer subsidy bill after a potential natural gas rate hike. Nevertheless, the ministry suggested that issue of price hike would be deliberated upon once the gas price hike have been announced and implemented.

Urea, the most used crop nutrient, is a controlled commodity, whose maximum retail price (MRP) is fixed at Rs 5,360 per tonne. The government pays manufacturers the difference between cost of production and MRP. The commodity’s hike depends much upon the natural gas price hike as natural gas accounts for as much as 65% of urea production costs in India. Meanwhile, Fertilizer plants collectively are the biggest consumer of domestically produced gas, which supplies of 31.5 million standard cubic meters of the fuel daily.

Notably, country's urea production has stagnated at 22 million tonnes since 2007-08, while current demand is about 30 million tones, leaving a shortfall of 8 million tones, which is met through imports, as no urea capacity has been added in India in the past almost 13 years.

In the interim budget, UPA government’s proposal to keep the fertiliser subsidy for 2014-15 about the same level as the previous financial year, drew sharp criticism from the industry, facing a liquidity crunch because of delayed subsidy payments.

The CNX Nifty opened at 7,672.40; about 16 points higher as compared to its previous closing of 7656.40, and has touched a high and a low of 7,676.40 and 7,636.50 respectively. The index is currently trading at 7,660.75, up by 4.35 points or 0.06%. There were 26 stocks advancing against 24 declines on the index.

The top gainers of the Nifty were Infosys up by 5.17%, Grasim up by 2.01%, Wipro up by 1.96%, Tech Mahindra up by 1.64% and Cipla up by 1.40%. On the flip side, HDFC down by 1.57%, HUL down by 1.43%, Bajaj Auto down by 1.42%, SSLT down by 1.36% and L&T down by 1.26% were the major losers on the index.

Asian equity indices were trading mostly in the red; Hang Seng slipped 91.68 points or 0.39% to 23,224.06, Straits Times decreased by 7.49 points or 0.23% to 3,286.33, Shanghai Composite declined 5.19 points or 0.25% to 2,047.35 and FTSE Bursa Malaysia KLCI was marginally in red by 0.09 points to 1,876.52.  On the flip side, Nikkei 225 spurted by 48.39 points or 0.32% to 15,043.19, KOSPI Index increased 1.55 points or 0.08% to 2,013.35 and Jakarta Composite was up by 1.49 points or 0.03% to 4,947.58.