Markets trade with strong gains; Nifty touches 5,500 level

Benchmarks extended early gains and trading at high point of the day being the gainers of this year in Asian markets over laggards of last year with sustained buying almost across the board. The Nifty touched the 5,500 level for the first time since August 1, 2011, while BSE Sensex rose over 1.75%. On sectoral front, rate sensitive auto, realty and metal were in strong position while only oil sector remained in the negative territory. Meanwhile impressive results from some top notch companies, including Tata Motors, and expectations of a rate cut from the central bank following a significant drop in headline inflation were also contributing to the upbeat mood on the Indian bourses. On the global front, Asian shares also remained bullish on reports that the Chinese government has pledged his support to pull Europe out of its debt crisis. Back home, the market breadth favoring the positive trend; there were 1,799 shares on the gaining side against 811 shares on the losing side while 113 shares remained unchanged.

The BSE Sensex is currently trading at 18,153.42, up by 304.85 points or 1.71%. The index has touched a high and a low of 18,154.06 and 18,000.30 respectively. There were 28 stocks advancing against just 2 declining ones on the index.

The broader indices too were outperforming frontline equity indices; the BSE Mid cap and Small cap indices surged by 1.76% and 1.20% respectively.

The top gaining sectoral indices on the BSE were, Auto up by 3.80%, CG up by 3.54%, Realty up by 3.39%, CD up by 2.53% and Power up by 2.18%, while Oil & Gas down by 0.06% was the only loser on the BSE sectoral space.

The top gainers on the Sensex were Tata Motors up by 6.91%, Sterlite Industries up by 4.53%, L&T up by 4.49%, M&M up by 3.84% and DLF up by 3.79%. On the flip side, RIL down by 0.90% and HUL down by 0.27% were the only losers on the Sensex.

Meanwhile, the government is likely to reduce further the subsidy on non-urea imports in the wake of falling international prices and a strengthening rupee. Consumers can expect prices of fertilisers like di-ammonium phosphate (DAP) and muriate of potash (MoP) to rise. Earlier in April 2010, the prices of phosphatic and potassium fertilisers like DAP and MoP was freed from the government control, even though it continues to offer subsidy to keep prices down. This is done to keep the prices low.

However last month, the inter-ministerial committee (IMC) had decided to reduce the subsidy on DAP and MoP to Rs 15,000 a tonne for the 2012-13 fiscal from the existing level of Rs 19,763 a tonne and Rs 16,054 a tonne, respectively. The IMC still feels that there is more room for subsidy cuts due to falling international prices and a stronger rupee. Therefore in its meeting held early this month, it was decided to reduce the subsidy further to Rs 14,350 a tonne on DAP and Rs 14,400 a tonne on MoP.

The new subsidy rates shall be applicable for 2012-13 and are subject to the Cabinet clearance. India imports almost half of its requirement of DAP and almost entire requirement of MoP. Retail price of DAP is ruling at around Rs 20,000 per tonne and MOP is available at Rs 12,000 per tonne. The subsidy is benchmarked against the global prices. So, if international rates are coming down, subsidy too has to be reduced.

The S&P CNX Nifty is currently trading at 5,510.70, higher by 94.65 points or 1.75%. The index has touched a high and a low of 5,513.10 and 5,460.60 respectively. There were 48 stocks advancing against just 2 declines on the index.

The top gainers of the Nifty were Tata Motors up by 6.90%, JP Associates up by 6.10%, Sterlite Industries up by 4.69%, L&T up by 4.65% and Axis Bank up by 4.52%. On the flip side, Reliance Industries down by 1.04% and HUL down by 0.57% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite up by 0.80%, Hang Seng surged by 2.06%, Nikkei 225 added 2.45%, Straits Times rose 0.69%, Seoul Composite expanded by 1.08% and Taiwan Weighted zoomed 1.54%.

On the flip side, Jakarta Composite down by 0.17% was the lone loser amongst the Asian pack.