Local bourses trade flat after a weak start

The Indian equity markets have made a negative start as investors remained concerned over high crude oil prices and inflation worries, but market bounced back and are trading flat in early trade tracking positive cues from firm Asian counterparts as all the Asian markets barring Chinese Shanghai were trading in the positive terrain at this point of time indicating strong investors' sentiments. On the sectoral front auto witnessed the maximum gain in trade followed by software and capital goods while, metal, oil and gas and public sector undertaking stocks remained the top losers on the BSE sectoral space. Moreover, the top three technology firms Infosys, TCS and Wipro are trading on a higher note as street is expecting strong quarterly profit from the companies. The broader indices were outperforming benchmarks. The market breadth has made a positive start; there were 886 shares on the gaining side against 807 shares on the losing side while 60 shares remained unchanged.

The BSE Sensex opened at 19,187.01; about 75 points lower compared to its previous closing of 19,262.54, and has touched a high and a low of 19,254.04 and 19,101.63, respectively.

The index is currently trading at 19,245.26, down by 17.28 points or 0.01%. There were 10 stocks advancing against 20 declines on the index.

The overall market breadth has made a positive start with 50.54% stocks advancing against 46.04% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices up by 0.21% and 0.25% respectively. 

The top gaining sectoral indices on the BSE were, Auto up by 0.33%, IT up by 0.19%, CG up by 0.10%, Bankex up by 0.08% and FMCG was up by 0.04%. While Realty down by 0.54%, Metal down by 0.53%, Oil and Gas down by 0.24%, PSU down by 0.22% and HC down by 0.18% were the top losers on the index.

The top gainers on the Sensex were Tata Motors up by 1.12%, HDFC up by 1.09%, HUL up by 1.06%, Wipro up by 0.92% and Hero Honda was up by 0.91%.

On the flip side, Sterlite Industries down by 1.32%, RCom down by 1.26%, Bharti Airtel down by 1.12%, ONGC down by 0.99% and Reliance Infra down by 0.94% were the top losers on the index.

Meanwhile, India's fertiliser industry is in no rush to import potash, which is used extensively in manufacturing nitrogen, phosphorus and potassium (NPK) farm nutrients owing to high global prices and comfortable domestic stocks. Fertiliser Association of India has said in a statement that there was no need for the industry to import the commodity at currently high prices.

'The unreasonable, exorbitant international price of potash is a result of cartelization of suppliers. Indian fertiliser industry has decided to take a holiday from application of imported Potash for the present,' said the industry body in a statement released on Monday. India is a major player in global fertilizer market and imported 6.4 million tonne of potash in the last financial year.

Economists have been urging India to join other major buyers to form a group and thereby increase their joint negotiating power against the suppliers' cartel. About 70% of the world trade in key fertilisers, feedstock potash and phosphate is controlled by three multinational companies including Canpotex, Belarusian Potash and PhosChem. These companies often collude with each other and use illegitimate strategies to jack up prices.

Since countries like India, China, Brazil and Australia have a big agricultural sector and little domestic production of potash, they have high reliance on fertiliser imports. India in fact relies almost completely on import of potash and phosphate to meet its domestic demand. The rest of the countries mentioned above also import a considerable chunk of their domestic demand. This provides the MNCs to manipulate prices by using ad hoc policies.

This leaves India will one option, that is, to form a buyers alliances with countries like China and Brazil which together will account for about 80% of the global trade in potash. Such a buyer alliance will have much greater negotiating power than any individual companies can act as a monopolist (monopoly buyer) to ensure that MNCs do not form a cartel and artificially jack up prices. Until the buying nations increase their coordination, fertilizer prices will continue to remain at elevated levels, even though a buying holiday announced by any major country like India will have some softening impact on prices.

The S&P CNX Nifty opened at 5,747.95; about 38 points lower compared to its previous closing of 5,785.70, and has touched a high and a low of 5,780.90 and 5,735.55 respectively.

The index is currently trading at 5,779.40, lower by 6.30 points or 0.11%. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were BPCL up by 1.69%, Siemens up by 1.50%, HDFC up by 1.16%, Tata Motors up by 1.11% and HUL up by 1.04%.

Sterlite Industries down by 1.41%, Bharti Airtel down by 1.30%, Sun Pharma down by 1.09%, RCom down by 1.07% and Bajaj Auto was down by 1.06%, were the major losers on the index.

All the Asian markets barring Chinese Shanghai were trading in the green; Hang Seng was up 50.51 points or 0.21% to 24,026.88, Jakarta Composite was up 10.87 points or 0.29% to 3,730.10, KLSE Composite was up 0.93 points or 0.06% to 1,526.85, Nikkei 225 was up 18.94 points or 0.20% to 9,574.20, Straits Times was up 12.90 points or 0.41% to 3,150.90, Seoul Composite was up 1.11 points or 0.05% to 2,090.51 and Taiwan Weighted was up by 6.41 points or 0.07% to 8,739.00.

On the flip side, Shanghai Composite was down by 7.22 points or 0.24% to 3,014.15.

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