Benchmarks trade range-bound on account of caution ahead of F&O expiry

Stuck in a tight range, barometer gauges are currently sustaining early gains, if not adding any further on account of prevailing caution ahead of the expiry of monthly derivative contracts later in the day. Short-covering of pending positions since early deals mainly has led to the up-move of local bourses, which also drew some strength from firm Asian counterparts. However, after cooling off from day’s high point, both Sensex and Nifty are comfortably trading past the crucial 21,050 and 6,250 levels respectively, with gains of close to two tens of a percent. Nevertheless, broader indices despite paring their early gains continue to outperform larger peers, with gains of over 3 /4 of a percent.

Further, the secular upmove of bourses is also on account of across the board buying activity, which has left no sectoral indices in negative terrain. Nevertheless, stocks from Consumer Durables, Power and Capital Goods counters are the top gainers of the session. Additionally, Public Sector Oil Marketing companies, BPCL, HPCL and IOC are trading sanguine since early deals on hopes of higher hike in diesel prices than the current 50 paise per litre per month. Further, power stocks too charged up in trade after CCEA okayed mega power policy, wherein it approved changes in tapering coal linkage policy. Besides, fertilizer stocks too were upbeat on prospects of hike on fertilizer subsidy on urea. The overall market breadth on BSE continues to remain in the favour of advances which thumped declines in the ratio of 1523:677; while 136 shares remained unchanged

The broader indices pared some of its gains; the BSE Mid cap and Small cap indices were trading up by 0.87% and 1.41% respectively.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.23%, Power up by 1.01%, Capital Goods up by 0.74%, Metal up by 0.57% and TECk up by 0.49%. There were no losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.33%, Tata Powers up by 1.62%, Sun Pharma up by 1.38%, Bharti Airtel up by 1.17% and NTPC up by 0.98%. On the flip side, Hero Motocorp down by 1.52%, Bajaj Auto down by 0.91%, RIL down by 0.74%, Dr Reddy’s Lab down by 0.71% and ICICI Bank down by 0.42%.

Meanwhile, Fertilizer 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 is currently trading at 6,284.70, up by 16.30 points or 0.26% after trading in a range of 6,291.20 and 6,270.05. There were 38 stocks advancing against 12 declining on the index.

The top gainers of the Nifty were BPCL up by 3.02%, ONGC up by 2.31%, NMDC up by 2.17%, Tata Power up by 1.57% and SunPharma  up by 1.44%. On the flip side, Hero Motocorp down by 1.39%, Reliance down by 0.94%, Bajaj Auto down by 0.92%, Power Grid down by 0.71% and Cairn India down by 0.68% were the major losers on the index.

Most of the Asian equity indices were trading in green; Hang Seng up by 1.13%, KLSE Composite up by 0.40%, Straits Times up by 0.25%, Nikkei 225 up by 1.03% and Taiwan Weighted up by 0.21%. While, Seoul Composite down by 0.11% and Shanghai Composite down by 1.49%.