Benchmarks pare gains; Sensex above 17,000 mark

Indian equity indices are trading firm in a narrow rage but paring off some gains amid reports of fresh geo-political tensions fuming between South Korea and North Korea and owing to partial weakness in the European markets, but investors are not showing any kind of kneejerk reaction to the reports and are only focusing on hunting undervalued but fundamentally strong bargains. Market participant were seen piling up the positions in Auto, Realty and Consumer Durables while selling was witnessed in Oil & Gas and FMCG sector. Stocks like Warren Tea, Residency Project, Hindoostan Mills, Inventure Growth & Securities and Nitin Fire Protection hit new high while stocks like Cambridge Solutions, Euro Ceramics, Infinite Computers, Syncom Healthcare, Parle Software, GeeCee Ventures and SAL Steel hit new low. NTPC is trading firm after reports that the company is confident of achieving its target for the 12th Year Plan. NTPC has a capacity addition programme to get to about 66,000-70,000 MW by the end of 12th Year Plan. Fertilizers stocks were seen in action on expectation of some positive announcement. Stocks of fertilizers company like Chambal Fertilizers, National Fertilizers, RCF, Coromandel International and Gujarat State Fertilizers were seen trading firm. Last week there were reports that GoM approved draft policy on urea price decontrol. The Group of Ministers (GoM) on fertilizers headed by Finance Minister Pranab Mukherjee approved the draft policy which allows companies to increase the retail prices urea on the bases of market dynamics. The government on August 05 approved the decontrol of urea prices and allowed fertilizer companies to increase the rate of the important agriculture input prices by up to 10% in the first year of policy. Heavy activity was seen in counters of Manali Petrochemicals and Bharti Shipyard with heavy volumes due to fund based activity as of yesterday. Sidd Life Sciences bought 11,446,053 shares of Manali Petrochemicals while Southern Petrochemical Industries Corporation. Birla Sunlife Insurance Company sold 159,500 shares of Bharati Shipyard. Shares in Indian wind turbine maker Suzlon Energy were firm after the company received orders worth $107 million while Bharat Forge rose after it delivered an impressive June-quarter result. On the global front, Asian markets are trading in green barring Straits Times while the European markets were trading in mix on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,100 and 17,000 levels, respectively. The market breadth on the BSE was positive in the ratio of 2140:655 while, 79 scrips remained unchanged.

The BSE Sensex is currently trading at 17,053.91 up by 196.00 points or 1.16% after trading as high as 17,256.46 and as low as 17,022.25. There were 23 stocks advancing against 7 declines on the index.

The broader indices were trading on an optimistic note; the BSE Mid cap index surged 1.77% while Small cap jumped 2.23% respectively. 

On the BSE sectoral space, Auto up 3.29%, Realty up 2.23%, Consumer Durables up 2.10%, Bankex up 2.02% and Capital Goods up 1.70% were the major gainers while Oil & Gas down by 0.57% and FMCG down 0.52% was the only loser on the index.

Tata Motors up 5.51%, Maruti Suzuki up 4.32%, M&M up 3.94%, NTPC up 3.34% and DLF up 3.14% were major gainers on the Sensex, while ONGC down by 2.17%, HUL down 1.08%, Bharti Airtel down 0.96%, ITC down 0.78% and Sun Pharma down 0.65% were the major losers on the index.

Meanwhile, the Ministry of Food Processing Industries (MFPI) has finalized its Vision 2015 Document, which is expected to reduce the wastage quotient in the processing of the perishable and it also aims to increase the size of the food processing sector by three times. The Minister of State, MFPI, Charan Das Mahant, said, the document envisage increasing the level of processing of perishables from 6% to 20%, value addition from 20% to 35% and share in global food trade from 1.5% to 3% by 2015.

To minimize the wastage of fruit and vegetables, MFPI is encouraging the creation of cold chain facilities through a scheme for Cold Chain, Value Addition and Preservation Infrastructure coined in the 11th Five Year Plan. This was to give finance help to project proposals received from public and private organizations for cold chain infrastructure development.

Charan Das Mahant said, the scheme envisaged financial assistance in the form of grant-in-aid at the rate of 50% of the total cost of plant and machinery and technical civil works in general areas and 75% for North Eastern Region and difficult areas subject to a maximum of Rs 10 crore. However, the minister did not provide any information on the effectiveness of the scheme. The private sector has been criticizing government for not having a clear policy or scheme for exponentially increasing the cold storage infrastructure in the country.

The contribution of agriculture to India’s GDP at the time of Independence was 70% and it accounted for 85% of total employment. The share of agriculture in the country’s GDP has been gradually declining since then. At present, the contribution of agriculture to GDP is about 25%, but it still engages about 70% of the population. The annual average rate of growth of agricultural GDP has also declined from around 3.5% during mid-eighties to mere 1.5 % during 2006-07. It is estimated that if the country has to maintain a GDP growth rate of over 8%, the agricultural sector has to grow at the rate of at least 4%. The country has a huge potential for growth in agriculture with about 160 million hectares of arable land and diverse agro climatic conditions, suitable for cultivation of a wide variety of crops.

India currently produces about 50 million tonnes of fruits, which is about 9% of the world’s production of fruits and 90 million tonnes of vegetables, which accounts for 11% of the world’s vegetable production. Though India has a strong raw material base, it has been unable to tap the potential for processing and value addition in perishables like fruits and vegetables. Only about 2% of the fruits and vegetables in India are processed, which is much lower when compared to countries like USA (65 %), Philippines (78%) and China (23%). 

The S&P CNX Nifty is currently trading at 5,132.40, higher by 59.55 points or 1.17% after trading as high as 5,197.95 and as low as 5,132.40. There were 37 stocks advancing against 13 declines on the index.

The top gainers of the Nifty were Tata Motors up 5.66%, M&M up by 4.17%, Maruti Suzuki up 3.88%, NTPC up 3.58% and DLF up 3.34%.

Grasim down 2.10%, ONGC down 1.93%, Cairn down 1.65%, Bharti Airtel down 1.10% and HUL down 1.03% were the major losers on the index.

Asian markets traded on a positive note, Shanghai Composite added 0.91%, Hang Seng surged 2.34%, Jakarta Composite soared 3.05%, KLSE Composite rose 0.57%, Nikkei 225 gained 1.05%, Seoul Composite rose 0.27% and Taiwan Weighted rallied 3.25%. On the other hand, Straits Times sank 1.69%.

The European markets were trading in mix with, France’s CAC 40 down 0.02%, Germany's DAX gained 1.15% and London’s FTSE rose 0.21%.