After early spurt, Indian benchmarks trade in a narrow range in noon trades

Indian benchmark indices continue to trade with renewed vigor in the Friday afternoon session and are looking set to extend the northbound journey for the seventh straight week. The frontline indices after the gap up opening managed to capitalize on the momentum and sailed beyond the psychological 5,600 (Nifty) and 18,400 (Sensex) levels. However, the key indices could not hold on to those levels for long and slipped slightly. Since then the gauges continue to trade in a narrow range around those psychological levels as investors showed largely across the board buying interests. Stocks from the power sector continue to hog the limelight with hefty gains while the Consumer Durables and Capital Goods pockets too are not far behind. Meanwhile, stocks from the shipping sector like Great Eastern Shipping and Pipavav Defence and Offshore surged higher amid reports that Committee of Secretaries are likely to meet to discuss Shipping subsidy. Moreover, stocks from the information technology counters too gained traction after industry body Nasscom opined that the industry witnessed a CAGR of 17 percent during the five-year period of 2007-12 despite turmoil in the US and in European Union. For the next eight years, it has forecasted a CAGR of 13 percent to get to the targeted $225 billion by 2020 from $101-billion achieved this year. On the global front, Asian markets are trading on an optimistic note while European stock futures too are indicating a higher opening for the markets there as sentiments remain positive on reports that ECB had agreed to exchange Greek bonds they hold for new bonds as part of a deal to help the debt-strapped country while a slew of encouraging US economic reports too boosted investors’ confidence.

Moreover, the broader markets too traded with fervor and amassed around a percent gains, performing largely in line with their larger peers. The bourses surged on good volumes of over Rs 1 lakh crore while market breadth on BSE was in favor of advances in the ratio of 1677:1053 while 129 scrips remained unchanged.

The BSE Sensex is currently trading at 18,390.86 up by 236.87 points or 1.30% after trading as high as 18,423.06 and as low as 18,302.97. There were 19 stocks advancing against 11 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.91% and Small cap gained 1.04%.

On the BSE sectoral space, Power up 4.43%, Consumer Durables up 4.12%, Capital Goods up 3.65%, IT up 2.10% and Metal up 2.10% were the major gainers while Auto down 0.37% was the only loser in the space.

BHEL up 9.16%, Sterlite up 4.88%, Tata Power up 4.54%, SBI up 3.49% and DLF up 3.29% were the major gainers on the Sensex, while Maruti down 1.93%, Hero Moto down 1.67%, GAIL India down 1.35%, Bajaj Auto down 1.31% and Tata Motors down 0.98% were the major losers in the index.

Meanwhile, moving a step further towards implementing its decision to allow Indian airlines to import aviation turbine fuel directly, the Civil Aviation Ministry has written to the Commerce Ministry to take necessary steps to make the proposal feasible.

The government in a meeting of a Group of Ministers on aviation, headed by finance minister Pranab Mukherjee, last month, took a decision to allow national carriers to import ATF directly rather than having to buy it from the state governments. Fuel comprises of 40% of an airlines’ operating cost and the cash stripped airlines had been demanding that they be allowed to import fuel directly as the heavy taxes imposed by the states were making fuel costs unbearable.

Currently as per policy the Indian carriers have to purchase fuel locally from the state owned oil companies. Additionally the states also levy a sales tax varying from 4% to 30%, which makes the price of aviation turbine fuel 30% to 40% higher as compared to countries like Singapore, Japan, and those in the Gulf and in Europe. Hence cash-strapped Indian carriers, particularly Kingfisher, have been demanding allowing of direct imports.

Most of the Indian airlines owe substantial amounts to oil companies on account of jet fuel. Air India owes over Rs 4,170 crore to public sector oil companies in unpaid jet fuel bills, according to figures tabled in Parliament, while all other private carriers together have dues worth over Rs 2,000 crore. Flight schedules of airlines like Air India and Kingfisher have been disrupted on several occasions in the past few months due to these oil firms stopping ATF supplies due to non-payment of dues.

Since the days of Praful Patel, successive civil aviation minister, including incumbent Ajit Singh, have written to the chief ministers of all states to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers. However, most of the states have not responded favourably. Revenue from sales tax on ATF contributes only 0.5% to 2% of the total sales tax collection of the states. But for the airlines, it is almost 40% of the total operational cost, imposing a heavy burden on the beleaguered companies.

The decision is also likely to bring down the cost of working capital to the airlines, as suppliers’ credit on lower interest rates would become feasible.

The S&P CNX Nifty is currently trading at 5,593.60, higher by 71.65 points or 1.30% after trading as high as 5,606.70 and as low as 5,567.20. There were 35 stocks advancing against 15 declines on the index.

The top gainers on the Nifty were BHEL up 9.26%, R Power up 7.11%, Sterlite up 5.55%, Sesa Goa up 4.71% and Tata Power up 4.56%.

BPCL down 2.45%, Maruti down 2.28%, Hero Moto down 1.77%, Bajaj Auto down 1.39% and Cairn down 1.36% were the major losers on the index.

In the Asian space, Hang Seng climbed 0.60%, Jakarta Composite advanced 0.64%, KLSE Composite gained 0.42%, Nikkei 225 jumped 1.58%, Straits Times added 0.31%, Seoul Composite surged 1.30% and Taiwan Weighted amassed 0.31%.

On the flipside only Shanghai Composite slipped 0.02%.