Benchmarks extend gains; trade near intra-day high level

Indian equity benchmarks extended early gains to continue firm trade in late morning session, hovering near intra-day high level amid a rally in Realty, Capital Goods and PSU stocks. Moreover, increased buying by funds and retail investors supported by fall in global crude oil prices after fading of fears about supply disruption in the wake of Iraq crisis also influenced the trading sentiments. Snapping its four-day losing streak, Sensex and Nifty were now trading above the crucial 25,300 and 7,550 levels respectively, with gains of over 0.80%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1.30%. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 214.49 crore on June 23, 2014.

Meanwhile, shares of sugar companies continued their upward march for the second day in a row, after the government announced various measures to help the sector. Shares of Oil & gas companies were trading higher on report that the government may hike gas prices to $5.5-6.8/unit from $4.2/unit. Moreover, stocks related to textile space too edged higher as Union Textiles Minister Santosh Kumar Gangwar has said that textile exports are set to touch $50-billion mark in the current fiscal.  In scrip specific development, Ceat extend its gains after the overseas investor has bought equity shares worth of Rs 13 crore of the company though open market. Moreover, IRB Infrastructure Developers were trading higher by 4% after the company has entered into a pact with National Highways Authority of India for an Rs 2,300 crore project.

Markets are likely to remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month June series to July series. On the global front, Asian markets were trading higher as improved manufacturing data from China, Japan and the United States augured well for global growth, despite a disappointing result from the euro zone. However, Wall Street indices took a breather on Monday ending the longest winning streak since April. Back home, after two days of losses, the rupee has recovered by 9 paise to 60.11 against the US dollar in early trade on increased selling of the American currency by exporters amidst fall in global crude oil prices. The market breadth on BSE was positive, out of 2287 stocks traded, 1629 stocks advanced, while 572 stocks declined on the BSE.

The BSE Sensex is currently trading at 25332.24 up by 300.92 points or 1.20% after trading in a range of 25336.06 and 25115.83. There were 27 stocks advancing against 3 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.30%, while Small cap index gained 1.50%.

The top gaining sectoral indices on the BSE were, Realty up by 2.01%, Capital Goods up by 1.99%, India Infrastructure Index up by 1.95%, PSU up by 1.57% and Power up by 1.56%, while IT down by 0.06% was the lone loser on the sectoral index.

The top gainers on the Sensex were GAIL up by 4.36%, L&T up by 2.53%, Axis Bank up by 2.21%,  HDFC up by 2.17% and SBI up by 2.06%. On the flip side, Infosys was down by 0.61%, Wipro was down by 0.16% and Sun Pharma was down by 0.14% were the few losers on the Sensex.

Meanwhile, in order to curb the inflow of cheaper sweetener, the government has decided to hike the import duty on sugar to 40 percent from the current 15 percent. The move is likely to increase the sugar prices up to Rs 60 per quintal in the country. Besides, the government will provide additional interest-free loan of Rs 4,400 crore to cash-starved sugar mills to make payments to cane farmers. The decision was taken after a high-level meeting attended by various ministers including Food Minister Ram Vilas Paswan and Commerce & Industries Minister Nirmala Sitharaman among others.

Food Minister Ram Vilas Paswan also announced that the subsidy on raw sugar exports would be extended till September 2014. Furthermore, mandatory blending of ethanol (a by-product of sugar) with petrol was also enhanced to 10 percent as against 5 percent at present. However, Food Minister cleared that all these decisions were subject to the sugar industry's guarantee that it would clear all arrears estimated at around Rs11,000 crore. The government’s latest decision is likely to provide impetus to Indian sugar industry through making imports costlier and improving the liquidity of sugar mills.

India, the second largest producer of sugarcane after Brazil, holds about 5 million hectares of land under sugarcane with an average yield of around 70 tonne per hectare. India produced 25.14 million tonnes of sugar in the crop season ended September 30, 2013, almost 4.5% less than the previous year's because of low rainfall in Maharashtra, Karnataka and Tamil Nadu in 2012. The Indian Sugar Mills Association (ISMA) has estimated Indian sugar production at 24 million tonnes for 2013-14.

The CNX Nifty is currently trading at 7,578.45 up by 85.10 points or 1.14% after trading in a range of 7,580.05 and 7,515.20. There were 42 stocks advancing against 8 declining on the index.

The top gainers of the Nifty were GAIL up by 4.46%, Bank of Baroda up by 3.07%, NMDC up by 3%, BPCL up by 2.82% and PNB up by 2.70%. On the flip side, Infosys down by 0.68%, Cairn down by 0.67%, Tech Mahindra down by 0.47%, HCL Tech down by 0.40% and Sun Pharma down by 0.37% were the major losers on the index.

Asian equity indices were trading in the green; Nikkei 225 soared 0.19%, Hang Seng surged by 0.43%, KOSPI Index improved by 1.04%, Straits Times increased 0.20%, Jakarta Composite gained 0.36%, Shanghai Composite climbed by 0.46%, FTSE Bursa Malaysia KLCI spurted by 0.12% and Taiwan Weighted was up by 0.19%.