Sensex gains strength tracking optimism in European markets

Stock markets in India have climbed to the session’s highs with the benchmark equity indices trading with around half a percent gains in Thursday afternoon trades. The frontline gauges which showed side-ways movement since the start of trade and see-sawed around the psychological 5,300 (Nifty) and 17,400 (Sensex) levels have come out of their range bound trajectory and are trending northwards led by automobile and healthcare counters. The markets traded on a subdued note through the morning trades tracking the apathetic cues from Asian peers after disappointing quarterly earnings number from tech majors like IBM and Intel, renewed worries over the Europe’s onerous debt crisis and Japanese trade data which showed the nation registered biggest annual trade deficit ever. However, sentiments got a lift after European markets opened on an encouraging note ahead of Spanish debt auction as investors focused on reports that China would increase liquidity supply by employing measures like open market operations and reserve requirement ratio cuts in order to spur economic growth. On the domestic front, investors came across official data showing FDI into India increased by a whopping 74% to $2.21 billion in February as compared to the same month last year taking FDI for the period April- February 2011-12 to $24.8 billion, substantially higher than $19.42 billion in 2010-11, and $25.83 billion in 2009-10. However, despite India's exports exceeding government's target for the year through March, trade deficit widened to a record high following a surge in crude oil and gold imports. On the BSE sectoral space, the rate sensitive Automobile counter rallied higher than all its peers in the space with over one half a percent gains. While the defensive Healthcare pocket too witnessed buying interests as it surged over a percent. But, the Capital Goods and Power sectors were under some pressure as they declined by around half a percent while the high beta Realty counter too traded in the red with moderate cuts of one third of a percent.

Moreover, the broader markets traded on a positive note with around half a percent gains, performing in tandem with their larger peers. The bourses rose on good volumes of over Rs 0.76 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1427:1148 while 115 scrips remained unchanged.

The BSE Sensex is currently trading at 17,475.06 up by 82.67 points or 0.48% after trading as high as 17,475.50 and as low as 17,361.71. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index rose 0.44% and Small cap soared 0.31%.

On the BSE sectoral space, Auto up 1.51%, Healthcare up 1.04%, Metal up 0.59%, IT up 0.45% and Bankex up 0.38% were the major gainers, while Capital Goods down 0.71%, Power down 0.43% and Realty down 0.34% were the only laggards in the space.

Tata Motors up 2.42%, Maruti up 2.34%, HDFC Bank up 2.23%, M&M up 1.47% and Coal India up 1.41% were the major gainers on the Sensex, while BHEL down 2.67%, Hindalco down 1%, Wipro down 0.89%, ICICI Bank down 0.67% and GAIL down 0.64% were the major losers in the index.

Meanwhile, sugar production this year is expected to be more than last year’s production number. Given the additional produce, the government is expected to allow an additional 1 million tonnes of sugar to be exported.  Food Minister, K V Thomas has stated that the decision regarding additional exports will be decided in the coming Empowered Group of Ministers (EGoM) on April 25. The EGoM is also expected to discuss the shipment modalities for the export of the 3 million tonnes recently approved.

As per the Food Ministry, production for the 2011-12 season is likely to touch 25.5 million tonnes, up from 24.6 million tonnes last year. However, according to Indian Sugar Mills Association (ISMA) the production should be around 26 million tonnes.

As per the ISMA, mills have produced 24.63 million tonnes of sugar till April 15 of 2011-12, as compared to 21.73 million tonnes in the year-ago period and hence by the year end, the production should reach 26 million tonnes. In either case sugar production is set to increase.

Sugar production in Uttar Pradesh, the country's second biggest producer, has increased by 18% to 6.91 million tonnes from the corresponding period last year. Similarly, the output in Maharashtra has gone up by 9% to 8.54 million tonnes in the review period. Karnataka, Tamil Nadu and Andhra Pradesh have also reported higher output of 3.72 million tonnes, 1.45 million tonnes and 1.95 lakh tonnes, respectively, so far this year.

Given the excess production the government may consider allowing more sugar exports. So far, the government has allowed exports of 3 million tonnes in three tranches of 1 million tonnes each. However, the export notification for 1 million tonnes approved late March is yet to be issued by the Food Ministry.

The S&P CNX Nifty is currently trading at 5,323.20, higher by 23.20 points or 0.44% after trading as high as 5,324.00 and as low as 5,291.30. There were 31 stocks advancing against 19 declines on the index.

The top gainers on the Nifty were Tata Motors up 2.34%, Ranbaxy up 2.21%, HDFC Bank up 2.19%, Maruti up 2.14% and IDFC up 1.71%.

BHEL down 2.99%, R Infra down 1.86%, Hindalco down 1.49%, Wipro down 1.01% and JP Associates down 0.97% were the major losers on the index.

In the Asian space, Shanghai Composite eased 0.12%, Jakarta Composite declined 0.37%, KLSE Composite down 0.16%, Nikkei 225 sank 0.82%, Straits Times dropped 0.01% and Seoul Composite fell 0.23%. On the flipside, Hang Seng climbed 0.74% and Taiwan Weighted advanced 0.23%.

The European markets got off to a positive start as France’s CAC 40 climbed 0.61%, Germany’s DAX advanced 0.66% and Britain’s FTSE 100 rose 0.52%.