Indian share pulled through an unexpected finish to the initial day of F&O expiry week amid a slew of news continuously flowing from New Delhi, the national capital. The 5,400 level proved as a solid support for the S&P CNX Nifty index which registered a smart re-bound from those levels as investors turned sanguine and resorted to hefty bottom fishing in fundamentally strong and undervalued stocks. Government's consent to opposition's demand for Joint Parliamentary Committee Probe along with a robust GDP projection of nearly 9% for the coming fiscal by C Rangarajan, Chairman of the PM's Economic Advisory Council, underpinned investor sentiment in the dying hours of trade. Meanwhile Indian President Pratibha Patil affirmed that top priority of the government was to combat inflation, especially of food items, and sustaining growth momentum while striving to push economic reforms to encourage foreign and private sector investments in the country. The NSE's 50-share broadly followed index, Nifty surged over a percent to settle around the high point of the day above the crucial 5,500 level while the Bombay Stock Exchange's Sensitive Index, or Sensex soared over two hundred points to end above the psychological 18,400 mark. The broader markets though succumbed to selling pressure as the BSE's midcap index fell 0.04% and smallcap index shed 0.09% in Monday's session, underperforming their larger peers by quite a margin. The IT and TECk counters in the BSE sectoral space snapped the day with maximum gains of 2.76% and 2.11% respectively as bellwethers like Wipro and TCS zoomed 4.12% and 4.24% respectively. The consumer durables pack too remained amid the thick of the things after majors like Titan Industries and Bajaj Electricals amassed 4.64% and 1.86% respectively. Besides, index heavyweights like Reliance Industries and ONGC too made their participation felt after jumping 2.98% and 2.04% respectively. However the Auto pocket remained the only sectoral index that languished in the red zone with 1.18% losses since shares of Tata Motors and Hero Honda plunged 3.33% and 1.66%.
On the global front, Asian benchmarks closed mostly in the negative terrain amid growing concerns of turmoil in the Middle East which underpinned the crude oil prices to rise by more than $1 per barrel in Asian electronic trade. The European counterparts too traded with large cuts as investors resorted to hefty profit booking with the DAX plummeting around a percent, being the top laggard in the space. On the other hand, the screen trading for US index futures too indicated that the Dow could open on a pessimistic note.
Earlier on the Dalal Street, after Friday's over a percent jolt the benchmark showed signs of consolidation for most part of the day's trade as investors lacked conviction. The index gyrated around the neutral line in a narrow band through the first half in the absence of any optimistic market triggers. But Budget-related positive news flow and softening inflation eased investors' apprehensions as the Sensex saw a bounce back post-noon. Sanguine sentiments in the dying hours helped the local bourses pull through a scintillating intraday U-turn and settle around the high point of the day. The indices eventually went home with over a percent gain on the initial day of F&O expiry week and four working days ahead of the Budget 2011. Volumes for markets were lower than Friday at over Rs 1.77 lakh crore while the turnover for NSE F&O segment too remained higher at over Rs 1.63 lakh crore on Monday. The market breadth on the BSE was negative as there were 1397 shares on the gaining side against 1463 shares on the losing side while 112 shares remained unchanged.
On Charts: The S&P CNX Nifty today closed above 5,507 levels, which was crucial level. The next resistance for the nifty will be around 5,572 (38% retracement level) and 5688 (50% retracement level).While support will be around 5,457 (10EDMA) and 5,401 mark, while going forward its major resistance may see around 5,655 mark.
Finally, the BSE Sensex rose 226.79 points or 1.25% to settle at 18,438.31 while the S&P CNX Nifty advanced 59.65 points or 1.09% to end at 5518.60.
The BSE Sensex touched a high and a low of 18,457.49 and 18,082.66, respectively.
TCS up 4.24%, Wipro up 4.12%, Sterlite Inds up 3.31%, ONGC up 2.98% and Jaiprakash Associates up 2.93% were the major gainers on the Sensex.
On the flip side, Tata Motors down 3.33%, Hero Honda down 1.66%, Maruti Suzuki down 1.31%, NTPC down 1.04% and Tata Power down 1% were the main losers on the index.
The BSE Mid-cap and Small-cap indices lost 0.04% and 0.09%, respectively.
Meanwhile, the Indian textile industry has seen strong recovery from the impact of global downturn riding on improving demand from the rich countries and diversification of its export direction. There is however still a number of troubles facing the industry and textile players have lined up a series of expectations from the forthcoming Budget for FY12.
