Markets pare early gains; realty again dips into red

The domestic markets have pared most of their early gains in the mid-morning session due to some profit booking in infra and realty stocks after their good run-up in last session and some selling in the ADAG stocks. The broader indices too have lost their momentum however still managing to trade in green, the rate sensitive sectors which were looking strong at the start of the trade have turned weak and have been replaced by the defensive sectors FMCG and IT and Tech sectors as the gainers, while, realty auto and oil & gas have turned the laggards at this point of time. The rise in international crude prices has dampened the mood of the PSU oil marketing companies who were hoping to get some respite in their subsidy burden with the decline in crude prices. BPCL was down by 1.86%, IOC was flat while the HPCL was trading lower by 1.46% on the BSE.

The BSE Sensex is currently trading at 18,563.98, up by 57.16 points or 0.31%.The index touched a high of 18,690.97 and 18,563.98 respectively. There were 17 stocks advancing against 10 declines on the index.

The broader indices too have pared some gains but were still trading in green; the BSE Mid cap and Small cap indices were up by 0.36% and 0.50% respectively.

In BSE sectoral space FMCG up 0.87%, IT up by 0.86%, TECk up by 0.56%, PSU up by 0.43% and HC up by 0.43%, were the main gainers.

On the other hand Realty down by 0.43%, Auto down by 0.30%, Oil & Gas down by 0.10% were the losers.

The top gainers of the BSE Sensex were HUL up by 2.25%, BHEL up by 1.89%, Wipro up by 1.75%, Maruti Suzuki up by 1.67% and HDFC Bank was up by 1.66%

RCom down by 2.05%, Reliance Infra down by 1.33%, M&M down by 1.09%, Tata Motors down by 1.02% and Tata Steel down by 0.88% were top losers on the BSE Sensex.

Meanwhile, even as economists have been urging the government to implement reforms in its subsidy mechanism and put in place some sustainable solutions, for the moment the finance ministry seems set to continue what it has been doing in past as it fails to find any politically and socially accepted way to pass on rising global commodity prices to consumers.

Fuel subsidy of the government is set to increase way beyond the Budget estimates given last year. Even the estimates prepared for couple of months which pegged fuel subsidy at whopping Rs 70,000 crore now are proving wrong with the bill looking set to cross Rs 80,000 crore as global crude prices, mainly in Asia, have been on the rise in wake of ongoing unrest in some Middle-East countries.

Another major head here is Fertilizer subsidy which is also on the rise. The Empowered Group of Ministers (EGoM) on fertilizers had on Tuesday hiked the prices of complex fertilizers for the upcoming financial year 2011-2012. The EGoM, headed by Finance Minister Pranab Mukherjee, approved the prices of DAP, MOP, sulphur and urea for the purposes of its nitrogen component at $580, $390, $180 and $350 per tonne for contracting by the industry under the Nutrient Based Subsidy (NBS) policy.

However, the prices at which the fertilizers will be available to the farmers remain same as were applicable last year. This clearly means the government will have to substantially increase subsidy spending next year. While it is true that international fertilizer prices have been surging and government would found it hard to pass on the entire prices hike, but, some degree of market link should remain in prices of any commodity.

The S&P CNX Nifty is currently trading at 5,564.75, up by 18.30 points or 0.33%. The index touched high of 5,599.25 and a low of 5,557.55. There were 30 stocks advancing against 20 declines on the index.

The top gainers of the Nifty were HUL up by 2.39%, Ambuja Cements up by 1.99%, Maruti Suzuki up by 1.71%, HDFC Bank up by 1.71% and Wipro was up by 1.70%

The top losers of the index were RCom down by 2.55%, HCL Technology down by 2.51%, Suzlon down by 1.05%, BPCL down by 2.01% and Reliance Infra was down by 1.75%.

Majority of the Asian markets were trading in green, barring the  Shanghai composite which remains in somber mood, trading lower by 0.87%.

On the other hand, Hang Seng was up by 1.04%, Straits Times up 0.79%, Seoul Composite up 1.66%, Taiwan Weighted up by 2.00%, Nikkei 225 was up by 0.05%, KLSE Composite gained 0.59% and Jakarta Composite added 1.76%.

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