Equity indices continue to trade firm

The benchmark equity indices continue to trade firm in late morning session as sustained buying from foreign and local funds on easing inflation worries following a fall in crude oil prices. Meanwhile, US index futures were also trading higher while other Asian markets trading mixed. Back home, the BSE Sensex and NSE Nifty were trading above key psychological levels of 19,000 and 5700 mark. In the sectoral space, TECk, CG, Power, IT and Auto stocks saw buying interest while realty stocks were the only lot witnessing selling pressure .The broader indices too continued to trade in green; the BSE Mid cap and Small cap indices surged 0.35% and 0.30% respectively. The overall market breadth on BSE was slightly positive; advances thrashed decliners in the ratio of 1278:1216, while, 119 shares remained unchanged. 

Foreign institutional investors (FIIs) continued as buyer in equity's worth Rs 890 crore, on Monday; till now in the month of March, FII have bought $1.07 billion, adding positive sentiments for domestic investors markets.

The BSE Sensex increased 145.66 points or 0.77% at 19,088.80. The index has touched a high of 19,116.25 and a low of 18,944.82 respectively.

The BSE Mid cap and Small cap indices gained 0.35% and 0.30% respectively. 

All sectoral indices on the BSE  barring Realty down by 0.91% were trading in green, TECk up by 1.08%, CG up by 0.92%, Power up by 0.82%, IT up by 0.81% and Auto was up by 0.80%.

The top gainers on the Sensex were Reliance Communication up by 3.80%, Hero Honda up by 2.75%, Bharti Airtel up by 2.59%, Tata Power up by 2.40% and L&T up by 1.63%.

On the flip side, Jaiprakash Associates down by 0.96%, Tata Steel down by 0.48%, ITC down by 0.08% and ICICI Bank down by 0.01% were the only losers on the index.

The Indian government cleared on Monday that even as the global crude prices continue to remain at highly elevated levels, it was not considering an immediate increase in retail fuel prices. This however will lead to surge in under-recoveries of the publically controlled fuel retailers.

India's fuel subsidy bill in the current fiscal is now likely to be around Rs 85,000 crore from Rs 70,000 crore as global crude prices have been at elevated levels for a large part of the March quarter. Further, if prices do not come down soon, or remain at current levels for a large part of next fiscal, the subsidy bill can surge further to beyond Rs 1 lakh crore easily in FY12. This can lead to substantial impact on government's finances.

However, for the moment the government is neither considering a hike in retail prices, nor the finance ministry is looking to tweak the duty structure for the oil products. Union Oil and Gas Minister S Jaipal Reddy on Monday said that despite the surge in under-recoveries of oil marketing companies (OMCs) and increase in subsidy outgo, the government would not increase fuel prices at the moment.

In case of petrol however, he stated that it was totally deregulated and OMCs will take a view on when to increase its prices. State-run Indian Oil, Hindustan Petroleum and Bharat Petroleum currently sell petrol at a discount of about Rs 4.50 a litre despite the fact that government deregulated it completely in June last year. Diesel on the other hand, whose price continues to be dictated by the government, is being sold at a loss of Rs 15.79 a litre.

'As far as petrol is concerned, there is no doubt it is decontrolled... Oil companies must be watching global markets and will take studied decision on raising prices,' he said. On diesel he however, added that it was probably not the right time to talk either about deregulating the key fuel or even increasing its sale price. Hs said it was also too early to call a meeting of the Empowered Group of Ministers (EGoM) on oil sector, which is headed by finance minister Pranab Mukherjee, as everyone was busy with the forthcoming state assembly elections.

The government is unlikely to tinker with fuel prices until the crucial state assembly elections are out of the way. Meanwhile, crude prices have been on the upswing owing to political unrest in some countries in Middle East and Africa and implied apprehensions of a shortage. Average cost of India's crude basket has increased to $110.61 a barrel this month as against $72-73 a barrel about couple of quarters ago. Clearly the situation is no less than alarming though given the election constraint the government is not going to make any move for now.   

The S&P CNX Nifty surged 41.35 points or 0.57% at 5,728.60.The index has touched a high of 5,734.45 and a low of 5,680.70 respectively.

The top gainers of the Nifty were Reliance Communication up by 4.75%, Hero Honda up by 3.07%, Dr Reddy Lab up by 2.93% Sesa Goa up by 2.82% and BPCL  up by 2.45%.

IDFC down by 1.03%, Ranbaxy down 0.80% SAIL was down by 0.68% GAIL down 0.64% and Tata Steel down 0.62%, were the major losers on the index.

The other Asian markets were trading mixed, Hang Seng inched up 0.06%, KLSE Composite gained 0.15%, Seoul Composite added 0.77% and Taiwan Weighted was up by 0.51% and Straits Times climbed 0.05 %.On the flip side, Shanghai Composite declined 0.60%,Nikkei 225 shed 0.21% and Jakarta Composite lost 0.64% 

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