Bourses ends modestly higher; December F&O series expires with 3% gain

The December series futures and options contract expiry day, despite late hour volatility, largely remained a quiet session, lacking the flavor of high volatility, which typically surfaces on an F&O contract expiry day. Nevertheless, the frontline indices witnessed consolidation through the day’s trade snapping the session with modest gains. The gauges gained about three percentage points in the December F&O series and traders were seen rolling-over their position to fresh month F&O contract on cautious hopes that the Reserve Bank of India (RBI) will surprise markets by cutting interest rates at its policy review in January 2014.

The bourses traded with traction through-out the session as sentiments remained up-beat after Mauritius said that it has put additional safeguards in place for global business companies operating from its jurisdiction to ensure their substantial presence there and to boost its image as a preferred global financial centre. Some support also came in from report that revenues from service tax, the new focus area for the finance ministry, have grown over 300 times in the past two decades, besides, the number of assessees have gone up over 400 times since 1994-95.

Global cues too remained supportive as the US markets ended mostly higher ahead of Christmas holiday, reacting to a pair of better than expected economic reports, though the trade remained somewhat subdued. Moreover, most of the Asian markets ended in the green terrain, with investors picking up stocks amid renewed optimism about the global economy on the back of recent encouraging data from the US, Europe and parts of Asia. Back home, some support came in from rally in public sector oil marketing companies (OMCs). Stocks like BPCL, HPCL and IOC edged higher on reports that the oil ministry has decided to move a Cabinet note for a higher increase in diesel price - in line with Rs 5 raise recommended by the Kirit Parikh committee. Moreover, power stocks too remained on buyers’ radar after CCEA approved mega power policy, wherein it approved changes in tapering coal linkage policy.

Sugar stocks like, Shree Renuka Sugars, Bajaj Hindusthan, Balrampur Chini, Triveni Engineering and Rana Sugars all edged higher after the Cabinet Committee on Economic Affairs approved the guidelines for financial assistance to the sugar industry for payment of cane price arrears. Additionally, fertilizer stocks remained upbeat on reports that fertilizer Ministry was seriously considering industry's demand to raise the fixed production cost incurred by manufacturers.

The NSE’s 50-share broadly followed index Nifty rose by over ten points to end above its psychological 6,250 level, while Bombay Stock Exchange’s sensitive Index -- Sensex increased by over forty points to end above the psychological 21,050 mark.

Broader markets, however, outperformed benchmarks and ended the session with gain of around a percentage point. Moreover, the market breadth remained in favour of advances, as there were 1629 shares on the gaining side against 902 shares on the losing side, while 129 shares remained unchanged.

Finally, the BSE Sensex gained 41.88 points or 0.20%, to settle at 21074.59, while the CNX Nifty added 10.50 points or 0.17% to settle at 6,278.90.

The BSE Sensex touched a high and a low of 21135.85 and 21013.14, respectively. The BSE Mid cap index was up by 0.41%, while the Small cap index gained 1.15%.

The top gainers on the Sensex were Tata Power up 4.06%, ONGC up 2.31%, HDFC Bank up 1.83%, Tata Steel up 1.53%, and Wipro up 1.36%, on the flip side Bajaj Auto down 2.02%, Dr Reddys Lab down 1.97%, Hero MotoCorp down 1.66 %, RIL down 0.94%, and Tata Motors down by 0.64%,were the top losers on the index.

On the BSE Sectoral front, Power up by 1.06%, Consumer Durables up by 0.88%, PSU up by 0.66%, Bankex up by 0.53%, and Metal up by 0.50%, were the top gainers, while Auto down by 0.46%, Healthcare down by 0.30%, and Realty down by 0.15%, were the only losers on the sectoral front.

