Sensex gyrates in narrow range in noon trades after gaining close to 1%

Stock markets in Indian continued to oscillate in a narrow range in the Tuesday afternoon trading session after the frontline equity climbed close to a percent in late morning trades. The frontline gauges have furthered their gaining momentum for third straight session and have breached the psychological 17,600 (Sensex) and 5,350 (Nifty) levels as investors showed largely across the board buying interests. The key indices are trading around the session’s highs as sentiments got support from the supportive cues from global markets. Asian equities remained in fine fettle as market participants largely remained influenced by the overnight upmove on Wall Street on the back of solid US factory activity report. The data which was over the 50% mark, indicated more manufacturers are expanding in the US and countered concerns over reports that European unemployment rose to a 14-year high in February and manufacturing contracted for an eighth month in March. Besides, the European market after opening on a flat note are gradually inching higher into the green terrain after registering their biggest one-day gain in three weeks in the last session. Back home, the upside in local markets was capped as bond yields spiked after traders dumped bonds to make way for the heaviest weekly debt supply totaling $3.54 billion in the holiday-shortened week. The government is set to sell Rs 30 billion each of 8.97% 2030 bonds and 8.83% 2041 bonds; Rs 80 billion of 9.15% 2024 bonds and Rs 40 billion of 8.19% 2020 bonds respectively. Moreover, shares from the Aviation space including SpiceJet and Kingfisher skyrocketed in the session after the airlines filed application with the Director General of Foreign Trade (DGFT) seeking permission to directly import aviation turbine fuel (ATF). On the BSE Sectoral space, the Oil & Gas and rate sensitive Bankex counters led the rally with close to two percent gains while there some profit booking evident in the IT and Auto pockets which traded with marginal losses. Meanwhile, the market regulator SEBI has allowed listing of local stock exchanges, subject to a few conditions, rejecting a significant recommendation of the Jalan Committee report.

Moreover, the broader markets continued to show resilience and surged by over a percent, outperforming their larger peers by a small margin. The bourses rose on low volumes of over Rs 0.5 lakh crore since it was the third day of a new F&O series. Market breadth on BSE was in favor of advances in the ratio of 1643:866 while 113 scrips remained unchanged.

The BSE Sensex is currently trading at 17,627.92 up by 149.77 points or 0.86% after trading as high as 17,652.72 and as low as 17,570.27. There were 22 stocks advancing against 8 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index surged 1.03% and Small cap soared 1.15%.

On the BSE sectoral space, Oil & Gas up 2.01%, Bankex up 1.86%, Consumer Durables up 1.67%, Metal up 1.46% and Capital Goods up 1.30% were the major gainers, while IT down 0.17%, Auto down 0.09 and Healthcare down 0.04% were the only laggards in the space.

Hindalco up 2.62%, ICICI Bank up 2.23%, RIL up 2.21%, SBI up 2.19% and Sterlite up 2.19% were the major gainers on the Sensex, while Hero Moto down 1.80%, TCS down 1.05%, Sun Pharma down 0.78%, Maruti down 0.74% and NTPC down 0.42% were the major losers in the index.

Meanwhile, the mining industry has demanded that the 30% hike in export duty of iron ore be rolled back. In a letter to the Finance Minister, Pranab Mukherjee, the Federation of Indian Mineral Industries (FIMI) has stated that the duty hike is actually proving to be counterproductive for all concerned.

FIMI has pointed out that 92% of the iron ore exports comprise of the low grade iron ore- fines, which does not find too many domestic buyers. For every one tonne of lumps (iron ore with more than 60% Fe content), about 2.5 tonnes of fines is produced. Given its large quantity and low domestic demand, companies have no option but to export it. Moreover the increased duty has made exports unviable and it is expected that they will come down by about 50% in the FY’12 fiscal to 50-52 million tonnes (MT). Such a huge reduction will mean losses for the industry.

Building its case further, FIMI has observed that the government itself is losing on export duty due to reduced exports, whereas the States are earning less royalty revenues due to reduced output. Also, the earnings of the Railways and the Ports are impacted due to lower traffic volumes during the year.

Uncertainty in policies is also impacting the foreign direct investment and investment in exploration. Besides, the curb on mining in Karnataka has also added to lower exports, impacting profit margins as well government revenues.

Late December, the Government had hiked the export duty on iron ore fines and lumps to 30% from the earlier 20%. Iron ore exports for 2011-12 were estimated at around 50 million tonnes, down 50% from the previous year's 97.64 million tonnes. The trend is largely attributed to export duty hikes.

The S&P CNX Nifty is currently trading at 5,361.30, higher by 43.40 points or 0.82% after trading as high as 5,374.00 and as low as 5,344.45. There were 37 stocks advancing against 13 declines on the index.

The top gainers on the Nifty were Cairn up 4.08%, JP Associates up 3.78%, Hindalco up 3.06%, Sterlite up 2.74% and Reliance up 2.54%.

Dr Reddy’s down 2.10%, Hero Moto 1.69%, TCS down 1.34%, Maruti down 0.99% and Sun Pharma down 0.72% were the major losers on the index.

In the Asian space, Hang Seng climbed 0.78%, Jakarta Composite surged 1.48%, KLSE Composite rose 0.13%, Straits Times added 0.16% and Seoul Composite soared 0.99%.

On the other hand, Nikkei 225 declined 0.59% and Taiwan Weighted sank 1.30%.

Meanwhile, markets in mainland China will remain closed for a three day public holiday starting Monday on account of Qingming Festival and will reopen on Thursday. Stock markets in Hong Kong will remain closed on Wednesday and Friday.

The European markets were trading in red as France’s CAC 40 eased 0.04%, Germany’s DAX eased 0.3% and Britain’s FTSE 100 fell 0.25%.