Benchmarks make firm start on first trading day of 2011

The Indian equity markets have made a firm start on first trading day of the year 2011, taking positive cues from firm Asian counterparts. All the Asian equity indices were trading on a positive terrain at this point of time. Back Home, sustained buying in broader indices along with heavyweights was keeping the momentum on a positive side for the markets, metal witnessed the maximum gain in trade followed by auto and realty with no losers on the BSE sectoral space, meanwhile the broader indices are outperforming the benchmarks. The domestic markets' sentiment were also lifted by Finance Minister Pranab Mukherjee's statement that Centre is hopeful that food inflation will come down to 6.5% by March. Index heavyweight Reliance Industries was trading with a gain of more than half a percent. Moreover, Steel companies viz. Tata Steel, Steel Authority of India (SAIL) and JSW Steel all were trading with a gain of more than two percent as the steel prices are set to go up by about 5% later this week due to higher raw material prices. The market breadth on the BSE was positive; there were 1,561 shares on the gaining side against 391 shares on the losing side while 61 shares remained unchanged.

The BSE Sensex opened at 20,621.61; about 112 points higher compared to its previous closing of 20,509.09, and has touched a high and a low of 20,664.80 and 20,618.32, respectively. The index is currently trading at 20,640.49, up by 131.40 points or 0.64%. There were 28 stocks advancing against just 2 declines on the index.

The overall market breadth has made a strong start with 77.32% stocks advancing against 19.37% declines. The broader indices were performing in line with benchmarks; the BSE Mid cap and Small cap indices surged 0.99% and 1.18% respectively. 

The top gaining sectoral indices on the BSE were, Metal up by 1.58%, Auto up by 1.47%, Realty up by 1.03%, Bankex up by 0.93% and CD was up by 0.89%. While there were no losers on the index.

The top gainers on the Sensex were Tata Steel up by 2.28%, M&M up by 2.24%, Sterlite Industries up by 2.20%, Reliance Infra up by 2% and Maruti Suzuki was up by 1.79%.

Bharti Airtel down by 0.74% and BHEL down by 0.50%, were the only losers on the index.

Meanwhile, whether the diesel prices are hiked or not, the under-recoveries of the oil marketing companies (OMCs) will be fully taken care of, said the government on Thursday. The oil and gas ministry said on Thursday that the finance ministry was equally worried about the health of government controlled OMCs and had assured the petroleum ministry of adequate compensation.

In a press conference the oil secretary S Sundareshan said that oil and finance ministries have been in consultations over the issue of under-recoveries and in no case the financial health of the oil companies will be allowed to be affected. He also cleared that compensation will be provided to OMCs in line with the subsidy sharing formula. The finance ministry which had earlier refused to bear more than 33% of the under-recoveries is now likely to let its share hike. 

The remarks from the secretary came just amidst the cancellation of a meeting of the Empowered Group of Ministers (EGoM) on fuel prices. The panel was to take up the issue of hiking prices of diesel and LPG gas. The indefinite postponement of the meeting was taken as government's unwillingness to hike the administered prices of the fuels. This however can have significant impact on financial health of the OMCs whose under-recoveries may cross earlier estimates of Rs 66,000 crore by a significant margin.

The EGoM has been considering a price hike of Rs 2 per litre on diesel and Rs 30-40 per LPG cylinder. OMCs currently sell diesel at a loss of Rs 6.09 per litre and cooking at Rs 272.19 per cylinder.  Sundareshan while refused to comment on the reason for the cancellation of the meeting of fuel EGoM, said that it will have no bearing on the issue of compensation of the OMCs which will be addressed by the finance ministry.

'An impression seems to have been generated that since the EGoM has been postponed, and the under-recoveries will be left unattended. This is totally incorrect,' he said. Sundareshan also categorically stated that in no case the upstream companies will bear more than 33% of the under-recoveries and only a very small amount can be left to be absorbed by the downstream companies, which means the finance ministry will have to increase its share of subsidy burden. 

The S&P CNX Nifty opened at 6,177.45; about 43 points higher compared to its previous closing of 6,134.50, and has touched a high and a low of 6,178.55 and 6,166.65 respectively. The index is currently trading at 6,177.00, higher by 42.50 points or 0.69%. There were 48 stocks advancing against just 2 declines on the index.

The top gainers of the Nifty were Tata Steel up by 2.23%, M&M up by 2.14%, Sterlite Industries up by 2.04%, Reliance Infra up by 1.74% and Maruti Suzuki up by 1.72%.

The only losers of the index were Bharti Airtel down by 0.77% and BHEL was down by 0.42%.

All Asian equity indices were trading in the green; Hang Seng was up 330.08 points or 1.43% to 23,365.53, Jakarta Composite was up 30.76 points or 0.83% to 3,734.28, KLSE Composite was up 11.51 points or 0.76% to 1,530.42, Straits Times was up 37.79 points or 1.18% to 3,227.83, Seoul Composite was up 15.68 points or 0.76% to 2,066.68 and Taiwan Weighted was up by 49.13 points or 0.55% to 9,021.63.

While, stock markets in Japan, mainland China, Australia and New Zealand remained closed on Monday on account of New Year's holiday.

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