Benchmarks trade flat on profit booking

A day after a strong rally triggered by a buoyed by encouraging global manufacturing activity reports, domestic benchmarks have stalled their rally and are trading flat as investors opted to book profits. However, global cues remained supportive as the US markets surged on the start of a new trading year after a gauge of US manufacturing hit a six-month high while, most of the Asian peers were trading in the positive terrain at this point of time. Back home, profit-booking by participants at improved levels led to a fall in stock prices but firming trend on the other Asian bourses following overnight gains at the US market capped the losses. Meanwhile, telecom stocks were reeling under pressure as the telecom department plans to impose penalties totaling Rs 1,594 crore on five mobile phone companies for allegedly understating revenues and hence paying lower revenue share during 2006-07 and 2007-08. Stocks like Bharti Airtel, Idea Cellular and Reliance Communication were trading with a cut of 1-2 percent. However, the broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 858 shares on the gaining side against 509 shares on the losing side while 56 shares remained unchanged.

The BSE Sensex opened at 15,967.49; about 28 points higher compared to its previous closing of 15,939.36, and has touched a high and a low of 15,967.49 and 15,887.38 respectively.

The index is currently trading at 15,937.15, down by 2.21 points or 0.01%. There were 11 stocks advancing against 19 declines on the index.

The overall market breadth has made a positive start with 60.30% stocks advancing against 35.77% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.38% each.

The top gaining sectoral indices on the BSE were, CD up by 1.53%, PSU up by 1.18%, CG up by 0.84%, Metal up by 0.38% and Power up by 0.36%. While, FMCG down by 0.24%, Auto down by 0.11%, TECk down by 0.10%, Bankex down by 0.06% and Realty down by 0.03% were the top losers on the index.

The top gainers on the Sensex were BHEL up by 2.68%, Tata Motors up by 2.11%, ICICI Bank up by 1.66%, Wipro up by 1.36% and ONGC up by 0.61%.

On the flip side, Bharti Airtel was down by 1.84%, M&M was down by 1.72%, HDFC Bank was down by 1.51%, Hero MotoCorp was down by 1.44% and Tata Power was down by 1.35% were the top losers on the Sensex.

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 opened at 4,774.95; about 9 points higher compared to its previous closing of 4,765.30, and has touched a high and a low of 4,777.05 and 4,746.80 respectively.

The index is currently trading at 4,765.95, up by 0.65 points or 0.01%. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were BHEL up by 3.69%, SAIL up by 2.63%, Tata Motors up by 2.47%, Wipro up by 1.90% and ICICI Bank up by 1.89%.

On the flip side, BPCL down by 1.99%, Bharti Airtel down by 1.95%, M&M down by 1.72%, ACC down by 1.59% and Ambuja Cement down by 1.58%, were the major losers on the index.

Most of the Asian markets were trading in the green; Jakarta Composite was up 59.99 points or 1.55% to 3,917.87, Nikkei 225 was up 112.01 points or 1.32% to 8,567.36, Straits Times was up 14.38 points or 0.53% to 2,702.74, Seoul Composite was up 0.35 points or 0.02% to 1,875.76 and Taiwan Weighted was up 28.85 points or 0.41% to 7,082.23.

On the flip side, Shanghai Composite was down 4.75 points or 0.22% to 2,194.67 and Hang Seng was down by 54.73 points or 0.29% to 18,822.68.