Sensex shoots up to day’s highs on positive European market opening

Stock markets in Indian continued to display sanguine trends in the afternoon trades of the last session of this financial year. The fresh futures and options series has got a promising start and the frontline indices continue to build on the momentum after concluding the March series with around six percent decline and also registering the first negative close since November 2011. The benchmark equity indices have surged over one and half a percent and also sailed beyond the psychological 5,250 (Nifty) and 17,300 (Sensex). The key gauges touched session’s high point in the early noon trades as sentiments got filliped on the back of the optimistic European market opening which halted the three session declining streak and rebounded on bargain hunting ahead of a two-day meeting of European finance ministers in Copenhagen starting today. On the domestic front, market participants also got some solace after Finance Minister Pranab Mukherjee stated that government will issue clarification on its position on taxation of investments from overseas, amid FIIs expressing concern on the proposed anti-tax avoidance rules in due course. He also opined that the intention of government is not to harass genuine investors and IT department will examine taxability of FIIs. Meanwhile, global rating agency Fitch expects Indian economy to grow at 7.5% in 2012-13. Hefty buying interests was evident in the rate sensitive Banking and Real Estate counters after the Indian central bank in its move to improve liquidity situation in the system and check the appreciation of rupee, in an unexpected move announced Rs 10,000 crore worth of bond buying program. This is the first instance of the RBI’s buying bonds in the last day of the fiscal year. Though there appeared no sectoral laggards some individual names like Sun Pharma and Wipro failed to keep their heads above the water as they traded with marginal cuts. Besides, oil marketing companies rallied sharply in the session amid hopes that the government would hike prices of petrol this weekend. The OMCs are also pushing for raising prices of other petroleum products like diesel and LPG.

Moreover, the broader markets too showed resilience and surged by around one and half a percent, in tandem with their larger peers. The bourses soared on low volumes of over Rs 0.5 lakh crore since it was the first day of a new F&O series. Market breadth on BSE was in favor of advances in the ratio of 1730:825 while 111 scrips remained unchanged.

The BSE Sensex is currently trading at 17,331.87 up by 273.26 points or 1.60% after trading as high as 17,343.00 and as low as 17,105.22. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.60% and Small cap soared 1.39%.

On the BSE sectoral space, Metal up 2.42%, Realty up 2.39%, Bankex up 2.05%, PSU up 1.77% and IT up 1.66% were the major gainers, while there were no laggards in the space.

Hindalco up 4.17%, Tata Steel up 3.44%, ICICI Bank up 2.80%, GAIL India up 2.73 and BHEL up 2.39% were the major gainers on the Sensex, while Sun Pharma down 0.32% and Wipro down 0.17% were the major only in the index.

Meanwhile, the Food Ministry has decided to hike its interest rates on loans that it provides to sugar companies. The hike has come in as a response to the increase in interest rates by the Reserve Bank of India on 13 February.

The Food Ministry lends money to the sugar industry at subsidized rates through a fund called the Sugar Development Fund (SDF). Uptil now it has been charging an interest rate of 4% which will be hiked to 7.5% per annum with effect from February 14, 2012.The fund keeps its interest rates 2% below the RBI’s rate. The fund aims towards sugarcane development, modernisation, co-generation and ethanol projects.

The corpus of the Sugar Development Fund, now around Rs 850 crore-Rs 900 crore, is built through a special levy of central cess of Rs 24 per quintal of sugar production. So far in the current fiscal, the fund has disbursed around Rs 370 crore with 100 proposals still pending. This is way below the disbursement amount of Rs. 900 crore in the last fiscal. The sharp dip has come in due to the lesser number of proposals received for ethanol projects. Also the fund has been strapped for cash due to large disbursements done in the earlier two fiscals.

The increase in interest rates has seen a mixed reaction from the industry. Some factory owners feel that this will put additional pressure on them as they are already burdened with the arrears of payment to farmers. Others, however, are of the opinion that the increase will discourage the misuse of the soft loans.

The S&P CNX Nifty is currently trading at 5,262.95, higher by 84.10 points or 1.62% after trading as high as 5,269.25 and as low as 5,203.65. There were 47 stocks advancing against 3 declines on the index.

The top gainers on the Nifty were IDFC up 4.65%, Hindalco up 4.17%, JP Associates up 3.49%, Tata Power up 3.19% and SAIL up 3.03%.

Cairn down 1.46%, Sun Pharma 0.78% and Wipro down 0.73% were the major losers on the index.

In the Asian space, Shanghai Composite gained 0.44%, Jakarta Composite advanced 0.28%, KLSE Composite rose 0.34%, Straits Times added 0.35% and Taiwan Weighted climbed 0.77%.

On the other hand, Hang Seng declined 0.47%, Nikkei 225 declined 0.31% and Seoul Composite slipped 0.02%.

The European markets were trading in green as France’s CAC 40 surged 1.11%, Germany’s DAX climbed 0.77% and Britain’s FTSE 100 advanced 0.40%.