Markets continue to trade higher; realty, auto counters lead the rally

The local equity markets continued to trade higher in late morning session most of the Asian markets were also trading in green but US index futures showing down tick. Back home, all the sectoral indices were trading in green Realty, Auto, Public Sector Undertaking (PSU) , Oil & Gas  and Capital Goods . The broader indices were outperforming the benchmarks; the BSE Mid cap and Small cap indices surged 1.12% and 0.87% respectively. The overall market breadth on BSE was in the favour of advances which have thrashed declines in the ratio of 1604:868, while, 89 shares remained unchanged. Sugar companies, Balrampur Chini Mills, Shree Renuka Sugars, Bajaj Hindusthan and Triveni Engineering and Industries were trading higher. Having waited for several months, the government is likely to allow around 200,000 tonne of sugar exports on Tuesday under unrestricted sales or the open general license (OGL) which will be first tranche of the half a million tonne of exports announced earlier.

Meanwhile, the government today introduced the Constitution Amendment Bill in Parliament to facilitate implementation of Goods and Services Tax (GST). The GST will facilitate implementation of a new tax regime that subsumes levies like excise, sales and service tax. Earlier, the Union Cabinet had given green signal to the bill on the GST. The Bill is likely to be referred to the Parliamentary Standing Committee for scrutiny. The GST, which is considered as a major tax reform and it may contribute good amount towards India GDP, has been pending for the last four years due to differences between centre and some states over the structure of the new tax regime. Mean while, the inter-ministerial group (IMG) on inflation has pointed out an urgent need for states to amend the Agriculture Produce Marketing Committee (APMC) acts to facilitate the free movement of essential food items, which, according to the group, is very important for achieving and sustaining a lower food inflation level these positive cues boosted the sentiment in local bourses .In addition this, in a bid to provide relief from high inflation, the government today increased dearness allowance (DA) by 6 per cent to 51 per cent, benefiting over 50 lakh central government employees and 38 lakh pensioners.

The BSE Sensex surged 189.77 points or 1.06% at 18,028.82. The index has touched a high of 18,041.22 and a low of 17,878.80 respectively. The BSE Mid cap and Small cap indices surged 1.12% and 0.87% respectively. 

The top gaining sectoral indices on the BSE were Realty up by 1.71%, Auto up by 1.46%, Public Sector Undertaking (PSU) up by 1.19%, Oil & Gas up by 0.93% and Capital Goods up by 1.01%. While there were no losers on the index.

The top gainers on the Sensex were DLF up 2.58%, Maruti Suzuki up by 2.27%, Jaiprakash Associate up by 2.23%, Bharti Airtel up by 1.80% and Tata Motors up by 1.68%.There were the no losers on the index.

The inter-ministerial group (IMG) on inflation has pointed out an urgent need for states to amend the Agriculture Produce Marketing Committee (APMC) acts to facilitate the free movement of essential food items, which, according to the group, is very important for achieving and sustaining a lower food inflation level.

The IMG was set-up at the suggestion of the Prime Minister Manmohan Singh 'in order to review the inflation situation and suggest corrective measures.' The second meeting of the IMG on inflation was held on Monday under the Chairmanship of Dr Kaushik Basu, Chief Economic Advisor (CEA) to the Ministry of Finance.

In Monday's meeting, there was a discussion on the need to revise the APMC act and encourage competition among traders and also to promote efficiency in retailing. Dr Basu stressed that there were certain natural rises and falls of price which are the market's way of signaling information to consumers and it was not a good idea to flatten out these natural price movements.

He added that it was only when a small shortfall in production results in a disproportionate rise in prices that one realizes that there might be flaws in the marketing system. Basu said that it was these flaws that we need to correct. Towards this end, the IMG felt an urgent need to reform the APMC acts and in fact the overall marketing system as far as farm produce was concerned.

While some states have already amended their APMC Acts, many states are yet to relax the norms that restrict sale of agriculture produce. Until greater freedom in movement of food articles is grated, observed the IMG, it would be very difficult to improve efficiency in marketing and bring down the difference between farm gate and consumer prices. It has been earlier noted by government agencies as well as independent economists that major reason for high food inflation was large difference between retail and wholesale prices which indicated substantial inefficiencies in marketing and distribution.

The S&P CNX Nifty advanced 57.60 points or 1.07% at 5,422.35.The index has touched a high of 5,426.50 and a low of 5,376.15.

The top gainers of the Nifty were Maruti Suzuki up by 2.55%, SAIL up by 2.31%, JP Associates up by 2.29%, DLF up 2.17%  and Bharti Airtel up by 2.11% .

Sunpharma down by 0.39% and BPCL down by 0.04% were the only losers on the index.

All the other Asian markets with an exception Jakarta Composite shed 0.25% were trading in the green; Shanghai Composite climbed 0.35%, Hang Seng gained 0.69%, KLSE advanced 0.01% Nikkei 225 jumped 4.36%, Straits Times inched up 0.58%, Seoul Composite added 0.51% and Taiwan Weighted rose 0.48%.

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