Benchmark indices climb further; broader markets rally

After a sharp slump in the previous session, Indian equity markets have bounced back and are trading in the positive territory since morning as good advance tax numbers reported for the fourth quarter indicated that the growth outlook for Indian companies remain unchanged. Sentiments also got lifted as crude oil prices slipped to a three-week low to $107 per barrel. Positive global cues further helped in keeping up the momentum as most of the Asian markets are trading in the green and Nikkei 225 has also bounced back considerably in trade today as Bank of Japan announced that they will inject $3.5 trillion into the system. US index futures too are witnessing an uptick in screen trade today. While the markets have risen, radiation threat continues to weigh on Japan, as the latest reports suggest new break out at Tokyo Electric Power's No. 4 reactor at Daiichi plant in Fukushima. Back on the Dalal-street, all the sectoral indices were in the green with consumer durables, realty, banking, public sector undertakings and power stocks leading the upmove. The broader markets are outperforming their larger counterparts and are also trading firm, the midcap and smallcap indices were up 1.50% and 1.62%, respectively. The market breadth on the BSE was in favour of advances in a ratio of 1842:808 while 88 scrips remained unchanged. Meanwhile, investors are eagerly awaiting Reserve Bank of India's (RBI) policy review tomorrow for any rate hike decision.

The BSE Sensex jumped 229.74 points or 1.26% at 18,397.38. The index touched a high and a low of 18,419.02 and 18,263.68, respectively.

The BSE Mid-cap and Small-cap indices gained 1.50% and 1.62%, respectively.

All the sectoral indices on the BSE are trading in the green. Consumer Durables (CD) up 2.36%, Realty up 2.26%, Bankex up 2.07%, Public Sector Undertakings (PSU) up 1.63% and Power up 1.51% were the major gainers.

Meanwhile, with the Finance Bill proposing to omit the commodity from the Schedule of Additional Duties of excise (goods and Special Importance) Act, 1957 the sugar prices are once again likely to shoot up. The change, which will come into effect on enactment of the Finance Bill, will empower state governments to impose VAT on sugar at a maximum 5% rate, in addition to the existing excise duty which currently stands at Rs 38/qtl for levy sugar and Rs 71/qtl for free sale sugar, the level at which it has remained since 2006. if states choose to levy the maximum of 5% VAT on sugar in addition to the existing excise duty, the total levy (excise plus VAT) on free sale sugar (on an assumed price of Rs 3000/qtl) could be as high as Rs 221/qtl. Of this, VAT alone could total up to Rs 150/qtl.

In his Budget speech, the finance minister proposed to amend the Additional Duties of Excise (goods of special importance) Act, 1957, and decided to remove sugar and textile from its schedule. After this amendment, states are free to levy value added tax on these commodities after 54 years. Due to the amendment, the Centre has given back these powers to states, which are scouting for revenues, post implementation of the goods and service tax(GST). At present, about 16 commodities are notified as declared goods. These include coal, cotton, cotton yarn, crude oil, hides and skins, iron and steel, jute, LPG for domestic use and oil seeds

Meanwhile, the government is likely to decide on sugar export on March 17, in a meeting of the empowered group of ministers (EGoM). The Agriculture Ministry has favoured permitting export of sugar, while the Commerce Ministry has sought more information on this issue. At present, the government has kept the export of 0.5 million tonnes (MT) of sugar under the open general licence (OGL) scheme on hold due to high inflation. But earlier, it had allowed mills to meet their export obligation (ALS) of nearly one million tonnes by March, 2011.

The industry has pegged India's sugar output at 25 MT for the 2010-11 sugar year (October-September), as against demand of 22 MT, while the government's production estimate is marginally lower at 24.5 MT for the same period.

The top gainers on the Sensex were Reliance Infra up 5.22%, RCom up 3.12%, ICICI Bank up 2.84%, DLF up 2.60% and Sterlite Inds up 2.44%; while HUL down 0.80% and Hero Honda down 0.05% were the only losers on the index.

A development which could lead to unfolding of yet another scandal, one more pilot has been arrested for questioning for allegedly using forged mark sheet to acquire an Airlines Transport Pilot License (ATPL) from the country's airline regulator. The pilot in question works with Air India.

Meanwhile, the Central Bureau of Investigation (CBI) and Directorate General of Civil Aviation (DGCA) are probing certain flying schools in the country that allegedly sell flying hours to students enabling them to get commercial pilot licenses (CPL) even if they do not have the planes on which they certify their students have flown.

Further, concerned over instances of use of forged documents to get pilot's licenses, the government has directed investigations into all licenses issued in the past and set up an experts committee to look into the current examination system, as it could threaten to thousands of lives flying through air.

The incidence of forged documents came to light when Capt Gulati, of IndiGo airline landed an aircraft on its nose-wheel, instead of the rear wheels. During the enquiry into the incident, it was found that there had been other instances in the past of her "exhibiting similar deficiencies in landing techniques." Later it was found that Gulati had not passed the pilot examination and fraudulently obtained the license. Hence, an investigation has also been launched for touts who are helping in getting these forged mark sheets and role of insiders 'in the DGCA'' in the fraud.

The S&P CNX Nifty rose 71.15 points or 1.31% at 5520.80. The index touched high of 5527.35 and a low of 5475.95 respectively.

The top gainers on the Nifty were Reliance Infra up 5.11%, RCom up 3.07%, ICICI Bank up 2.95%, Ambuja Cement up 2.83% and Axis Bank up 2.81%.

On the other hand, HUL down 0.91%, GAIL down 0.38% and Hero Honda down 0.36% were the only losers on the index.

The other Asian markets were trading in the mixed range. Shanghai Composite added 1.06%, KLSE Composite rose 0.23%, Seoul Composite gained 1.77%, Nikkei 225 advanced 5.68%, Straits Times surged 0.66% and Taiwan Weighted jumped 1.09%; while, Hang Seng plunged 0.12% and Jakarta Composite trimmed 0.43%.

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