Markets make a positive start; trade cautiously ahead of IIP data

Indian equity markets have made a positive start, though as expected the gains are not as pronounced as the other global markets are witnessing. The mood of the market participants is cautious ahead of the October month’s IIP data, which is likely to see a contraction, its first decline in over two years.  The whole week is full of economic developments and hence the investors are opting to remain on sidelines despite getting a good outcome of the European Summit, where most of the European leaders agreed on a new 'comprehensive' set of measures meant to calm the debt crisis. Though UK vetoed, but many countries, chief among them Germany, wanted to craft the new pact as a change to the EU's foundational treaties. That would have given the changes a stronger legal force and would have eased the way for the EU authorities. Back on street, realty and FMCG stocks were showing some upmove while the broader indices too are trying to remain in green with the benchmarks.

The BSE Sensex opened at 16354.96 about 140 points higher compared to its previous closing of 16,213.46, and has touched a high and low of 16360.32 and 16218.28 respectively.  The index is currently trading at 16232.90, up by 19.44 points or 0.12%. 13 stocks were declining against 17 advances on the index.

The broader indices were trying to keep pace with the benchmarks, BSE Mid cap index was up by 0.01%, while the BSE Small cap index was up by 0.20%.

Realty up by 0.87%, FMCG up by 0.59%, Bankex up by 0.30%, HC up by 0.08% and OIL & Gas up by 0.05% were the top gainers on the index. While, CD down by 0.34%, Power down by 0.18%, CG down by 0.17%, TECk down by 0.02% were the major losers.

The top gainers of the Sensex were Tata Motors up by 0.98%, ITC up by 0.91%, DLF up by 0.79%, BHEL up by 0.72% and M&M was up by 0.65%.

On the flip side, Bajaj Auto was down by 1.80%, Tata Power down by 0.89%, Cipla was down by 0.78%, Bharti Airtel was down by 0.72% and NTPC was down by 0.66%.

Meanwhile, on the back of slowdown in economic activities and unfavorable environment in global economy, excise duty collections for the month of November declined by 6.5%. However, despite the drop in revenue collections the senior government officials were confident of achieving the indirect taxes target projected in the budget.

The Central Board of Excise and Customs (CBEC) Chairman SK Goel said 'I am optimistic of achieving the revised indirect tax targets of over Rs 4 lakh crore.' The government’s confidence is backed by the surge in the customs and service tax. During November, the domestic car sales increased by 7%, which hints that industrial activities may have gained momentum, this increase is expected to increase excise collections.  

In November 2011, the customs duties collections increased by 15.2% to Rs 100,062 crore and service tax collections also jumped by 43% to Rs 7,232 crore. In November, overall indirect tax collections increased by 6.36% to Rs 31,082 crore compared to Rs 29,222 crore in the same period of last year. During the first eight months of current financial year, the indirect tax collections increased by 16.8% to Rs 2,52,544 crore. The CBEC has already achieved 63.04% of the budget estimates of Rs 3.99 lakh crore.

Goel said the excise duty collections, a tax imposed on goods at the factory gate and considered as one of the few accurate gauges of industrial activity had been hit largely due to cut on duties on oil products earlier in the year. By adding further he said, ‘there has been a fall in Central Excise, which is a matter of concern.... I have called a meeting to discuss why central excise is showing negative growth.’

During October, IIP grew by just 1.9% and economic growth for the first half of 2011-12 grew by 7.3%. This decline in economic growth and industrial production has raised concern for meeting the revenue collection targets. However, the imports for the month of November increased by 29.1%, this surge in import with decline in Indian rupee against American dollar are expected to help custom revenue collections buoyant.

The S&P CNX Nifty opened at 4,906.85; about 40 points higher compared to its previous closing of 4,866.70, and has touched a high and a low of 4,910.25 and 4,868.25 respectively. The index is currently trading at 4,872.60, up by 5.90 points or 0.12%. There were 29 stocks advancing against 20 declines, while one stock remained unchanged on the index.

The gainers of the Nifty were Reliance Infra up by 1.80%, Tata Motors up by 1.58%, DLF up by 1.08%, RCom up by 0.99% and JP Associates up by 0.87%.

On the other hand, Ambuja Cements down by 1.75%, Bajaj Auto down by 1.63%, ACC down by 1.39%, IDFC down by 0.87% and Cipla down by 0.83% were the major losers on the index.

All the Asian markets, barring the Chinese one is trading in green, Shanghai Composite was down 10.47 points or 0.45% to 2,304.80.

Hang Seng was up 264.47 points or 1.42% to 18,850.70, Jakarta Composite gained 41.74 points or 1.07% to 3,800.00, Nikkei 225 rose by 138.81 points or 1.63% to 8,675.27, Straits Times was up by 19.26 points or 0.72% to 2,713.85, Seoul Composite gained 21.59 points or 1.17% to 1,896.30 and Taiwan Weighted was up by 53.26 points or 0.77% to 6,946.56.