Markets continue to ascend on bullish global cues

The key benchmark indices hit three-week highs in trade today tracking positive global cues. The regional counterparts, with an exception of Taiwan Weighted settled in the green. Moreover, major European indices are trading with significant traction at this point of time. The US index futures were also showing an up-tick in screen trade today. Back home, all the sectors in the BSE sectoral space are trading in the green. Consumer durables segment was the major gainer followed by banking, metal and fast moving consumer goods counters. The S&P CNX Nifty and BSE Sensex were trading above the psychological 6,050 and 20,200 levels, respectively. Though the BSE Mid-Cap index mirrored its larger counterpart, the Small-Cap index was outperforming the index with gain of over one percent. With overall positivism in sight, key benchmarks are likely to settle today's trade with good gains. The market breadth on the BSE was positive; the gainers outpaced the losers in a ratio of 1870:1034 while 99 shares remained unchanged.

The BSE Sensex surged 190.96 points or 0.95% to 20,216.38. The index touched a high and a low of 20,235.41 and 20,054.64, respectively.  

The BSE Mid-cap and Small-cap indices gained 0.58% and 1.13%, respectively.

The main gainers in the BSE sectoral space were Consumer Durables (CD) up 1.79%, Bankex up 1.38%, Metal up 1.35%, Fast Moving Consumer Goods (FMCG) up 1.31% and Public Sector Undertaking (PSU) up 0.68%; while there were no losers.

Meanwhile, rubber prices have been on the rise throughout in the current year, on tight demand supply scenario in global markets, hitting the user industries like tyre makers. While it was anticipated earlier that prices will correct in 2011 owing to a supply response, the same is unlikely to happen now as demand grows strongly amidst tepid supply increase.

Global supply of natural rubber (NR) is now anticipated to fall 6.3% in the fourth quarter of the current calendar year as per the revised estimates of the Association of Natural Rubber Producing Countries (ANRPC) whose members, including India, produce over 90% of global output of natural rubber, dampening any prospects of early correction in prices of the crucial raw material.

This further downward revision, from the previously expected 3.8% fall during the quarter, originates from downgrade in production by many countries including Thailand, which revised downwards its production growth estimate from -28.4% to -33.4%, India (revised down from -1.8% to -4.6%) and Vietnam (revised down from +3.8% to - 2.8%). As a result, this year's annual supply growth in natural rubber is likely to be slower at 5.7% rate than the previously expected 6.6% rate reported last month.

Demand for natural rubber on the other hand has been buoyant. The latest spike in market in fact has been driven by an improved economic outlook coupled with China's higher import demand which rose at 58% and 65% annualised rates during the months of October and November respectively. Also, rising crude oil prices are also boosting prices of natural rubber as it makes the close substitute, synthetic rubber, more costly. 

Overall, as the rubber demand remains strong and supply tightens further over next couple of quarter, the rubber market is set to remain tight in the near term. Following the downward revision in production growth, the already tight supply situation is likely to be aggravated further during the Feb-May 2011 period coincident with annual leaf-shedding of trees. This will most likely result in firm prices in the short run.

The major gainers on the Sensex were HUL up 2.89%, HDFC Bank up 2.83%, Bharti Airtel up 2.79%, Sterlite Inds up 2.57% and HDFC up 1.94%.

On the flip side, Cipla down 1.31%, Wipro down 0.85%, RCom down 0.40% and Tata Power down 0.06% were the only losers the index. 

The environment and coal ministries are in a sort of battle over the extent to which the coal reserves in the country are minable and what areas should be completely restricted for the mining companies. While the coal ministry wants to mine most of the coal reserves, the environment ministry wants to restrict the areas substantially.

The debate came into the light after the coal ministry came up with 'no-go-areas', or areas where coal mining cannot be conducted because they happen to be in environmentally sensitive zones. These areas comprise of a total of 206 coal blocks spread across 4,039 sq km in nine coalfields, with a production potential of 660 million tonne, or nearly 40% of identified potential.

The coal ministry has now approached the Cabinet to get a clearance for mining most of the areas classified as the 'no-go' zones by the environment ministry. Coal ministry argues that mining in the more sensitive areas can be reduced to protect the environment but totally disallowing mining will hamper India's overall coal production and hit the economic growth potential of the country.

India's Planning Commission, the top economic strategy making body of the country, too jumped into the debate and said last week that the environment ministry should show some flexibility in terms of demarking the go and no-go areas so that while the environmental concerns are addressed, industrial growth and overall development in the country is not effected either.

The S&P CNX Nifty soared 54.50 points or 0.91% at 6050.50. The index touched a high and a low of 6056.70 and 6002.85, respectively. 

The top gainers on the Nifty were HUL up 2.96%, HDFC Bank up 2.91%, Sterlite Inds up 2.82%, Bharti Airtel up 2.79% and HDFC up 1.90%.

The top losers on the index were Cipla down 1.66%, HCL Tech down 0.98%, Wipro down 0.96%, Sun Pharma down 0.57% and RCom down 0.50%.

Rest of the Asian markets with an exception of Taiwan Weighted, which slipped 0.05%, settled in the green. Shanghai Composite rose 0.68%, Hang Seng added 1.54%, Jakarta Composite advanced 1.07%, KLSE Composite gained 0.45%, Nikkei 225 jumped 0.50%, Straits Times surged 0.76% and Seoul Composite soared 0.50%.

Major European markets were trading in the positive territory. CAC-40 added 0.58% and DAX gained 0.38% and FTSE 100 advanced 0.10%.

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