Benchmarks trade firm; Sensex regains 19,000 mark

The Indian equity markets are trading firm in the morning session after making a good start, tracking good going in the Asian markets. Most of the Asian equity indices barring Jakarta Composite and KLSE Composite were trading in the positive terrain at this point of time indicating strong investors' sentiments. Back home, sustained buying in key heavyweights and broader indices was keeping the momentum on a positive side. The BSE's -- Sensex -- and NSE's -- Nifty -- have regained their crucial 19,000 and 5,700 level, respectively. On the sectoral front, software, banking and consumer durables stocks were witnessing maximum gains in trade, while capital goods was the lone loser on the BSE sectoral space, meanwhile the broader indices were going neck to neck with the benchmarks. IT sector remained the top gainer on the sectoral space taking support from the better than expected results of industry bellwether TCS, the company has posted 29.93 per cent jump in consolidated net profit at Rs 2,369.83 crore for the third quarter ended December 31, 2010. The market breadth on the BSE was positive, there were 1216 shares on the gaining side against 456 shares on the losing side while 39 shares remained unchanged.

The BSE Sensex opened at 18,983.20; about 101 points higher compared to its previous closing of 18,882.25, and has touched a high and a low of 19,071.02 and 18,977.06 respectively. The index is currently trading at 19,030.53, up by 148.28 points or 0.79%. There were 25 stocks advancing against 5 declines on the index.

The overall market breadth has made a strong start with 71.07% stocks advancing against 26.65% declines. The broader indices were performing in line with benchmarks; the BSE Mid cap and Small cap indices surged 0.73% and 0.75% respectively. 

The top gaining sectoral indices on the BSE were, IT up by 1.70%, Bankex up by 1.50%, CD up by 1.45%, TECk up by 1.38% and Metal was up by 1.20%. While, CG down by 0.04% was the lone loser on the index.

The top gainers on the Sensex were TCS up by 3.41%, Wipro up by 2.74%, Jaiprakash Associates up by 2.15%, ICICI Bank up by 1.84% and Cipla was up by 1.76%.

Hero Honda down by 1.56%, ONGC down by 0.47%, L&T down by 0.37%, BHEL down by 0.18% and HDFC down by 0.05%, were the top losers on the index were.

Meanwhile, even as the headline inflation in India continue to remain at highly elevated levels, the recent significant rise in price of steel has further added to inflationary pressures as food and energy costs are already soaring. Since steel is an input for so many products, the rise in steel prices has a cascading impact on overall pricing structure in an economy.

Over the last one month, prices of various steel products, particularly the flat category, have increased by 9-12% in India. However, the steel industry cannot be held guilty as its cost of production has been increasing at a much faster pace, and despite the recent increase, the steel companies would probably be earning margins which are less than the year-ago levels.

The industry has already had a bleak quarter December as margins have been hit due to rising costs amidst stagnant prices. Even though steel demand in India is reasonably strong, there has been a lot of import of the commodity which has been keeping the pressure on prices. With a pick-up in infrastructure projection expected in first quarter of 2011, steel demand should further improve.

However, it is the cost of production which is keeping the industry under pressure. Prices of both iron ore and coking coal prices have been on the rise in recent months. Iron ore prices which had softened considerably towards the end of September quarter following a surge early in the year have again been on the rise in recent months. The trend may further firm up in wake of overall rising global commodity prices. Another key steel input, coking coal, too has seen substantial increase in prices. Coking coal prices grew by 75% over 2009 and after remaining somewhat flatter in 2010 is now again likely to surge on account of floods in Australia which has taken around 5% of the global supplies off the charts.

With rising cost of production, steel prices are inevitable to rise. This will however further push the inflation in India which is already ruling high. Already a significant increase in the headline inflation has been seen in month of December and if steel prices rise further in January, even a high base from last year might not bring the inflation down to the extent the policy makers are expecting.   The S&P CNX Nifty opened at 5,682.55; about 28 points higher compared to its previous closing of 5,654.75, and has touched a high and a low of 5,816.25 and 5,682.55 respectively. The index is currently trading at 5,703.40, higher by 48.65 points or 0.86%. There were 43 stocks advancing against 7 declines on the index.

The top gainers of the Nifty were Axis Bank up by 4.32%, TCS up by 3.35%, Wipro up by 2.58%, JP Associates up by 2.27% and IDFC up by 2.13%.

The top losers of the index were Hero Honda down by 1.30%, ONGC down by 0.51%, HDFC down by 0.43%, L&T down by 0.35% and BPCL was down by 0.09%.

Most of the Asian equity indices were trading in the green; Shanghai Composite was up 4.70 points or 0.17% to 2,711.36, Hang Seng was up 200.15 points or 0.83% to 24,357.12, Nikkei 225 was up 34.15 points or 0.33% to 10,537.01, Straits Times was up 7.12 points or 0.22% to 3,245.75, Seoul Composite was up 8.53 points or 0.41% to 2,108.38 and Taiwan Weighted was up 92.51 points or 1.04% to 8,981.15.

On the flip side, Jakarta Composite was down 6.36 points or 0.18% to 3,529.37 and KLSE Composite was down by 4.13 points or 0.26% to 1,570.36.

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