Benchmark indices continue their range bound trade

The Benchmark equity indices continue to trade flat with positive bias in the late-morning session. In the mean time majority of the regional peers were trading in positive terrain, while the US index futures were also showing up-tick in screen trade. Back home The BSE Sensex and the NSE Nifty were hovering around the psychological 20,100 and 6,020 levels, respectively. All the sectoral indices of the BSE were trading in the green with only exception of Information Technology (IT) counter. Metal, Consumer Durables (CD), Bankex, Fast Moving Consumer Goods (FMCG) and Realty stocks hogged the limelight. The mid-cap and small-cap pockets outperformed their large-cap peers in trade. The market breadth on the BSE was strong; the gainers thrashed the losers in a ratio of 1774:868 while 129 shares were unchanged.

The BSE Sensex advanced 80.01 points or 0.40% to 20,105.43. The index touched a high and a low of 20,122.49 and 20,054.64, respectively.

The BSE Mid-cap and Small-cap indices gained 0.63% and 1.03%, respectively.

The main gainers in the BSE sectoral space were Metal up 1.09%, Consumer Durables (CD) up 0.96%, Bankex up 0.55%, Fast Moving Consumer Goods (FMCG) up 0.54% and Realty up 0.40%.

On the other hand Information Technology (IT) down 0.04% was the only loser in the BSE sectoral space.

The major gainers on the Sensex were Sterlite Inds up 1.68%, Hindalco Inds up 1.64%, HDFC Bank up 1.48%, Bharti Airtel up 1.42% and Jindal Steel up 1.40%.

The major losers on the index were Wipro down 0.71%, RCom down 0.57%, BHEL down 0.40%, Cipla down 0.41% and M&M down 0.66% .

Textile industry continues to face the problems of rising cost of inputs as the cotton prices remain close to record highs on tight demand-supply equation. The government, which is facing the difficult task of balancing the interests of textile players and farmers, is unlikely to be able to provide much relief to the industry in near term.

Cotton prices shot up in the international markets in the second half of the current calendar year because of the demand-supply imbalance, driven mainly by increasing consumption in China and poor harvests in Pakistan due to floods. The global trend has been mapped in India as well where the price of the natural fibre increased 90% in the last five months. A cotton candy (356 kg) was priced at an all-time high of Rs 45,000 in October in the domestic market, compared with around Rs 27,000 this time around a year ago.

As the local cotton prices surged, the government capped cotton exports in the current season that started on October 1 at 55 lakh bales (170 kg each) and that for cotton yarn at 720 million kg. However, this has not reduced prices much, as traders believe that the export limit could be raised any time. Industry insiders now opine that in case the government does not increase the limit of cotton export from the current ceiling of 55 lakh bales, it may lead to an increased supply in the domestic market and lower cotton prices.

This however is not clear as yet. While the government permitted export of 55 lakh bales from 1st November to 15th December, only about 25 lakh bales were shipped out of the country over that period. As a result, the government is likely to extend the deadline and fresh notifications may happen in first half of January. This will keep the domestic prices firm, at least till the exports continue.

Textile industry on the other hand is demanding an immediate ban on cotton exports. While the argument of the industry is valid given the over 100% appreciation in prices on year-on-year basis, the government is facing similar pressure from trader and farmer lobbies. Farmer leaders contend that if prices have increased in India, so do they have everywhere else, and in that sense competitiveness of textile industry should not be affected. 

The S&P CNX Nifty increased 22 points or 0.38% to 6,018.55. The index touched a high and a low of 6,025.10 and 6,002.85, respectively. 

The top gainers on the Nifty were Sterlite Inds up 1.65%, Hindalco Inds up 1.64%, Bharti Airtel up 1.56%. HDFC Bank up 1.52% and SAIL up 1.36%.

The top losers on the index were Siemens down 0.77%, RCom down 0.75%, Cipla down 0.74%, Sun Pharma down 0.72% and Wipro down 0.65%.

Majority of the regional peers were trading in green, Shanghai Composite added 0.04%, Hang Seng gained 1.17%, Jakarta Composite rose 0.67%, KLSE Composite advanced 0.35%, Nikkei 225 jumped 0.50%, Straits Times increased 0.73% and Seoul Composite climbed 0.50% while Taiwan Weighted shed 0.05%.

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