Hefty buying in heavyweights takes Sensex over 100 points higher in noon trades

Stock markets in India showed a sharp surge in Tuesday afternoon trades with the benchmark equity indices climbing to the high point of the day, largely led by defensives and Oil & Gas stocks. The frontline indices are trading with gains of around three fourth of a percent as they surpassed the psychological 5,100 (Nifty) and 16,800 (Sensex) levels and looked set to surge higher. After getting off to a flat to positive opening, the markets traded in close proximity with the previous closing levels for most part of morning trades as cues from the Asian space remained sluggish. While the Greek polls ensured that there would be no break-up of the European Union, which capped the downside, however hopes of a concerted EU action to provide stimulus faded after German Chancellor Angela Merkel said that the new Greek government had to meet commitments made to international lenders, limiting the markets’ upside chances. However, the domestic markets showed renewed vigor in afternoon trades following the positive European market opening as sentiments got support from growing speculation that Greece's New Democracy party will come to a coalition agreement with the socialist Pasok party however, Spain's soaring government bond yields limited gains. On the domestic front, cues from the money market remained supportive as the rupee came off the lows of the day and inched below the 56 per dollar levels. On the BSE sectoral space, the defensive FMCG pocket rallied close to two percent and remained the top gainer followed by the heavyweight Oil & Gas counter which traded with over one and half a percent gains. On the other hand, the consumer durables index remained the top laggard while investors were also seen booking profits from the rate sensitive Bankex and Realty shares.

Moreover, the broader markets traded on flat note with single digit cuts, relatively underperforming their larger peers. The bourses rose on weaker volumes of over Rs 0.7 lakh crore while the market breadth on BSE was in favor of declines in the ratio of 1248:1038 while 140 scrips remained unchanged.

The BSE Sensex is currently trading at 16,820.47 up by 114.64 points or 0.69% after trading as high as 16,831.20 and as low as 16,681.89. There were 22 stocks advancing against 8 declines on the index.

The broader indices were trading on a flat note; the BSE Mid cap index eased 0.01% and Small cap index rose 0.01%.

On the BSE sectoral space, FMCG up 1.76%, Oil & Gas up 1.53%, Healthcare up 0.87%, Capital Goods up 0.78% and PSU up 0.57% were the major gainers, while Consumer Durables down 0.23%, Realty down 0.19%, Bankex down 0.16%, IT down 0.10% and TECk down 0.05% were the major laggards in the space.

ITC up 2.82%, ONGC up 1.90%, Cipla up 1.51%, RIL up 1.51% and TCS up 1.29% were the major gainers on the Sensex, while Sterlite down 2.45%, Infosys down 1.11%, BHEL down 0.98%, Coal India down 0.49% and HDFC Bank down 0.44% were the major losers in the index.

Meanwhile, after Prime Minister Manmohan Singh called for infrastructure led economic recovery in a review meeting of key infrastructure ministries, the Ministry of Shipping has gone ahead and revised its targets upwards and vowed to award projects for creating 244 million tonnes of capacity during 2012-13 spread across 42 projects at an estimated cost of Rs 14,500 crore. The government’s move to award projects worth Rs 14,500 crore in the current fiscal is forecasted to augment major ports' capacity to about 934 million tonnes (MT) per annum.

G K Vasan, the Union Minister of Shipping also revealed that the target would entail obtaining approval of establishing two new major ports one in Andhra Pradesh and another in West Bengal. The Shipping Minister also remained confident that the various incentives offered in Union Budget would certainly provide an impetus for the growth of India’s port sector.

Amid times of tight liquidity situation, the shipping sector faces several difficulties in raising easy money. In order to address this short coming and to enable the ports to raise funds to the tune of Rs 5,000 crore for various projects, the government in this year’s Union Budget proposed to extend the tax-free bond scheme for one more year. Moreover, the rate of withholding tax on interest payments on external commercial borrowings has also been reduced from 20 percent to 5 percent for a period of three years for ports and shipyards.

After the introduction of the tonnage tax regime, Indian shipping which was stagnating around 6 million Gross Tonnage for a decade witnessed a steady growth to reach 11 million Gross Tonnage by the end of 2011. The capacity of Indian ports went up to more than 1200 million metric tonnes by March 2012 from about 1100 million metric tonnes per annum at the end of the previous financial year. The Shipping Ministry has also brought to the notice of Finance Ministry the need for exemption of Minimum Alternate Tax (MAT) on the book profit on sale of qualifying ships and its inclusion within tonnage tax regime. The inclusion of interest income on funds deployed out of tonnage tax reserve within tonnage tax regime is also among the various other issues that are being taken up with the Ministry of Finance.

G K Vasan exuding confidence over the sector’s bright growth prospects, pinned hopes on high demand for energy in future, which would result in increased import of coal and oil while he also remained certain that the container volumes in India will remain in high growth trajectory. With India’s external trade, as a proportion of GDP, registering more than two-fold growth in last 10 years and a bulk of this international trade being carried through shipping, the sector is expected to witness high growth in the years to come.

The S&P CNX Nifty is currently trading at 5,095.35, higher by 31.10 points or 0.61% after trading as high as 5,095.60 and as low as 5,048.10. There were 33 stocks advancing against 17 declines on the index.

The top gainers on the Nifty were Ambuja up 2.70%, ITC up 2.69%, Grasim up 2.07%, Siemens up 2.04% and Ranbaxy up 2.02%.

Sterlite down 2.35%, Bank of Baroda down 1.59%, PNB down 1.48%, Cairn down 1.29% and Infosys down 0.88% were the major losers on the index.

In the Asian space, Shanghai Composite declined 0.67%, Hang Seng slipped 0.30%, Nikkei 225 sank 0.75% and Taiwan Weighted eased 0.11%.

On the other hand Jakarta Composite inched up 0.05%, KLSE Composite gained 0.51%, Straits Times Index climbed 0.55% and KOSPI Composite Index rose 0.01%.

The European markets got off to a positive start as France’s CAC 40 advanced 0.43%, Germany’s DAX gained 0.35% and the United Kingdom’s FTSE 100 rose 0.48%.