Markets trade in tight range post soaring near three years’ high level

Indian equity markets, after speeding up-to three years high levels in the late afternoon deals, are stuck in a tight range as select market-participants growing wary of these higher levels have initiated profit-booking. In-line with Asian counterparts, local equity markets rallied on hopes that potential damage to the US economy from the weeks-long government shutdown would discourage the Federal Reserve from scaling back its stimulus programme at least until the beginning of next year. Nevertheless, optimism witnessed on account of China’s quickening growth, just a day after US. legislators finally broke a confidence-sapping fiscal impasse, also spilled across European markets, which got to a positive start. China'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. Closer home, intra-day reversal trend of Rupee on reports suggesting of RBI considering closing the dollar swap window offered to oil companies, also has taken trimmed bit of the bourses’ gains. Thus, at this point of time, both Sensex and Nifty, gaining over one and half a percent, are trading above the crucial 20,700 and 6,100 levels. Hopes that RBI would lift the limit that banks could borrow from repo window in its upcoming quarterly policy review on October 29, are aiding sentiment the sentiment. This secular up-move of the bourses is led by Metal, Banking and Realty counters. The overall market breadth on BSE is in the favour of advances which have thumped declines in the ratio of 1241:919; while 154 shares remained unchanged.

The BSE Sensex is currently trading at 20720.69, up by 305.18 points or 1.49% after trading in a range of 20765.13 and 20486.78. There were only 27 stocks advancing against 3 declines on the index.

The broader indices were trading in green; the BSE Mid and Small cap indices were trading higher by 0.78% and 0.54% respectively.

The gaining sectoral indices on the BSE were Metal up by 3.28%, Bankex up by 2.46%, Realty up by 1.81%, Oil and Gas up by 1.61% and PSU up by 1.18%. While, there were no losing indices on BSE.

The top gainers on the Sensex were SSLT up by 7.66%, Tata Steel up by 5.34%, ICICI Bank up by 2.60%, HDFC Bank up by 2.57% and Dr Reddy’s Lab up by 2.36%. On the flip side, Bajaj Auto down by 0.45%, Cipla down by 0.26% and BHEL down by 0.20% 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 6,136.00, up by 90.15 points or 1.49% after trading in a range of 6,152.90 and 6,070.90. There were 48 stocks advancing against 2 declines on the index.

The top gainers of the Nifty were SSLT up by 7.49%, Tata Steel up by 5.03%, Indusind Bank up by 4.72%, BPCL up by 3.29% and ICICI Bank up by 2.69% . On the flip side, BHEL down by 0.68% and Cipla down by 0.23% were the only losers on the index.

most of the Asian equity indices were trading in Green; Taiwan Weighted up by 0.79%, Seoul Composite up by 0.58%, Straits Times up by 0.29%, Shanghai Composite up by 0.21% and Hang Seng up by 0.93%. While, Jakarta Composite down by 0.12%, KLSE Composite down by 0.01% and Nikki 225 down by 0.17%.

European markets have got off a good start; with CAC 40 gainning 0.48%, DAX rising by 0.09% and FTSE 100 adding 0.23%.