Domestic bourses continue to trade in green

Indian equity indices continued to trade in tight band with a positive bias keeping their head above water on the back of supportive global cues. Most of the Asian markets were trading with a gain of over half a percent following the previous session’s rally as investors look ahead to negotiations on the US debt limit and spending cuts. Meanwhile, China’s official purchasing managers’ index (PMI) for the non-manufacturing sector rose to a four-month high of 56.1 in December from 55.6 in November, adding to signs of a revival in the world’s second-largest economy.

Back home, hefty buying in software and technology pack helped frontline gauges to trade above their crucial 6,000 (Nifty) and 19,700 (Sensex) levels. Stocks like Infosys, TCS, Wipro and HCL Technologies edged higher in the trade on expectations of better-than-expected third-quarter earnings for IT companies when they report results starting later this month. Some support also came in after jewellery stocks viz. Tribhovandas Bhimji Zaveri, Thangamayil Jewellery and PC Jeweller extended their rally triggered by expectations of pick up in jewellery sales during the ongoing wedding season. However, some concern came in from currency markets as Indian rupee depreciated by 10 paise to 54.45 against the US dollar in early trade today on the Interbank Foreign Exchange due to appreciation of the American currency against the euro and other currencies in overseas markets.

On the sectoral front, oil and gas witnessed the maximum gain in trade followed by technology and software while, fast moving consumer goods, capital goods and consumer durables remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the market breadth on the BSE was positive; there were 1657 shares on the gaining side against 1072 shares on the losing side while 103 shares remain unchanged.

The BSE Sensex is currently trading at 19748.04 up by 33.80 points or 0.17% after trading in a range of 19786.30 and 19693.29. There were 17 stocks advancing against 13 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.80% and Small cap index was up by 0.93%.

The top gaining sectoral indices on the BSE were, Oil & Gas up by 0.85%, TECk up by 0.79%, IT up by 0.68%, PSU up by 0.46% and Realty up by 0.42%. While, FMCG down by 0.35%, Capital Goods down by 0.19% and Consumer Durables down by 0.05% were the top losers on the index.

The top gainers on the Sensex were Dr Reddy’s Lab up by 2.79%, RIL up by 0.96%, ONGC up by 0.95%, Sterlite Industries up by 0.91% and SBI up by 0.86%.

On the flip side, Tata Power was down by 1.30%, Sun Pharma was down by 0.80%, Jindal Steel was down by 0.71%, Cipla was down by 0.63% and L&T was down by 0.55% were the top losers on the Sensex.

Meanwhile, in order to trim down food and fertilizer subsidies, which could rise to Rs 200,000 crore next fiscal, the government's advisory body on farm prices Commission for Agriculture Costs and Prices (CACP) in its pre-budget consultations with Finance Minister P Chidambaram, has recommended direct cash transfer to beneficiaries in order to rationalize food and fertilizer subsidies. It has also asked for stable export policy for farm commodities and promotion of palm oil to cut vegetable oil imports, which was at a record 10 million tonnes (worth Rs 60,000 crore) in 2011-12.

The advisory body also demanded deregulation of urea sector to attract more investment and improve balanced use of fertilizers. Moreover, CACP added that higher farm exports and reduction in edible oil imports would help centre to curb current account deficit.

After the pre-budget meeting, CACP Chairman Ashok Gulati said 'rising current account deficit is the biggest problem that the government currently facing. So, we have pitched for rationalization of food and fertiliser subsidies in the forthcoming Budget'. By adding further he said, the government can save Rs 50,000 crore by plugging the leakages through conditional cash transfer (CCT) and also save additional Rs 10,000-15,000 crore from storage cost of grains. He also pointed that 40 per cent of food distributed through shops get diverted.

Further, CCT can be implemented initially in 33 cities of more than one million population and then expand to cereal surplus states and finally to cereal deficit states. On fertilizers, CACP chief said that the government can save Rs 20,000 crore if it immediately starts direct cash transfer of subsidy to farmers. For the 2012-13 fiscal, the Budget allocation for food and fertiliser subsidies was 136,000 crore, which is expected to rise in the revised Budget estimate.

The S&P CNX Nifty is currently trading at 6,001.55 up by 8.30 points or 0.14% after trading in a range of 6,017.00 and 5,986.55. There were 31 stocks advancing against 19 declines on the index.

The top gainers of the Nifty were Dr Reddy’s Lab up by 2.87%, Ambuja Cements up by 1.69%, Cairn up by 1.61%, ACC up by 0.91% and Bharti Airtel up by 0.90%.

On the flip side, Tata Power down by 1.70%, Punjab National Bank down by 0.84%, Lupin down by 0.83%, Sun Pharma down by 0.80% and Jindal Steel down by 0.77% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Jakarta Composite surged 1.05%, KLSE Composite increased 0.76%, Straits Times added 0.39%, Hang Seng up by 0.07% and Taiwan Weighted was up by 0.74%.

On the flip side, KOSPI Composite was down by 0.58%.

Markets in Japan and China remained shut for public holidays and will reopen on Friday.