Benchmarks continue to trade near day’s high in early noon session

Indian equity markets continue to trade near day’s high in early noon session on account of buying in frontline blue chip counters, as a sluggish US jobs data eased fears of a rate hike by the US Federal Reserve this year. A higher-than-expected interest rate cut by the Reserve Bank of India (RBI) last week continues to cheer the street. Appreciation in the rupee too supported the sentiments. Rising for the fifth day in a row, the rupee appreciated by 22 paise to trade at 65.28 against the US dollar in early trade today at the Interbank Foreign Exchange on increased selling of American currency by exporters.  Sentiments got some support with reports that the government may extend export incentives such as cheap credit to even large players in sectors like pharmaceuticals, chemicals and electronics. At present, Sensex and Nifty were trading above the crucial 26,600 and 8,050 levels respectively, with gains of  around 1.5%.  Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by over 1.20%.

On the global front, Asian markets were trading in green on expectations Beijing will take steps to accelerate growth and the U.S. Federal Reserve will hold interest rates steady for longer, while Japanese equities advanced after the release of mixed economic data. Back home, in scrip specific development, shares of Force Motors was trading up by 14.61 on back of heavy volumes after the exchange raised the circuit limit of the stock from 5% to 20% with effect from today. Tata Motors was trading up by 6.70% on reports that PSA Peugeot Citroen and Tata Motors are in talks to form a partnership that might result in Tata producing and distributing the French giant’s cars in the Indian market.

The BSE Sensex is currently trading at 26626.05, up by 405.10 points or 1.54% after trading in a range of 26375.31 and 26649.34. There were 23 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.29%, while Small cap index gained 1.23%.

The top gaining sectoral indices on the BSE were Capital Goods up by 2.55%, Bankex up by 2.16%, Auto up by 1.79%, Power up by 1.64%, Consumer Durables up by 1.32%, while there were no losers on the sectoral front.

The top gainers on the Sensex were Tata Motors up by 6.99%, HDFC up by 4.00%, ICICI Bank up by 3.29%, Larsen & Toubro up by 3.14% and TCS up by 2.67%. On the flip side, Maruti Suzuki down by 1.76%, Dr. Reddys Lab down by 0.99%, Lupin down by 0.76%, Coal India down by 0.73% and Infosys down by 0.61% were the top losers.

Meanwhile, in order to boost export of surplus sugar and help mills clear dues of over Rs 12,000 crore to farmers, the government is working on a new subsidy scheme which is to be implemented in the current 2015-16 marketing year starting this month.  The new scheme is being worked out as the domestic glut situation is expected to continue in view of sugar stocks of 10.20 million tonnes at the end of 2014-15 season, besides the industry projecting a surplus for the sixth straight year in 2015-16. The previous scheme, failed to boost shipments amid a global glut and the new scheme will be made more attractive. The Food Ministry has decided not to extend the scheme further for the current 2015-16 season. Instead, it is working on a new sugar export subsidy scheme.

Earlier, in a bid to clear the cane arrears to farmers, the government had rolled out a scheme providing subsidy for export of 4 million tonnes of the sweetener in the 2013-14 season (October-September). The government extended the scheme for export of 1.4 million tonnes of raw sugar in 2014-15. The subsidy was given up to Rs 4,000 per tonne. Under the scheme, mills managed to export only 1.15 million tonnes of sugar in these two seasons. The export subsidy scheme was not successful as very few millers took advantage of the incentive. The quantity of exports undertaken in 2014-15 was much lower than 7.5 lakh tonnes of raw sugar done under the export incentive scheme in the 2013-14 marketing year.

According to the government data, sugarcane arrears, which stood at Rs 21,000 crore in April this year, have come down to Rs 12,248 crore at the end of the 2014-15 season on account of a number of government measures such as the soft loan, hike in import duty and raising ethanol blending with petrol to 10 per cent so as to infuse liquidity into the sugar sector. According to a preliminary forecast by the Indian Sugar Mills Association, India's sugar output is expected to touch 28 million tonnes in 2015-16, compared with 28.30 million tonnes last year. Consumption is likely to go up to 25.2 million tonnes in 2015-16, from 24.50 mt last year

The CNX Nifty is currently trading at 8066.30, up by 115.40 points or 1.45% after trading in a range of 8005.10 and 8069.20. There were 41 stocks advancing against 9 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 6.70%, HDFC up by 4.26%, ICICI Bank up by 3.54%, Larsen & Toubro up by 3.11% and Tata Steel up by 2.73%. On the flip side, Maruti Suzuki down by 1.80%, Dr. Reddys Lab down by 1.12%, Lupin down by 0.79%, Coal India down by 0.62% and Infosys down by 0.52% were the top losers.

Asian markets were trading in green; KOSPI Index increased 6.99 points or 0.35% to 1,976.67, FTSE Bursa Malaysia KLCI increased 12.33 points or 0.76% to 1,641.13, Shanghai Composite increased 14.64 points or 0.48% to 3,052.78, Straits Times increased 41.81 points or 1.5% to 2,834.96, Taiwan Weighted increased 45.21 points or 0.54% to 8,350.24, Jakarta Composite increased 113.34 points or 2.69% to 4,321.14, Nikkei 225 increased 302.38 points or 1.71% to 18,027.51 and Hang Seng increased 350.52 points or 1.63% to 21,856.61.