Indian equities trim gains; Nifty above 5,350 mark

Indian equities pared gains but continue to trade in green in the late afternoon session. The key benchmarks trimmed gains as profit booking emerged at higher levels. The weakness in international crude prices and positive development on the global front has supported the local markets to move higher for the day. Traders were seen piling up positions in Realty, Bankex and Metal sector while selling was witnessed in IT and FMCG sector. However, all eyes are set for tomorrow, February 29, 2012, when the government will announce Q3 December 2011 gross domestic product (GDP) data. The GDP growth stood at 6.9% in Q2 September 2011, the slowest in over two years. In the scrip specific development, Tea stocks Jay Shree Tea & Industries, Harrisons Malayalam, Diana Tea Company, McLeod Russel (India), Tata Global Beverages, Duncans Industries, Goodricke Group and Warren Tea were seen trading firm in green on reports that consumers may have to pay about 10-15% more for tea soon as wholesale prices rise on the back of a faltering supply. Bank of Maharashtra was seen trading in green after the board of the public sector bank has approved issue of equity shares to Government of India and Life Insurance Corporation of India on preferential basis at a premium to current market price. JP Associates is firm after receiving shareholders nod to hive off cement biz. The shareholders and creditors have approved the hiving off of the cement business to a wholly-owned subsidiary, Jaypee Cement Corporation. Gravita India was trading in green on announcing stock split plans of its shares. On the global front, Asian markets were trading in green barring KLSE Composite while the European markets were too trading in green on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,350 and 17,700 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 2047:719 while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 17,712.69, up by 266.94 points or 1.53% and has touched a high and low of 17,768.97 and 17,530.44 respectively. There were 26 stocks advancing against just 4 declines on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 2.74% while Small cap index was up by 2.36%.

Barring IT and FMCG sector which was marginally down by 0.55% and 0.11% respectively, rest all sectoral gauges on the BSE were in green. The top performing were Realty up by 4.41%, Bankex up by 3.64%, Metal up by 3.20%, Auto up by 3.06% and Consumer Durables (CD) up by 3.04%.

BHEL up by 5.69%, SBI up by 5.54%, Hindalco Industries up by 5.29%, Tata Motors up by 4.96% and Sterlite Industries up by 4.41% were the major gainers on the Sensex, while TCS down 2.10%, ITC down by 0.61%, Infosys down by 0.26% and NTPC down 0.11% were the only losers in the index.

Meanwhile, sharp rise in the prices of petrol, diesel and liquefied petroleum gas (LPG) cylinders can be expected after the conclusion of the Assembly polls in the five States. With the volatile international crude oil prices exerting pressure on the oil companies’ balance sheets, the government may be forced to hike prices before the start of the parliament session on March 12.

Tensions between the United States and Iran coupled with latest European Union sanctions against Tehran have ignited the crude oil markets worldwide. The Indian crude oil basket touched a new high of $123 per barrel on February 27. However, the Oil Marketing Companies (OMC) has not been able to revise prices due to the crucial assembly elections in states such as Uttar Pradesh, Punjab and Uttarakhand.

Even though petrol prices were deregulated by the government in June 2011, any change in them has to be approved by the EGoM. The prices, which are supposed to be recalibrated every fortnight, haven’t been changed since December 01, 2011 keeping in view the assembly elections.

The oil industry claims to have lost about Rs 900 crore since the last revision. Besides petrol, State-owned oil firms are losing Rs 12.77 per litre on diesel, Rs 30.21 a litre on kerosene and Rs 378 per 14.2-kg domestic LPG cylinder. Indian Oil Corp., Bharat Petroleum and Hindustan Petroleum are losing over Rs 410 crore a day on sale of diesel, domestic LPG and kerosene.

With the government’s subsidy bill threatening to go out of control and the OMCs suffering huge losses, pressure is mounting on the government to bring in a sharp hike in prices of petrol, diesel and LPG. If it comes through, the hike in petrol prices is expected to be around Rs 4 per litre, as per government officials. Cooking gas prices too could go up by Rs 70 per cylinder and diesel by about Rs 5 per litre.

The S&P CNX Nifty is currently trading at 5,371.90, higher by 90.70 points or 1.72% and has touched a high and low of 5,384.20 and 5,306.45 respectively. There were 42 stocks advancing against just 8 declines on the index.

The top gainers on the Nifty were Reliance Infrastructure up by 8.37%, JP Associates up by 6.15%, IDFC up 5.79%, SBI up by 5.75% and BHEL up by 5.66%. Cairn India down by 3.18%, TCS down by 2.36%, BPCL down by 1.33%, HCL Tech down by 0.77% and ITC down by 0.49% were the major losers on the index.

In the Asian space, Hang Seng ascended 1.65%, Jakarta Composite added 1.00%, Nikkei 225 jumped 0.92%, Straits Times advanced 0.68%, Seoul Composite gained 0.63% and Shanghai Composite advanced 0.20%. On the flipside, KLSE Composite inched down 0.20%, while Taiwan remained closed.

The European markets were trading in green with, France’s CAC 40 ascended 0.38%, Germany’s DAX added 0.66% and Britain’s FTSE 100 jumped 0.36%.