Indian equities continue northward journey; Nifty above 4,700 level

Indian equities continued its firm trade in the late afternoon session as consistent buying across the board helped market to lock its morning gains. Traders were seen piling up position in Metal, Capital Goods and Realty sector. Tata Steel, Jindal Steel, Sterlite, Hindalco, SesaGoa and SAIL from Metal pack were seen trading firm in green helping the markets edge higher. L&T and BHEL from Capital Goods space was trading with gain of around more than three to four percent pulling the markets up. Industry heavyweights RIL is too trading firm in green with gain of around more than two percent giving the much needed support. Investors’ sentiments got buoyed on getting an encouraging manufacturing activity data which showed that the sector resiliently bounced in the month of December. However, BPCL, M&M, Hero MotoCorp, Ambuja Cement and ACC were trading weak in red exerting pressure on the markets.

In the scrip specific development, TV18 Broadcast & Network 18 and Network18 Media & Media Investments were locked in upper circuit on reports that Reliance Industries - Flagship Company of Mukesh Ambani group - will invest Rs 1,500 crore in the TV18 group. Three state-run oil marketing companies HPCL, BPCL and IOC were trading in red after government yesterday did not allow them to hike petrol price following the parliamentary debacle last week and the impending polls in five states. On the global front, all Asian markets traded in green on optimistic note while the European markets were trading in mix. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 4,700 and 15,800 levels, respectively. The market breadth on BSE was dominantly in favor of advances in the ratio of 1869:723 while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 15,846.69 up by 328.77 points or 2.12% after trading as high as 15,872.72 and as low as 15,640.56. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on optimistic note; the BSE Mid cap index surged 1.91% while Small cap soared 1.86%.

On the BSE sectoral space, Metal up 3.99%, Capital Goods up 3.67%, Realty up 3.36%, Bankex up 3.31% and PSU up 2.68% were the major gainers while there were no losers in the space.

DLF up 4.83%, Tata Steel up 4.77%, Coal India up 4.76%, Jindal Steel up 4.73% and Tata Power up 4.48% were the major gainers on the Sensex, while Mahindra & Mahindra down 1.69% and Hero MotoCorp down 0.47% were the only loser in the index.

Meanwhile, a move which could hamper the overseas sales of iron ore raw material, the government has raised the ad valorem duty on iron ore exports to 30% from 20%. On the other hand, this decision is likely to enrich the cash-strapped government and also iron-ore producers who can now choose domestic players rather than export, due to higher taxes.

Federation of Indian Mineral Industries’ Secretary-General R K Sharma said, the government has further hiked the export duty on iron ore to 30 percent on December 30. This will make Indian iron ore totally uncompetitive in the world market. By adding further he said, ‘iron ore exports are already down by around 30 percent during the April-November period of the current financial year over the same period last fiscal. It will be far more challenging next year.’

Duty on overseas sales of iron ore was raised for the second time in 10 months to increase the availability of the key raw material for the domestic steelmakers. The government had raised the export duty on both lumps and fines to 20% in the budget for the current financial year to check the random export of the key steel-making raw material and support domestic value addition.

India, the world's third largest iron ore exporter, had shipped 117.3 million tonnes of iron ore in 2009-10 and 70-80% of this was in the form of fines, which do not have many takers among domestic steel makers. In 2010-11, iron ore exports from the country came down to 97.64 million tonnes and in the first eight months of the current financial year, exports plunged by a little over 28% to 40 million tonnes compared to the corresponding period last fiscal.

Apart from the duty hike, the fall in overseas sale of iron ore was due to a number of reasons, including the imposition of a ban on exports of the raw material from Karnataka since July, 2010, following accusation of widespread illegal mining. Further, production of iron ore in around 45 mines in Goa has also been shut down due to environmental reasons. An informal export ban is also in place in Odisha.

Concerned over the ruthless shortage of iron ore after the ban on mining in Karnataka, Steel Minister Beni Prasad Verma had written to the finance ministry last September for raising the export duty on iron ore to 30% to discourage exports.

The S&P CNX Nifty is currently trading at 4,735.10, higher by 98.35 points or 2.12% after trading as high as 4,744.40 and as low as 4,675.80. There were 45 stocks advancing against 5 declines on the index.

The top gainers on the Nifty were Kotak Bank up 6.44%, DLF up 5.36%, Tata Steel up 4.88%, Coal India up 4.77% and Tata Power up 4.65%.

BPCL down 2.72%, M&M down 2.21%, Hero MotoCorp down 1.40%, Ambuja Cement down 1.12% and ACC down 0.44% were the only losers on the index.

Asian markets traded on an optimistic note; Hang Seng soared 2.40%, Jakarta Composite climbed 0.91%, Straits Times amassed 1.64%, Seoul Composite spurted 2.69% and Taiwan Weighted surged 1.46%. Stock markets in China and Japan remained closed for extended New Year’s holiday.

The European markets traded on a mix note, France’s CAC 40 dropped 0.60%, Germany’s DAX jumped 0.91% and Britain’s FTSE 100 ascended 1.25%.