P-Notes clarification lifts benchmark indices high

Indian equities extend gains and made a smart recovery to continue firm trade in the late afternoon session on getting clarification on Participatory Notes (P-Notes) coupled with buying in frontline indices. The optimism crept in on reports that under the new GAAR regulations, the Government will not target Participatory Notes in its newly proposed rules targeting tax avoidance. Traders were seen piling up position in Consumer Durables (CD), FMCG and Realty sector. HUL and ITC from FMCG sector were seen trading in green pushing the markets up. DLF from Realty counter was seen trading with gain of around three and half percent pulling the markets up. Industry heavyweight RIL was seen trading in green giving the much needed support. In the scrip specific development, Tata Metaliks was trading firm after its board approved an issue of preference shares worth Rs 100 crore to its promoter Tata Steel. Delta Corp is firm after Goa government on Monday, March 26, 2012, reduced the entry fee to offshore casinos to Rs 500 from Rs 2000 earlier. Nalco is trading firm after Minister of State for Finance stated that the government is actively considering a 10% stake sale in the company. Reliance Infrastructure rose on reports that the company is planning to raise Rs 365 crore through non-convertible debentures, or NCDs.

On the global front, Asian markets were trading in green barring Shanghai Composite while the European markets were too trading in green on optimistic note. German Chancellor Angela Merkel stated that Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. Besides, European finance ministers will hold a meeting on March 30, 2012 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region's financial firewall. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,250 and 17,200 levels respectively. The market breadth on BSE was in favor of declines in the ratio of 1198:1545 while 127 scrips remained unchanged.

The BSE Sensex is currently trading at 17,264.53, up by 211.75 points or 1.24% after touching a high and low of 17,366.84 and 17,061.16 respectively. There were 25 stocks advancing against 5 declines on the index.

The broader indices were too trading on a firm note; the BSE Mid cap index was up by 0.17% while Small cap index gain 0.13%. On the BSE sectoral space, Consumer Durables up by 1.90%, FMCG up by 1.67%, Realty up by 1.67%, TECk up by 1.44% and IT up by 1.20% were the major gainers. On the flip side, there were no losers.

Cipla up by 4.10%, Sterlite Industries up by 3.74%, DLF up by 3.67%, HUL up by 3.08% and Bharti Airtel up by 2.99 were the major gainers on the Sensex, while Maruti Suzuki down by 1.39%, Coal India down by 1.08%, BHEL down by 0.97%, NTPC down by 0.36% and Gail India down by 0.18% were the major losers in the index.

Meanwhile, India’s steel production has increased by 6.8% to 63.894 million tonnes in the period April-January of this fiscal, as compared to the same period last year. Further, steel production during the entire 2010-11 fiscal was 66.013 million tonnes, up 8.8% over 60.624 million tonnes in 2009-10, as per the country's steel minister, Beni Prasad Verma.

India has been a net importer of steel during the last three years and the trend has continued so far in the current fiscal as well. During the April-January period of the current fiscal, India imported 5.59 million tonnes finished steel against 3.45 million tonnes over the corresponding period last year. In 2010-11, steel exports stood at 3.46 million tonnes compared to 6.79 million tonnes of imports.

The government has taken various steps to maintain steady supply position in the domestic market and also to boost steel production in the country. It has increased export duty on iron ore exports to 30% and brought import duty on raw materials such as coking coal and steel melting scrap to zero.

Steel prices in the country are deregulated and hence it is decided by the individual producers based on various market conditions such as demand-supply scenario, movement in international steel prices, cost of raw materials and other input costs.

The S&P CNX Nifty is currently trading at 5,250.50, up by 66.25 points or 1.28% after trading in a range of 5,277.95 and 5,184.65. There were 38 stocks advancing against 12 declines on the index.

The top gainers on the Nifty were Cipla up by 4.46%, DLF up by 3.73%, Sterlite Industries up by 3.70%, Sesa Goa up by 3.44% and HUL up by 2.88%.

Ambuja Cement down by 1.43%, Maruti Suzuki down by 1.28%, BHEL down by 0.87%, Coal India down by 0.74% and ACC down by 0.66% were the major losers on the index.

All the Asian markets barring, Shanghai Composite that eased 0.15%, were trading in green. Hang Seng surged by 1.83%, Jakarta Composite was up by 1.01%, Nikkei 225 zoomed by 2.36%, KLSE Composite rose 0.27%, Straits Times was up by 1.38%, Seoul Composite added 1.02% and Taiwan Weighted was up by 0.78%.

The European markets have extended their gains with a positive start, France’s CAC 40 added 0.71%, Germany’s DAX ascended 0.87% while Britain’s FTSE 100 was up by 0.49%.