Benchmarks pares their initial gains

The Indian equity markets have came off from their high after witnessing a decent up move in initial trade as investors remained cautious of fragile global economic condition and were reluctant to open fresh positions. Though, the US markets heaved a sigh of relief overnight and the major indices rallied in the last half-hour of trading while, Asian markets were trading on a mixed note at this point of time. Back home, on sectoral front, software witnessed the maximum gain in trade followed by capital goods and realty while, there banking, consumer durables and oil and gas remained the main losers on the BSE sectoral space. Meanwhile, Software stocks like, Infosys, TCS, Wipro and HCL Tech all edged higher in the trade on the back of weak rupee, moreover, aviation stocks like Jet Air India, Kingfisher Airlines and Spicejet all were trading with a gain of 2-4 percent on report that DIPP has commented that many of Indian airline companies are in dire need of capital and if any of these carriers collapse, then it will also impact the Indian financial sector. The broader indices were outperforming benchmarks benchmarks. The market breadth on the BSE was positive; there were 911 shares on the gaining side against 641 shares on the losing side while 74 shares remained unchanged.

The BSE Sensex opened at 15,967.72; about 103 points higher compared to its previous closing of 15,864.86, and has touched a high and a low of 16,019.60 and 15,877.65 respectively.

The index is currently trading at 15,887.80, up by 22.94 points or 0.14%. There were 19 stocks advancing against just 11 declines on the index.

The overall market breadth has made a strong start with 56.03% stocks advancing against 39.42% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.23% and 0.28% respectively.

The top gaining sectoral indices on the BSE were, IT up by 1.10%, CG up by 0.78%, Realty up by 0.75%, TECk up by 0.46% and Auto was up by 0.40%. While, Bankex down by 1.52%, CD down by 0.52%, Oil and Gas down by 0.24% and PSU down by 0.01%, remained the only losers on the index.

The top gainers on the Sensex were Jaiprakash Associates up by 2.99%, Tata Motors up by 1.97%, Sun Pharma up by 1.45%, Infosys up by 1.36% and HDFC was up by 1.24%.

On the flip side, ICICI Bank was down by 2.71%, SBI was down by 2.55%, Hero Motocorp was down by 0.84%, Hindalco was down by 0.80% and HUL was down by 0.66% were the top losers on the Sensex.

Meanwhile, Along with the difference in the Inter-Ministerial group on the issue of decontrolling the urea prices, the Prime Minister's Office (PMO) had directed the ministry of fertilizer to speed up the proposed policy. The Group of Ministers (GoM) headed by the Financial Minister Pranab Mukherjee, had sent the recommendation of deregulating the urea to the Cabinet Committee on Economic Affairs (CCEA) for approval due to strong resistance for the different ministries.

In the GoM meeting, it was decided that the concerns rose by the ministries on deregulating the urea prices would be sent to the CCEA, who would take the final decision. The interference of the PMO’s on the issue has come in the wake of delay on the Ministry of Fertilizers to move to the Cabinet note. It is also reported that the ministry has not yet cleared the note made by the Department of Fertilizers.

The ministry is not in favor of decontrolling the prices of urea contending that the decontrol of urea sector would lead to rise in prices of the important farm nutrient. Prior to the GoM meeting the Fertilizer Minister M K Azhagiri had written to the Prime Minister Manmohan Singh, opposing the deregulation of urea. He said the move should wait till amendment to the new investment policy for the sector is brought about.

Along with the Ministry of Fertilizers, agriculture and petroleum and natural gas ministries are also opposing the commerce ministry proposal of deregulating urea prices. However, the commerce ministry proposal is backed by the Ministry of Finance and Planning Commission, because of the increasing pressure of subsidies on the government’s financial health.

During 2010-11, the subsidy bills was estimated to be around Rs 52,840 crore and almost half of which was on account of urea. As urea is the only fertilizer, which is still controlled by the government, the government had freed prices of phosphatic and potash fertilisers in the last financial year. In the draft policy, made by the Committee of Secretaries, a partial freeing of the radial price urea was proposed. The Committee of Secretaries also suggested that with the partial decontrolling, the industry can increase the prices by 10% after a year. 

The ministry of agriculture is also not in favor of any price increase. The agriculture ministry is of the view that the deregulating of urea can wait for 2 to 3 years. Currently the Maximum Retail Price (MRP) of urea is Rs 5,310 a tonne. Presently, India’s production is around 21-22 million tonnes compared to demand of 27-28 million tonne.
 
 The S&P CNX Nifty opened at 4,791.30; about 19 points higher compared to its previous closing of 4,772.15, and has touched a high and a low of 4,819.35 and 4,774.45 respectively.

The index is currently trading at 4,777.25, higher by 5.10 points or 0.11%. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were JP Associates up by 2.92%, Tata Motors up by 2.15%, RCom up by 1.61%, Sun Pharma up by 1.58% and Infosys up by 1.30%.

On the flip side, SBI down by 2.86%, ICICI Bank down by 2.83%, PNB down by 1.52%, Kotak Bank down by 1.42% and Ambuja Cement down by 1.31%, were the major losers on the index.

Asian markets trade mixed at this point of time; Jakarta Composite was up 11.66 points or 0.36% to 3,281.11, KLSE Composite was up 7.43 points or 0.55% to 1,368.81 and Straits Times was up 2.17 points or 0.09% to 2,533.19.

On the flip side, Nikkei 225 was down 65.83 points or 0.78% to 8,390.29, Seoul Composite was down 37.16 points or 2.18% to 1,669.03 and Taiwan Weighted was down by 25.46 points or 0.36% to 7,022.41.

Stock markets in China remained closed on Wednesday in observance of Golden Week holiday while bourses in Hong Kong too were closed for public holiday.