Markets trade with marginal gains in early deals

After falling over two percent in the last session, Indian equity markets have made a gap-up opening and pared most of their gains, are now trading with marginal gains in early deals. Positive trade in other Asian markets also supported the sentiments after a rebound in China stocks post the sharp sell-off in the previous session. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 667.15 crore on 4 January 2016, as per provisional data released by the stock exchanges. Further, retail inflation for farm labourers and rural workers in November rose to 4.92 percent and 5.02 percent, respectively, due to increase in prices of food items that also kept pressurizing the markets. On the sectoral front, traders were seen piling up position in Oil & Gas, Capital Goods, Power, Realty and Metal, while selling was witnessed in Consumer Durables, FMCG, IT, Bankex and TECK.

In the scrip specific development, Siti Cable Network has surged 13% to Rs 41.70, on the BSE, after the Reserve Bank of India (RBI) raised foreign institutional investors' (FIIs) investment limit.

On the global front, the US markets ended lower, putting the Dow on track for its worst start to a year since 1932 after weak Chinese economic data fanned fears of a global slowdown.  Asian markets were mostly trading in green with some of the markets erasing early losses after the Chinese market advanced in volatile trade following the previous session's sell-off. However, worries about global economic growth and rising geopolitical tensions in the Middle East weighed on investor sentiment.

Back home, the NSE Nifty and BSE Sensex were trading above the psychological 7,800 and 25,650 levels respectively. The market breadth on BSE was positive in the ratio of 1426: 686 while 77 scrips remained unchanged.

The BSE Sensex is currently trading at 25659.41, up by 36.06 points or 0.14% after trading in a range of 25637.53 and 25766.76. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.24%, while Small cap index up by 0.50%.

The gaining sectoral indices on the BSE were Oil & Gas up by 0.74%, Capital Goods up by 0.65%, Power up by 0.63%, Realty up by 0.63% and  Metal up by 0.58% while, Consumer Durables down by 0.19%, FMCG down by 0.17%, IT down by 0.13%, Bankex down by 0.08% and TECK down by 0.07% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.35%, GAIL India up by 1.36%, ONGC up by 1.34%, Asian Paints up by 1.11% and BHEL up by 0.91%. On the flip side, SBI down by 0.61%, Coal India down by 0.61%, Axis Bank down by 0.60%, Infosys down by 0.52% and Hindustan Unilever down by 0.49% were the top losers.

Meanwhile, the fertilizer industry in a pre-budget meeting with Finance Minister has pitched for direct transfer of urea subsidy to farmers and clearance of its arrears, which are pegged at Rs 50,000 crore by the end of the current fiscal. Besides, the industry has also made a case for decanalisation of urea to allow fertiliser companies to directly import urea as against the current practice where only three canalising agencies import the crop nutrient.

The industry is under tremendous stress due to subsidy arrears. So, the government must allocate an additional Rs 15,000 crore for the next three years towards fertilizer subsidy, pegging the total subsidy at Rs 90,000 crore per year.

Stressing for direct transfer of fertilizer subsidy to farmers, the industry has expressed willingness to work with government on this initiative. It will provide all the data required for direct transfer of subsidy to the government. The industry thinks that this is the opportune time for such a policy change since cost of production of Indian urea is about the same as price of imported urea. Excessive use of urea due its lower retail price is impacting soil health and subsequently farmers, and argued for curbs.

Urea is a controlled commodity and is being sold at Rs 5,360 per tonne, with the difference between cost of production and selling price being taken care of as subsidy to manufacturers. Subsidy on urea constitutes almost 70 per cent of the total production cost. India's annual demand for urea is about 30 million tonnes, while domestic production remains stagnant at 22 million tonnes. The rest is met through imports.

The CNX Nifty is currently trading at 7800.85, up by 9.55 points or 0.12% after trading in a range of 7783.20 and 7831.20. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 2.43%, Hindalco up by 1.61%, GAIL India up by 1.43%, ONGC up by 1.41% and Vedanta up by 1.29%. On the flip side, Bank Of Baroda down by 1.26%, PNB down by 1.15%, Hindustan Unilever down by 0.79%, Coal India down by 0.61% and Infosys down by 0.49% were the top losers.

Asian markets were trading mostly in green, Shanghai Composite increased 13.67 points or 0.41% to 3,309.92, FTSE Bursa Malaysia KLCI increased 17.09 points or 1.03% to 1,670.46, KOSPI Index increased 17.16 points or 0.89% to 1,935.92, Jakarta Composite increased 51.93 points or 1.15% to 4,577.84 and Nikkei 225 increased 76.37 points or 0.41% to 18,527.35.

On the flip side, Hang Seng decreased 13.22 points or 0.06% to 21,313.90 and Taiwan Weighted decreased 6.14 points or 0.08% to 8,108.12.