First, the industry has seen one of the severest cost inflation cycle in last one year. Cotton prices have been increasing rapidly on a tight demand-supply scenario in global markets putting pressure on textile companies' margins. Export market on the other hand has become extremely competitive and much more price sensitive compared to pre-crisis period. This has not only impacted margins but competitiveness of textile players as well. While the cap of 5 million bales of exports is nearly exhausted, the industry wants the government to hike export duty on cotton to lower exports immediately and continue with the same in next season as well.
The industry wants the government to hike duty drawback rates by 5% at least by increasing the scope and coverage of duty drawback scheme so as to ensure full reimbursement of various duties including excise duties, custom duties, service tax, education cess and various state level taxes. The demand is also based on argument that rivals like China and Bangladesh have increased these concessions and in a super-competitive export atmosphere which prevails currently, Indian government should also match the steps.
The industry wants the government to make the funding easier and at reasonable rate of interest. With the central bank hiking its policy rates seven times in the current fiscal so farm market interest rate has been going up, making the working capital costly for the textile players. The industry wants that at least for the small and medium units the government should ensure cheaper working capital by providing interest subvention. The industry is demanding that export loans to be treated at par with the farm loans and therefore made a part of the priority sector lending by the banks.
Another wish of textile players is that government should scrap the import duty on manmade fibres which will help it source cheaper manmade fabrics. The move will bring the cost of production down and improve the global competitiveness of Indian textile players. Such a move also becomes more important in wake of the surging prices of cotton. However, it has been strongly opposed by the manmade fibre industry and therefore may not make the cut in Budget.
Further, given the severe shortage of power being faced by the industry, the government has been urged to encourage development of captive power units by textile companies. Towards this end, the government should exempt the diesel used in captive power generation from excise duty and other local levies. Finally, the industry wants an early implementation of the goods and services tax (GST) which will help bring the tax incidence down. The industry wants the government to make sure that the state level levies of around 6% are also refunded to producers by the central government.
In BSE sectoral space Information Technology (IT) up 2.76%, TECk up 2.11%, Consumer Durables up by 1.97%, Oil & Gas up 1.81% and Metal up 1.31% were the major gainers in the BSE sectoral space; while Auto down 1.18% was the sole loser in the sectoral indices.
The S&P CNX Nifty touched a high and a low of 5526.25 and 5413.10, respectively.
The top gainers on the Nifty were Wipro up 4.83%, TCS up 4.32%, Jaiprakash Associates up 3.93%, Sterlite Inds up 3.59% and ONGC up 3.17%.
The top losers on the index were Tata Motors down 3.65%, Hero Honda down 2.18%, Maruti Suzuki down 1.56%, NTPC down 1.51% and DLF down 0.84%.
With the announcement of the Union Budget just days away, the tea industry like any other industry has its set of expectations. The industry has demanded complete exemption from the present level of import duty of 10% on import of filter paper for tea bags as tea bags and instant tea are gaining preference amongst consumers of India and abroad. Another demand of the industry is full exemption from payment of import duty from the present level of 10% on Nylon Cloth for tea bags.
The industry wants continuation of the special purpose tea fund and other additional subsidies which were being provided by the central government earlier, as it is reeling under cost pressures. This will help tea companies upgrade and improve overall tea quality. The industry further wants that the increased weighted deduction on payments made to national laboratories, research associations, universities and other institutions for scientific research from 125% to 175% must be continued as this will help organizations like the Tea Research Association to take up better research and development activities, resulting in production of better quality tea saplings.
The industry will also be benefitted by the extension of concessional import duty on imported plantation machinery as it will help the industry in value adding and hiking exports in the long run. Also, another crucial demand of the industry is that tea plantations should be made under the purview of the Transport Subsidy Scheme under NEIIPP, which would provide much needed cost relief and its enhance competitiveness.
India's tea industry has seen a strong revival over last 2-3 years. After facing years of slump, the industry has remained in bullish scenario over the last three years. Overall, the outlook of tea industry is quite strong at the moment, given the tight global demand supply scenario, and any supportive announcement in the Budget will act as a further catalyst for the industry.
European markets were trading in the red on Monday. France's CAC 40 lost 0.81%, Germany's DAX dipped 0.77% and Britain's FTSE 100 dropped 0.34%.
Asian equity indices finished the day's trade mostly in the negative terrain on Monday amid growing turmoil in the Middle East. The sentiments in the region also weighed as crude oil prices rose by more than $1 per barrel in Asian electronic trade on Monday. Seoul shares slipped by 0.40%, weighed by fall in steelmakers and financials such as POSCO and KB Financial Group, while Chinese main stock index closed with a gain of more than one percent, supported by oil firms after China raised fuel prices to fresh highs, offsetting the impact of a rise in bank reserve requirement ratios
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