Benchmark indices continue to trade in green

The benchmark equity indices continue to trade in the green in late afternoon session even as the food price index rose 10.02% on annual basis during week-ended March 12, as compared with 9.42% recorded in the previous week as per the data released by the ministry of commerce and industry. Global markets were trading in green which kept local traders mood in positive; the European markets and US index futures were trading in green while most of the Asian markets settled in the green. Back home, all the BSE sectoral indices except Oil and Gas sectoral index, which was down by 0.46%, were trading in the green. Realty index continued to trade higher. The market breadth on the BSE was positive; the gainers thrashed the losers in a ratio of 1554:1228 while 130 shares remained unchanged. The broader markets were also trading higher; the BSE Mid-cap and Small-cap indices gained 0.55% and 0.64%, respectively.

Hindalco Industries leads the gainers list of 'BSE Metal' space. Hindalco is the world's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the world's largest custom smelter at a single location.

Amrutanjan Health Care jumped on getting nod to sell its Pharmaessense Chemistry division. The company has received its members' approval to transfer /sell its Pharmaessense Chemistry Services division, a wing dedicated to providing contemporary and futuristic chemistry services to a wholly owned subsidiary company.

Lovable Lingerie had a strong listing today. The stock was trading 22.39% higher. The company is India's leading women's innerwear, it has got listed today, and the issue price was fixed at Rs 205, higher end of price band of Rs 195-205 a share. The issue got overwhelming response and was subscribed around 35 times raising around Rs 93 crore.

The BSE Sensex advanced 107.99 points or 0.59% at 18,314.15.The index touched a high and a low of 18,373.97 and 18,269.32, respectively.

The BSE Mid-cap and Small-cap indices gained 0.55% and 0.64%, respectively.

All the sectoral indices on the BSE, barring of Oil & Gas, which was down by 0.46% were trading in the green. Realty up 2.20%, Capital Goods (CG) up 1.32%, Information Technology (IT) up 0.97%, Bankex up 0.92% and Power up 0.88% were the major gainers.

The top gainers on the Sensex were Hindalco Inds up 3.44%, BHEL up 2.74%, TCS up 2.02%, M&M up 1.87% and Wipro up 1.58%.

On the flip side, Maruti Suzuki down 1.20%, Reliance Infra down 0.62%, DLF 0.58%, RIL up 0.34% and Bajaj Auto up 0.30% were the only losers on the index.

Cotton prices have been at elevated levels for quite some time. After having seen a strong rally in second half of the last calendar year owing to tightness in global demand-supply equation, the commodity has refused to correct beyond a degree in the current year so far as demand remains strong.

The small corrections seen in recent weeks have been halted by farmers and traders hoarding stocks in anticipation of prices rising back again. There has been a global deficit in the cotton production in the current year which is boosting expectations of farmers and stockists that the global prices may touch a newer high before seeing any major correction.

Further, at the global level, prices are expected to remain firm even in the next season even as a supply shock to high prices is expected. "Although cotton prices are expected to decline from current record levels, it is likely that prices will stay substantially higher than the average of 60 cents per pound that prevailed during the past decade," the International Cotton Advisory Committee said in a recent report indicating prices would be relatively firm in medium term as well.

"Factors such as competition from food crops, limited available resources (including land, seeds, water and equipment), and government policies are preventing cotton-growing areas from rising further," the report said. Many analysts feel that the impact of rising cotton prices will be seen in apparel prices and as well as on margins of textile players.

However, there will be no shortage of cotton in the next season despite surging demand as production is expected to be higher than consumption in 2011-12, according to International Cotton Association (ICA). According to the ICA estimates, overall production was expected to be 27.65 million tonne in 2011-12 season (August-July), nearly three million tonne more than the output in 2010-11 season. Consumption on the other hand was expected to be 26.4 million tonne in the next season.

Hence there should be no shortage of cotton in the next season, provided there were no natural disasters. All major producers including Brazil, Australia, India and the US were expected to see increased production. However, despite increase in production, the new season would commence with historically low stocks. As such, while prices may correct from record high levels, they will still continue to remain at substantially higher levels compared with the pre-rally lows. 

The S&P CNX Nifty increased 32.55 points or 0.59% at 5,512.80. The index touched high of 5528.25 and a low of 5,496.10, respectively.

The top gainers on the Nifty were Hindalco Inds up 3.69%, BHEL up 2.72%, IDFC up 2.66%, M&M up 2.03% and Kotak Bank up 1.90%.

On the other hand, Gail down 1.70%, Cairn India down 1.30%, Maruti Suzuki  down 1.08%, Sesa Goa down 0.78% and Suzlon 0.76% were the major losers on the index.

Majority of the Asian markets settled in the green. Hang Seng added 0.39%, Jakarta Composite soared 1.56%, KLSE Composite increased 0.12%, Straits Times gained 0.65%, Seoul Composite jumped 1.22% and Taiwan Weighted advanced 0.37%; while Shanghai Composite shed  0.06% and Nikkei 225 dropped 0.15%.

European markets were trading in red; FTSE advanced 0.44%, DAX increased 0.74% and CAC 40 surged 0.41%.

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