Meanwhile, Fertiliser subsidy on urea is expected to go up in near future as the fertiliser ministry is likely to propose increase of subsidy by Rs 350 per tonne in urea as against the industry’s demand for a hike of Rs 700 per tonne. Currently, fertilizer companies are demanding for more subsidy owing to the rising fixed costs of urea production, which mainly includes establishment cost, annual maintenance cost, working capital, salaries, interest and other items. India produces about 22 million tonnes of urea and imports around 8 million tonnes in order to meet the shortfall. Presently urea is sold at a maximum retail price (MRP) of Rs 5,360 per tonne to farmers and the difference between production cost and MRP is reimbursed to manufacturers in the form of subsidy.

Further, the ministry is also likely to modify New Pricing Scheme (NPS) Stage- III after factoring in rise in fixed production cost over the years. Scheme was approved by the government in 2007 and was based on cost of production for 2002-03. So far this fiscal, the Fertiliser Ministry has been allocated only Rs 70,586 crore funds towards subsidy payment to fertiliser firms against the total demand of Rs 1,05,497 crore for the 2013-14 fiscal. Commodity wise, a subsidy of Rs 41,158.85 crore was allocated for urea and Rs 29,426.88 crore for P&K fertilisers. Furthermore, most of the fertilizer firms are facing a liquidity crunch as the government has exhausted its funds towards subsidy payment on indigenous urea. Concerned over acute the liquidity crunch faced by the Indian fertiliser sector, the fertiliser industry has urged the Government to immediately allocate an additional Rs 40,000 crore to clear the subsidy dues for the current fiscal to help resolving the payment crisis faced by the industry.

Meanwhile, in September, the Finance ministry had agreed to pay only Rs 5,500 crore subsidy under a special banking arrangement (SBA) as against Rs 12,000 crore sought by the Department of Fertilisers (DoF) and also agreed to bear interest of 8 per cent per annum with 2.7 per cent interest to be borne by the industry .

The CNX Nifty touched a high and low of 6,302.75 and 6,259.45 respectively.

The top gainers on the Nifty were Tata Power Company up by 4.64%, ONGC up by 2.38%, BPCL up by 1.94%, Wipro up by 1.82%, and HDFC Bank up by 1.78%, On the other hand, Bajaj Auto down by 2.23%, Hero MotoCorp down by 1.86%, Dr. Reddy's Laboratories down by 1.75%, Lupin down by 1.54%, and Punjab National Bank down by 1.54%, were the top losers.

The European markets remained shut for the trade today on account of Christmas Holidays.

The Asian markets barring Shanghai Composite and Seoul Composite concluded Thursday’s trade in green while Hong Kong and Indonesian markets remained shut for the trade today on account of Christmas Holidays. Markets in Korea were higher for the seventh straight session, after a break for Christmas. Japan’s Nikkei Stock Average extended its six-year high, pushing comfortably above the psychologically important 16,000 mark as a weak yen attracted foreign investors, and as Prime Minister Shinzo Abe tackled some of the remaining doubt over his stimulus measures. In Japan, markets responded well following two upbeat reports on the state of the Japanese economy from the government and Bank of Japan earlier in the week. Yet minutes of the Bank of Japan’s November 20-21 board meeting released showed that not all members were convinced that the country’s growth was on a long-term upward trend. One member stated that the recent deceleration in real gross domestic product growth could signal a downward shift in the economy’s trend.

China will likely stick with this year’s growth target of 7.5% for 2014 as top leaders balance the need to keep the economy on an even keel while pushing through necessary structural reforms. China’s banks are grappling with a surge of bad loans from three key sectors, led by the wholesale and retail sector. Non-performing loans in the wholesale and retail sector reached 2.6% -- far above the banking industry average in 2013 -- with information technology following at 2.0% and manufacturing at 1.8%. Japanese Housing Starts rose to a seasonally adjusted 14.1%, from 7.1% in the preceding quarter. Industrial Production in Singaporean fell to an annual rate of 4.0%, from 8.3% in the preceding month whose figure was revised up from 8.0%.