Northward journey continues on the bourses

Indian equities added gains to continue firm trade above neutral line in the late afternoon session taking clues from European counterparts. The trade was on optimistic note across the bourses even after private sector lender, Kotak Mahindra Bank, posted less than expected 6.5% growth in consolidated net profit for the quarter ended June 2012. Besides, investors are also expecting that government will kick-start economic reforms after the upcoming presidential election. The election for the country’s new President which is a direct contest between ruling UPA candidate Pranab Mukherjee and opposition-backed Purno Sangma is scheduled to take place today i.e.  July 19, 2012. Investors will also closely watch the data to be announced tomorrow i.e. July 20, 2012 by CSO on consumer price index (agricultural labourers/rural labourers) for June 2012. Traders were seen piling up position in IT, Consumer Durable and Power sector while selling was witnessed in Auto and FMCG sector. In the scrip specific development, Maruti Suzuki India is trading under pressure with a cut of around 8 percent after the company’s Manesar plant’s workers went on strike again on wage settlement issue that resulted in a scuffle between workers and plant management.  The work at the plant has been completely stopped from 7 p.m. on July 18, 2012 with all the 3,000 workers going on strike.

On the global front, the Asian markets were trading in green barring KLSE Composite while the European markets were too trading on optimistic note. Investors are eyeing on Spain which is due to auction 2 to 3 billion euros ($2.46 billion to $3.69 billion) in debt market scheduled for today i.e. July 19, 2012 while France is set to offer 8 to 9 billion euros of its own bonds. The above auctions come ahead of European officials meeting scheduled on Friday i.e. July 20, 2012 to hammer out the final details of the Spanish bank bailout. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,250 and 17,300 levels respectively. The market breadth on BSE was positive in the ratio of 1555:1064 while 129 scrips remained unchanged.

The BSE Sensex is currently trading at 17,303.11 up  by 118.10 points or 0.69% after trading as high as 17,318.93 and as low as 17,257.19. There were 23 stocks advancing against 7 declines on the index.

The broader indices were too trading in green; the BSE Mid cap index was up by 0.46% while Small cap index gained 0.69%.

The top gaining sectoral indices on the BSE were, IT up by 1.97%, Consumer Durable up by 1.66%, Power up by 1.34%, Realty up by 1.24% and Metal up by 1.22%, while Auto down by 0.11% and FMCG down by 0.03% were the only losers on the BSE.

Infosys up by 3.29%, BHEL up by 2.81%, Tata Power up by 2.54%, Sterlite Industries up 2.47% and Hindalco Industries up by 2.16% were major gainers on the Sensex, while Maruti Suzuki down by 7.89%, Bharti Airtel down by 1.49%, ONGC down by 0.56%, ITC down by 0.49% and Dr. Reddy’s Lab down by 0.42% were major losers on the index.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) is mulling a proposal to hike the sugarcane prices, which the mills are required to pay to farmers by 17% to Rs 170 per quintal for 2012-13 marketing year (October-September) period. CCEA will be taking the decision on it pursuant to Food Ministry accepting CACP’s recommendation for the same.

The Government receives advice from a statutory body the Commission for Agricultural Costs and Prices (CACP) on farm pricing policy front. For the 2012-13 marketing year, CACP has recommended a 17.25% hike in the FRP on account of rising input production costs. The CCEA in its meeting scheduled is considering of increasing Fair and Remunerative Price (FRP) of sugarcane for 2012-13. The Government by and large accepts the cane price recommended by the CACP. The FRP is the minimum price that sugarcane farmers are legally guaranteed and for the ongoing marketing year it stands at Rs 145 per quintal. The FRP is the sugarcane price fixed by the Centre however some states like Uttar Pradesh and Tamil Nadu follow the policy of state advisory price (SAP), where they declare their own rate.

However, the SAP is higher than the FRP. In Uttar Pradesh, compared to Centre's FRP of Rs 145 a quintal the SAP for the current year stands at Rs 250 per quintal. The FRP is linked to a basic recovery rate of 9.5%, subject to a premium of Rs 1.46 for every 0.1% point increase in recovery above 9.5%. The recovery rate is the quantity of sugar that is produced from the crushed cane.

Due to bumper production of sugarcane, India, the world's second largest sugar producer, is currently exporting the sweetener which stood at 357.66 million tonnes in 2011-12.

The S&P CNX Nifty is currently trading at 5,255.35, up  by 39.05 points or 0.75% after trading as high as 5,257.75 and as low as 5,238.00. There were 35 stocks advancing against 14 declines on the index, while 1 stock remained unchanged.

The top gainers on the Nifty were BPCL up by 3.94%, Cairn India up by 3.39%, Infosys up by 3.10%, BHEL up by 3.08% and Axis Bank was up by 2.65%. On the flip side, Maruti down by 8.12%, Bank of Baroda down by 2.67%, Kotak Bank down by 1.98%, Bharti Airtel down by 1.51% and PNB down by 0.79% were the major losers on the index.

All the Asian equity indices were trading in the green barring KLSE Composite which was down by 0.02%, while Jakarta Composite added 0.23%, Hang Seng index surged 1.66%, Nikkei 225 added 0.79%, Kospi Composite Index garnered 1.56%, Straits Times rose 0.21%, Taiwan Weighted expanded by 1.41% and Shanghai Composite gained 0.73%.

The European markets were trading in green with, France’s CAC 40 ascended 0.23%, Germany’s DAX added 0.57% and the United Kingdom’s FTSE 100 gained 0.19%.