Benchmarks continue to trade flat with positive bias

Indian equity benchmarks continued to trade near the neutral line with positive bias in the afternoon session amid buying witnessed in realty, tech and metal stocks. Investors’ sentiments got some support as the finance ministry underscored that the economy was well prepared to deal with the US Fed tapering programme. Buying was also witnessed in banking stocks after the Reserve Bank of India (RBI) stressed that the framework to revitalise distressed loans in the economy will be fully effective from April 1. The RBI’s new framework will help the domestic banking system to recognise financial distress early, to take prompt steps to resolve it, and ensure fair recovery for lenders and investors. However, markets’ gains remain capped as selling witnessed in auto, power and metal stocks as investors also remained cautious ahead of fiscal deficit data for the April-December period and first revised GDP data for the fiscal year that ended in March 2013, scheduled to be announced later in the day. On stock specific movement, M&M, Tata Steel and TCS were trading up by over 1.80%, while, NTPC, Tata Motors down and HDFC were trading down by over 1.50% on BSE. Balkrishna Industries surged around 7% to Rs 325.10 after net profit jumped 66.4% y-o-y to Rs 123.85 crore in Q3FY14. Arvind Ltd is up over 2% at about Rs 140.5 after the largest integrated textile and branded apparel players, posted a 42% rise in net profit for Q3FY14.

On global front, Asian equity indices were closed today barring Japanese index Nikkei which was down by 0.60%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,050 and 20,500 levels respectively. The market breadth on BSE was positive, out of 2,129 stocks traded, 1,241 stocks advanced, while 762 stocks declined on the BSE.

The BSE Sensex is currently trading at 20,511.46 up by 13.11 points or 0.06% after trading in a range of 20,572.32 and 20,469.26. There were only 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.91%, while Small cap index up by 0.99%.

The gaining sectoral indices on the BSE were Realty up by 1.46%, Teck up by 1.30%, Metal up by 1.22%, IT up by 1.21% and Capital Goods up by 0.52%. While, Auto down by 0.44%, Power down by 0.41% and Consumer Durables down by 0.34% were the losing indices on BSE.   

The top gainers on the Sensex were M&M up by 2.84%, Tata Steel up by 2.44%, TCS up by 1.85%, SSLT up by 1.39% and Bharti Airtel up by 1.20%. On the flip side, NTPC down by 3.12%, Tata Motors down by 2.77%, HDFC down by 1.51%, Hero Moto Corp down by 1.44% and BHEL down by 1.27%.

Meanwhile, a Group of Ministerial Panel (GoM) has recommended increase in fixed cost paid to urea manufactures by Rs 350 per tonne. Meanwhile, there will be no increase in the rate of crop nutrient for farmers as the additional cost of Rs 900 crore will be endured by the government. Earlier, Fertiliser Ministry had moved the proposal for modified New Pricing Scheme (NPS) III, under which the Ministry calculated production cost of urea to pay subsidy and had proposed to raise the fixed cost of urea by Rs 350 per tonne. Now, the proposal would be moved to Cabinet Committee on Economic Affairs (CCEA) for consideration.

According to the proposal, the fixed cost of urea produced by plants which are 30 years old or more would be increased by Rs 150 per tonne, while for all other plants it would be raised by Rs 350 per tonne. The base year for calculating fixed cost of urea has been changed from 2002-03 to 2008-09 and minimum fixed cost would be Rs 2,300 per tonne . Further, this scheme would remain applicable for one year from the date of notification. Fixed cost for a urea plant mainly includes repair & maintenance, salary & wages, contract labour and selling expenses. However, the proposed urea fixed cost at Rs 350 per tonne subsidy is lower than the industry demand at Rs 700 per tonne by using 2011-12 as the base year. The government introduced the New Pricing Scheme (NPS) Stage-III for urea units in 2007 and was originally effective from October 2006 to March 2010. Now, the scheme has been extended for three more years and was based on cost of production with 2002-03 as the base year.

India produces about 22 million tonnes (MT) of urea annually and also imports around 8 MT to meet the domestic total requirements. Currently, Indian fertilizer industry is struggling with acute liquidity crunch on account of high production costs. So far this fiscal, the government has allocated Rs 70,586 crore funds to Department of Fertiliser (DoF) as 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. 

The CNX Nifty is currently trading at 6,081.90 up by 8.20 points or 0.14% after trading in a range of 6,097.30 and 6,068.35. There were only 35 stocks advancing against 15 declining on the index.

The top gainers of the Nifty were M&M up by 2.94%, Tata Steel up by 2.51%, TCS up by 1.84%, HCL Tech up by 1.76% and DLF up by 1.71%. On the flip side, NTPC down by 3.16%, Tata Motors down by 2.89%, HDFC down by 1.59%, Asian paints down by 1.47% and Grasim down by 1.45% were the major losers on the index.

Asian equity indices were closed today barring Japanese index Nikkei ; Nikkei 225 down by 0.60%.