Markets pare early gains; still trades in green

The Indian equity indices have pared their early gains in the late morning trade but still manage to trade in green. Though the consumer durables, metal and IT stocks are holding the gains but the sharp decline in some rate sensitives like realty and banking has weighed down the sentiments. The result announcements are keeping the markets buzzing and the indices are mostly reacting to them. Sesa Goa on consolidated basis has posted a drop of 35.09% in its net profit to Rs 691.52 crore for the quarter ended December 31, 2011.PTC India Financial Services has reported total revenue of Rs. 94.07 crores and PAT of Rs 57.90 crores in Q3 FY12. Though the broader markets are holding gains but there is weakness in the pharma stocks with index heavyweight Ranbaxy plunging over 5 percent after the company announced court filing of consent decree with US FDA. Ranbaxy agreed to make broad changes at its plants in US & India as part of a US government probe.

The BSE Sensex is currently trading at 17,133.87, up by 56.69 points or 0.33%. The index has touched a high and a low of 17,258.97 and 17,106.57 respectively. There were 16 stocks advancing against 14 declining ones on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap and Small cap indices were up by 0.38% and 0.88% respectively.

The top gaining sectoral indices on the BSE were, Consumer Durables (CD) up by 2.38%, Oil & Gas up by 1.91%, Metal up by 1.54%, TECk up by 1.51% and IT was up by 1.32%.

On the other hand, realty down by 1.77%, Bankex down by 1.27%, FMCG down by 0.46%, Capital Goods down by 0.25% and Power down by 0.05% were the losers on the index.

The top gainers on the Sensex were Sterlite Inds up by 3.12%, Bharti Airtel up by 2.94%, Tata Motors up by 2.86%, RIL up by 2.47% and Tata Steel was up by 1.93%.

On the flip side, Bajaj Auto down by 2.50%, BHEL down by 2.38%, DLF down by 2.12%, Hero MotoCorp down by 1.93% and SBI down by 1.78% were the losers on the Sensex.

Meanwhile, in pre-Budget memorandum to the ministries of finance and steel, ASSOCHAM Secretary General D.S. Rawat said that India should raise the duty on steel from the current 5% to 10% to protect the domestic iron and steel industry to keep the India growth story intact.

The ASSOCHAM secretary stated that there was a need to protect the domestic companies from dumping which came through China and the Commonwealth of Independent States (CIS) countries. He said that China and CIS countries possessed huge resources of coking coal and iron ore, making their products cheap. Any oversupply of steel products like hot rolled coils, cold rolled coils and other coated products was being dumped into growing markets like India.

India on the other hand, depended upon imports for its requirements. Further the coking coal prices in India had increased by more than 100% in the last one year and this had put additional burden on Indian steel manufacturers. (Nearly 50% of the steel manufacturing cost is on account of coking coal and 20% on iron ore). Faced by stiffer competition in terms of low prices, the Indian steel industry had reduced production and was running at lower capacity utilisation.

Justifying the cause further, Rawat said that it was common practice in the world for nations to protect their domestic producers by discouraging imports through imposition of a marginally higher import duty while encouraging exports by offering various incentives. China, for example, provided export incentives of nine% on steel products. After China, the United States and Europe, India ranked as the fourth largest steel producer with annual production capacity of 68 million tonnes. In the next two years, steelmaking capacity was set to expand by 15 to 20 million tonnes for meeting growth in demand of high-end consumer products like cars, refrigerators and washing machines. By 2020, the figure was likely to go up to 200 million tonnes. Rawat urged that raising import duty to a minimum of 10% would encourage the growth of domestic steel industry and ensure that India growth story is kept intact.

The S&P CNX Nifty is currently trading at 5,174.80, higher by 16.50 points or 0.32%. The index has touched a high and a low of 5,217.00and 5,162.40 respectively.  There were 23 stocks advancing against 27 declining ones on the index.

The top gainers of the Nifty were Sesa Goa up by 5.83%, SAIL up by 3.66%, Sterlite Inds up by 3.38%, Bharti Airtel up by 2.99% and Tata Motors was up by 2.92%

On the flip side, Ranbaxy down by 5.80%, BHEL down by 2.99%, Bajaj Auto down by 2.75%, kotak Bank down by 2.15% and DLF down by 2.03% were the major losers on the index.

Asian markets were trading mixed; Jakarta Composite gained 0.14%, and Seoul Composite rose 0.39%.

On the flip side, Straits Times lost 0.17%, Nikkei 225 slipped by 0.09% and Hang Seng was lower by 0.09%.

Stock markets in China and Taiwan remained closed on Friday in observance of Lunar New Year holiday.