Firm trade prevails; Sensex above 18,700 mark

Indian equities added gains to continue its firm trade in green in the late afternoon session on back of buying in frontline counters. The sentiments in the market were also supportive on reports that showed foreign institutional investors remained net buyers of Indian stocks on Sept 24. Traders were seen piling up position in Realty, FMCG and Power sector while selling was witnessed in Metal, Auto and PSU sector. In the scrip specific development, Sugar stocks were seen trading under pressure after the government deferred a decision on scrapping subsidy on levy sugar under the public distribution system quota ahead of the upcoming festive season demand. Power stocks were seen trading firm in green as the government on Monday cleared Rs 1.90 lakh crore debt restructuring for power distribution companies, the second such move in less than a decade for entities that keep running up losses due to severe political interference even in regulatory agencies that fix tariffs. Mangalore Chemicals and Fertilizers was trading in green on stake sale buzz.

On the global front, most of the Asian markets were trading on the positive note while the European markets were too trading on mixed note.  German Chancellor Angela Merkel and President Francois Hollande disagreed on a timetable for starting joint oversight of Europe’s banking sector. Also, Germany’s governing coalition showed growing exasperation with Spain, as a senior ally of Chancellor Angela Merkel stated that Prime Minister Mariano Rajoy must stop prevaricating and decide whether Spain needs a full rescue. Separately, the Ifo index, a gauge of German business confidence, declined more than forecast in September. On the home turf, the NSE Nifty and BSE Sensex were trading above their psychological 5,650 and 18,700 levels respectively. The market breadth on BSE was positive in the ratio of 1411:1300 while 130 scrips remain unchanged.

The BSE Sensex is currently trading at 18,734.94, up by 61.60 points or 0.33% after trading in a range of 18,790.01 and 18,636.16. There were 16 stocks advancing against 14 declines on the index.

The broader indices too gained traction, with both BSE Midcap and Small cap indices trading higher by 0.45% and 0.37% respectively.

On the BSE sectoral space, Realty up by 2.75%, FMCG up by 1.10%, Power up by 0.74%, Capital Goods up by 0.74% and Consumer Durables up by 0.71% were the top gainers. While, Metal down by 1.05%, Auto down by 0.43% and PSU down by 0.07% were the only losers.

The top gainers on the Sensex were BHEL up by 2.55%, Cipla up by 2.22%, HUL up by 1.24%, ITC up by 1.13% and HDFC up by 1.12%. On the other hand, Jindal Steel down by 4.25%, Maruti Suzuki down by 1.79%, Tata Steel down by 1.68%, Sterlite Industries down by 1.45% and Tata Motors down by 1.12% were the top losers on the Sensex.

Meanwhile, in a great respite for common man, the Centre has deferred its decision of slashing subsidy on sugar under the public distribution system (PDS) quota. Currently, the government is selling sugar at a subsidized rate of Rs 13.50 per kg through the PDS, which it buys at Rs 19.50 per kg from millers. The government has been selling about 27 lakh tonnes of sugar every year to the below poverty line (BPL) families through PDS.

The PDS rate of sugar remains same since 2002. With the rising procurement price of the sweetener in line with peaking sugarcane price, the Ministry of Food had proposed raising sugar prices through PDS so as to reduce the burden of the government fund. It also pointed out that if the prices are raised to Rs 25.37 per kg, for sugar sold at every rupee lower than this price, the government will have to incur a subsidy of Rs 270 crore a year.

Albeit, it has not suggested any specific amount of hike in sugar prices, but left the decision to the Cabinet Committee on Economic Affairs (CCEA). It is mandatory for mills to sell 10% of their output to the government at below cost rates for supply to ration shops. Against the country's annual sugar demand of 22 million tonnes, mills are estimated to have produced 26 million tonnes of sugar in the 2011-12 marketing year.

However, the Union Cabinet has extended a control order on commodities from October 2012 to September 2013, ensuring moderate prices of pulses, edible oils and oilseeds. It also has not passed the proposal to digitize ration cards, and fully computerize the supply management chain of the Food Corporation of India.

The S&P CNX Nifty is currently trading at 5683.30, up by 13.70 points or 0.24% after trading in a range of 5,702.70 and 5,652.45. There were 27 stocks advancing against 23 declines on the index.

The top gainers of the Nifty were Bank of Baroda up by 2.46%, Kotak Bank up by 2.38%, BHEL up by 2.34%, Cipla up by 2.25% and Grasim Industries up by 1.77%. While, Jindal Steel down by 4.41%, Cairn India down by 3.53%, JP Associates down by 2.30%, Axis Bank down by 1.96% and Maruti Suzuki down by 1.90% were the major losers on the index.

Most of the Asian markets were trading in green, Hang Seng added 0.02%, Jakarta Composite gained 0.41%, KLSE Composite added 0.47%, Nikkei 225 rose 0.25% and Straits Times advanced 0.23%. On the other hand, Shanghai Composite declined 0.19%, Kospi Composite lost 0.60% and Taiwan Weighted edged lower by 0.44%.

The European markets were trading on a mixed note with, France’s CAC 40 descending 0.33%, Germany’s DAX dropped 0.17% and the United Kingdom’s FTSE 100 inched up 0.14%.