Benchmarks extends gain in late morning trade

Benchmarks have  extended their gain in late morning trade on speculation that the 16-day partial US government shutdown will curb economic growth in the world's biggest economy and lead the Federal Reserve to maintain monetary stimulus to the US economy into 2014. Fed's bond-buying program has been a source of liquidity for most Asian and emerging markets this year. Investors' sentiment boosted as the rupee was trading at 61.12/13 against the dollar versus its close of 61.23/24 on Thursday on the back of positive sentiments in the market and dollar sales by banks. Some support to the markets came in with a study commissioned by market regulator Securities and Exchange Board of India (Sebi) suggesting lowering of securities transaction tax (STT) to boost the capital market.

On the global front, most of the Asian equity benchmarks too were trading in the green at this point of time with Chinese Shanghai was trading with a gain of around half a percent after the nation’s economy grew 7.8% in the third quarter, its fastest pace this year and in line with expectations, as firmer foreign and domestic demand lifted factory production and retail sales.

Back home, traders were buying, Bankex, Metal and Realty on the BSE. The market breadth on BSE remains positive with advances to declines in the ratio of 1117: 574. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,600 and 6,100 levels respectively. 

The BSE Sensex is currently trading at 20680.40, up by 264.89 points or 1.30% after trading in a range of 20688.24 and 20486.78. There were 28 stocks advancing against 2 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.89% and Small cap index gained 0.75%.

The top gaining sectoral indices on the BSE were, Bankex up by 2.46%, Metal up by 2.14%, Realty up by 1.56%, Oil & Gas up by 1.38% and PSU up by 1.25% and while there was no losers on the sectoral index.

The top gainers on the Sensex were Tata Steel up by 3.34%, SSLT up by 3.18%, ICICI Bank up by 2.84%, SBI up by 2.55% and HDFC up by 2.03%. On the flip side, TCS was down by 0.51% and Bajaj Auto was down by 0.22% were the only losers on the Sensex.

Meanwhile, Indian Sugar Mills Association (ISMA), the apex body for sugar industry, urged the government to increase import duty on sugar and provide assistance for exports to bail out the industry, which has been suffering losses for previous fiscal year. Emphasizing that sugar mills have a huge opening stock of about 90 lakh tonnes, the association said that government should increase the import duty to at least 40 percent from the current 15 percent on both white and raw sugar and also assist the sugar industry in exporting 30-40 lakh tonnes in the next 8-10 months.

By adding further, the ISMA said that there is a need to implement the Rangarajan Committee recommendations linking sugarcane price to the sugar price and by-products price realization, therefore, the government should ask the state to immediately implement the committee’s suggestions. Recently, sugar mills in Uttar Pradesh have faced a loss of about Rs 3,000 crore because of higher sugarcane price in the state. Further, the government will have to create strategic sugar reserves of 20-30 lakh tonnes, to be held regionally by Food Corporation of India (FCI). Referring to liquidity crunches faced by the sector, ISMA said the government should re-introduce the interest subvention scheme on bank loans to enable sugar mills to meet the working capital requirement. In 2007-08, the government had introduced a scheme under which banks provided loans equivalent to excise duty paid/payable in two years to sugar mills and the interest burden was borne by the Sugar Development Fund as well as the central government up to an extent of 12 percent per annum.

Moreover, ISMA added that these steps are required to be implemented immediately so that the sugar industry could start their sugarcane crushing on time in 2013-14 sugar season. Meanwhile, India is world’s second largest producer and biggest consumer of sugar. Country’s sugar production is expected to increase at 250 lakh tonnes in the 2013-14 season (October-September) as against 251 lakh tonnes in the previous year. At present, annual domestic consumption is at 230 lakh tonnes.

The CNX Nifty is currently trading at 6,124.40 up by 78.55 points or 1.30% after trading in a range of 6,131.25 and 6,070.90. There were 48 stocks advancing against 2 declines on the index.

The top gainers of the Nifty were IndusInd Bank up by 4.15%, JP Associate up by 3.58%, Tata Steel up by 3.56%, SSLT up by 3.28% and ICICI Bank up by 3.02%.On the flip side, TCS down by 1.62% and Bhel down by 0.17% were the only loser on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 9.49 points or 0.43% to 2,198.03, Hang Seng surged 148.58 points or 0.64% to 23,243.46, Straits Times strengthened 8.28 points or 0.26% to 3,194.90, Seoul Composite added 8.43 points or 0.26% to 3,195.05 and Taiwan Weighted was up by 38.15 points or 0.46% to 8,412.83.

On the flip side, Nikkei 225 was down by 36.41 points or 0.25% to 14,548.49, KLSE Composite lost 0.10 points or 0.01% to 1,797.32 and Jakarta Composite decreased 5.80 points or 0.13% to 4,513.13.