Indian equities extend weakness, continue to trade in red

Indian equities extended weakness and continued to trade in red in the late morning session .On the global front, the Asian markets were trading on a mix note with some of the indices trading lower by quarter-to-half a percent in early trade as China pledged to keep curbs on its property market and euro declined amid concern Europe’s debt crisis is dragging on global growth. The US markets closed in green on the back of strong earnings and outlook from technology companies', which overshadowed weak economic data of rise in unemployment benefit claims. Back home, traders were seen piling up position in FMCG sector while selling was witnessed in Bankex, Oil & Gas and Realty sector. Meanwhile, there will be some buzz in PSU sector too, as the cabinet has also approved the sale of 10.82% of its stake in Steel Authority of India, which may fetch the exchequer over Rs 4,000 crore. The telecom stocks too will be watched as the ministerial panel on spectrum is expected to finalize its much awaited recommendations on spectrum reserve price and usage charges. The NSE Nifty and BSE Sensex were trading above their psychological 5,200 and 17100 levels respectively. The market breadth on BSE was negative in the ratio of 1124:946 while 81 scrips remained unchanged

The BSE Sensex is currently trading at 17171.85 down by 107.00 points or 0.62% after trading as high as 17275.20 and as low as 17142.13. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index down 0.19% while Small cap index was down 0.04%.

On the BSE sectoral space, FMCG up by 0.01%, while Bankex down by 1.04%, Oil & Gas down by 0.95%, Realty down by 0.90%, CG down by 0.69%, and Power down by 0.54% were the losers on the index.

Bajaj Auto up by 1.65%, TCS up by 1.60%, Jindal Steel up by 0.81%, Coal India up by 0.50% and Maruti Suzuki by 0.39% were the major gainers on the Sensex, while Dr Reddys Lab down by 2.94%, Sterlite Inds by 1.70%, Hero MotoCorp down by 1.41%, BHEL down by 1.36% and Tata Power down by 1.34% were the major losers in the index.

Meanwhile, for 2012-13 marketing year (October-September) period, the Cabinet Committee on Economic Affairs (CCEA) has approved the hike in the fair and remunerative price (FRP) of sugarcane by 17% to Rs 170 per quintal. The FRP is the minimum price that sugarcane farmers are legally guaranteed and for the ongoing marketing year it stands at Rs 145 per quintal.

The Government receives advice from a statutory body the Commission for Agricultural Costs and Prices (CACP) on farm pricing policy front. For the 2012-13 marketing year, CACP has recommended a 17.25% hike in the FRP on account of rising input production costs. CCEA took the decision on pursuant to Food Ministry accepting CACP’s recommendation for the same.

In the new season starting from October 01, sugar mills will have to pay farmers at least Rs 170 per quintal as the FRP for cane. However, farmers may be disappointed by this increase as this hike will fail to cover the entire increase in their costs which majorly factors labour and diesel costs. The farmers have started eyeing on the state advised price for cane that will be announced later by Uttar Pradesh, Punjab and Tamil Nadu, using the FRP as its base.

The FRP is the sugarcane price fixed by the Centre however some states like Uttar Pradesh and Tamil Nadu follow the policy of state advisory price (SAP), where they declare their own rate. Besides, the SAP is higher than the FRP. In Uttar Pradesh, compared to Centre's FRP of Rs 145 a quintal the SAP for the current year stands at Rs 250 per quintal. The FRP is linked to a basic recovery rate of 9.5%, subject to a premium of Rs 1.46 for every 0.1% point increase in recovery above 9.5%. The recovery rate is the quantity of sugar that is produced from the crushed cane. The Government by and large accepts the cane price recommended by the CACP.

Due to bumper production of sugarcane, India, the world's second largest sugar producer, is currently exporting the sweetener which stood at 357.66 million tonnes in 2011-12.

The S&P CNX Nifty is currently trading at 5,207.50,downby 35.20 points or 0.67% after trading as high as 5,238.70 and as low as 5,197.50. There were 11 stocks advancing against 39 declines on the index.

The top gainers on the Nifty were Bajaj-Auto up by 1.88%, TCS up by 1.55%, Asian Paint up by 1.18%, Jindal Steel by 0.86% and JP Associates up by 0.85%. While DR Reddy down by 2.96%, Kotak Bank down by 2.74%, STER down by 1.93%, BHEL down by 1.64% and Sesa Goa down by 1.63% were the major losers on the index.

Asian equity indices were trading on a mix note ; KLSE Composite up 0.09%, Hang Seng index up by 0.12%, Kospi Composite Index up 1.55% and Jakarta Composite was up by 0.01% While, Nikkei 225 down 1.44%, Straits Times down 0.50%, Taiwan Weighted down  0.05% and Shanghai Composite down 0.61%  were the only losers in the Asian pack.