Benchmarks end slightly in green on Monday

Indian key benchmarks, after hitting 2013 lows in the previous session, ended the day’s trade slightly in the positive terrain on Monday amid a supportive Asian trend. Markets, despite initial volatility, traded in the green throughout the session and consolidated near their crucial 19,500 (Sensex) and 5,900 (Nifty) levels. Some support came in from Planning Commission Deputy Chairman Montek Singh Ahluwalia’s statement that Indian economy would grow at a rate between 5 and 5.5 per cent in the current financial year and could expand by seven per cent in 2013-14. On the same time, the FIIs and domestic investors gained courage with a Mauritian minister saying that there is definite political will in India and Mauritius to conclude a revised tax treaty so as to prevent misuse of bilateral provisions governing investments, while routing of funds into and from India through the island nation.

Markets continued their gaining momentum till end supported by infra counter, as National Highways Authority of India (NHAI) is seeking to push a ‘relief package’ for road developers and the Prime Minister’s Office will be considering ways to revitalize the highway sector. Rally in PSU shares too supported the northward journey of the markets after strong investor response to the divestment of government’s 9.5 percent stake in NTPC earlier this month.

Supportive cues from Asian counters too provided the much needed support to the local markets. Japanese Nikkei rallied by over two percent as yen fell after Tokyo escaped direct criticism from the G20 peers on its aggressive reflationary plans that have weakened the currency while, Chinese Shanghai too ended in the green on its first day after the long holiday. However, disappointing cues from US market took their toll on domestic sentiments and capped the gains. Investors mainly resorted to profit booking following the decline in European markets.

Back home, rally in PSU oil marketing companies too boosted the sentiments in the initial trade as stocks like BPCL, HPCL and IOC edged higher after a hike in petrol and diesel prices was announced on February 15, 2013 after market hours. Petrol prices were increased by Rs 1.50 per litre while diesel prices were increased by 45 paise per litre. However, at the end of trade BPCL and IOC pared all their gains and ended in the red while HPCL ended with marginal gains. Shares related to construction too rose on expectations that the government will provide thrust on infrastructure development in Union Budget 2013-14 to be tabled in the Parliament on February 28, 2013.

The NSE’s 50-share broadly followed index Nifty rose by just ten points to end tad below the psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained by about thirty points to finish just above the psychological 19,500 mark. Moreover, broader markets too traded with traction and ended the session with a gain of over half a percent.

The overall volumes stood above Rs 0.99 lakh crore, which remained on the lower side as compared to that on Friday. The market breadth remained in favor of advances as there were 1,245 shares on the gaining side against 860 shares on the losing side while 874 shares remain unchanged.

Finally, the BSE Sensex gained 32.93 points or 0.17% to settle at 19,501.08, while the S&P CNX Nifty rose by 10.80 points or 0.18% to end at 5,898.20.

The BSE Sensex touched a high and a low of 19,554.48 and 19,462.92, respectively. The BSE Mid cap index up by 0.42% and Small cap index was up by 0.71%.

The top gainers on the Sensex were, Tata Steel up by 2.49%, Hindustan Unilever up by 1.89%, Sterlite Industries up by 1.76%, L&T up by 1.57% and HDFC up by 1.47%, while Jindal Steel down by 1.81%, Coal India down by 1.77%, ONGC down by 1.35%, Dr Reddy’s down by 1.24% and Bajaj Auto down by 1.17% were the top losers on the index.

The only gainer on the BSE Sectoral space was Realty up 2.08%, Capital Goods up 1.18%, Power up 1.03%, Metal up 0.49% and PSU up 0.33% while IT down by 0.49%, TECk down 0.47%, Consumer Durables down 0.22% and Oil & Gas down by 0.03% were top losers on the sectoral space.

Meanwhile, the government is likely to announce a credit guarantee fund in the coming Budget for Farmer Producer Organizations (FPOs) with equity participation to boost small and marginal farmers. FPO is typically a company comprising only farmers and producers, formed under the Companies Act. The role of FPOs in alleviating the plight of small and marginal farmers has also been recognized by the government’s National Advisory Council (NAC).

As per the working group of the NAC, FPOs are a necessity in the Indian environment, if one has to effectively address issues such as shrinking land, difficulty in accessing critical inputs like fertiliser and credit, a fragmented value chain, weak bargaining with market agents and low return on investments.

By June, government targets to have 500 FPOs, with a combined membership of almost 10 lakh farmers. However, there are almost 60 crore farmers in the country who can be brought under the FPO umbrella. Presently, there are close to 300 FPOs, covering a little over 500,000 farmers. The Small Farmers’ Agri-Business Consortium (SFAC), which is promoted by the department of agriculture, is to act as a nodal agency to provide support for creation of FPOs.

Meanwhile, FPOs are being mobilized by the network of about 25 grassroots non-governmental organizations and takes six to nine months for an FPO to get registered. However, the biggest problem they face since inception in the past decade has been access to funds.

The S&P CNX Nifty touched a high and a low of 5,911.00 and 5,878.45 respectively.

The top gainers on the Nifty were DLF up by 4.95%, JP Associates up by 3.62%, Tata Steel up by 2.87%, PowerGrid up by 2.46% and Reliance Infra up by 2.16%.

The top losers of the index were Jindal Steel down by 2.29%, Coal India down by 1.67%, TCS down by 1.52%, Baja Auto down by 1.39% and UltraTech Cement down by 1.39%.

The European markets were trading mixed, France’s CAC 40 down by 0.27%, United Kingdom’s FTSE 100 down by 0.12% and Germany’s DAX up by 0.08%.

Asian markets ended mostly higher on Monday, weighed by Japan’s Nikkei, which closed with strong gains due to decline in yen after the weekend Group of 20 meeting. Chinese stocks went home with green mark after a week-long trading holiday, while Hang Seng bucked the trend and closed lower. South Korean stocks ended marginally higher as auto sector exporters were affected by yen weakness.