Benchmarks trade marginally higher in late morning

Indian equity benchmarks were trading marginally higher in late morning deals ahead of GDP data for the October-December quarter to be released later in the day. Market participants’ sentiments remained boost as foreign institutional investors (FIIs) bought shares worth net Rs 511.15 crore on February 26, 2014, as per provisional data from the stock exchanges.  However, gains on up-side remained capped as the rupee deprecated against the US dollar in early trade.

On the global front, most Asian markets were trading in red while Japanese market was weighed down by the gain in yen. Back home, traders were buying, Healthcare, Metal and IT stocks, while selling was seen in Consumer Durables. The market breadth on BSE remains positive with advances to declines in the ratio of 1160:734. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,000 and 6,250 levels respectively. The BSE Sensex is currently trading at 21075.28 up by 88.29 points or 0.42% after trading in a range of 21120.25 and 20989.66. There were 19 stocks advancing against 11 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.48% and Small cap index gained 0.50%.

The top gaining sectoral indices on the BSE were, Healthcare up by 1.64%, Metal up by 1.08%, IT up by 0.76%, Teck up by 0.71% and Capital Goods up by 0.66%, while Consumer Durables down by 0.27% were the only losers on the sectoral index.

The top gainers on the Sensex were Hindalco up by 3.61%, Tata Motors up by 3.33%, Dr Reddys Lab up by 2.82%, TCS up by 2.50% and Sun Pharma up by 2.31%. On the flip side, Maruti Suzuki was down by 4.26%, NTPC was down by 1.43%, HDFC Bank was down by 1.29%, Hero MotoCorp was down by 0.92%, and Hindustan Unilever was down by 0.80% were the top losers on the Sensex.

Meanwhile, The Cabinet Committee on Economic Affairs (CCEA) is likely to consider Fertiliser Ministry’s proposal to raise the fixed cost of urea by up to Rs 350 per tonne, a move that would lead to increase in subsidy burden to government by about Rs 900 crore. Earlier, the Group of Ministers (GoM) had approved Ministry's proposal to raise the urea fixed cost under the New Pricing Scheme (NPS) III.

As per the Fertiliser Ministry’s the fixed cost of urea would be raised by up to Rs 350 per tonne and an additional increase of Rs 150 per tonne for plants which are 30 years old. The base year for calculating fixed cost of urea has been changed from 2002-03 to 2008-09 and maximum 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.

In another proposal, CCEA would also consider a proposal to modify the New Investment Policy (NIP) for urea to remove the 'guaranteed buyback' clause, that assured buyback of urea for eight years from start of production. Owing to this clause, the government had received about 13 investment proposals entailing capacity addition of 16 million tonne. Meanwhile, the proposed capacity addition by the applicants was more than double the actual requirement. India produces about 22 million tonnes (MT) of urea annually and also imports around 8 MT to meet the total domestic requirements.

The CNX Nifty is currently trading at 6,258.55 up by 19.75 points or 0.32% after trading in a range of 6,274.25 and 6,228.10. There were 33 stocks advancing against 17 decliners on the index.

The top gainers of the Nifty were Hindalco up by 3.81%, Tata Motors up by 3.43%, Dr. Reddy's Laboratories up by 2.86%, JP Associaties up by 2.84% and TCS up by 2.66%. On the flip side, Maruti Suzuki down by 4.26%, NTPC down by 1.57%, HDFC Bank down by 1.43%, Power Grid down by 1.16% and Hero Moto Company down by 1.07% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dropped by 18.37 points or 0.90% to 2,028.99, Hang Seng tumbled 71.77 points or 0.31% to 22,756.41, Nikkei 225 slipped by 152.43 points or 1.02% to 14,773.17, Straits Times declined 6.90 points or 0.22% to 3,089.84 and Seoul Composite was down by 2.43 points or 0.15% to 1,975.68. On the flip side, Jakarta Composite rose 27.77 points or 0.61% to 4,596.71 and KLSE Composite soared 2.54 points or 0.14% to 1,834.20.