FIRM TRADE

Indian equities pare gains but continued its firm trade in green in late afternoon session on back of renewed buying in frontline counters. Traders were seen piling up positions in Power, Consumer Durables and Capital Goods sector while selling was witnessed in Auto sector. BHEL and L&T from Capital Goods space was seen trading firm in green pulling the markets higher. Industry heavyweight RIL was trading in green giving the much needed support for the markets. However, Maruti, Bajaj Auto, Hero MotoCorp and Tata Motors from Auto pack were seen trading weak in red driving the markets down. The stocks from the shipping sector like Great Eastern Shipping and Pipavav Defence and Offshore surged higher amid reports that Committee of Secretaries are likely to meet to discuss Shipping subsidy. Telecom stocks Bharti Airtel, Reliance Communications, TTML and MTNL were seen trading firm after the government on February 15, 2012, unveiled some points of a new telecommunications policy, including separating licenses from bandwidth and easing mergers and acquisition rules. Moreover, stocks from the information technology counters too gained traction after industry body Nasscom opined that the industry witnessed a CAGR of 17 percent during the five-year period of 2007-12 despite turmoil in the US and in European Union. For the next eight years, it has forecasted a CAGR of 13 percent to get to the targeted $225 billion by 2020 from $101-billion achieved this year. NTPC, power equipment makers was seen trading firm as a favourable court ruling has paved the way for state-run power generation major to place bulk orders for boilers based on supercritical technology.

On the global front, Asian markets were trading in green while the European markets were too trading in green on an optimistic note. ECB had agreed to exchange Greek bonds they hold for new bonds as part of a deal to help the debt-strapped country. Euro zone officials are reportedly putting the finishing touches to a second bailout deal for Greece for approval on February 20, 2012. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 5,550 and 18,300 levels respectively. The market breadth on BSE was in favor of advances in the ratio of 1690:1173 while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 18,315.18 up by 161.19 points or 0.89% after trading as high as 18,423.06 and as low as 18,302.97. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.64% while Small cap gained 0.75%.

On the BSE sectoral space, Power up 3.61%, Consumer Durables up 3.31%, Capital Goods up 3.02%, Realty up 1.80% and PSU up 1.47% were the major gainers while Auto down 0.37% was the only loser in the space.

BHEL up 8.16%, Tata Power up 4.54%, Sterlite Industries up 4.30%, M&M up 2.91% and SBI up 2.68% were the major gainers on the Sensex, while Maruti Suzuki down 2.59%, Hero MotoCorp down 1.54%, GAIL India down 1.40%, Bajaj Auto down 1.18% and Hindalco Industries down 0.87% were the major losers in the index.

Meanwhile, moving a step further towards implementing its decision to allow Indian airlines to import aviation turbine fuel directly, the Civil Aviation Ministry has written to the Commerce Ministry to take necessary steps to make the proposal feasible.

The government in a meeting of a Group of Ministers on aviation, headed by finance minister Pranab Mukherjee, recently took a decision to allow national carriers to import ATF directly rather than having to buy it from the state governments. Fuel comprises of 40% of an airlines' operating cost and the cash stripped airlines had been demanding that they be allowed to import fuel directly as the heavy taxes imposed by the states were making fuel costs unbearable.

Currently as per policy the Indian carriers have to purchase fuel locally from the state owned oil companies. Additionally the states also levy a sales tax varying from 4% to 30%, which makes the price of aviation turbine fuel 30% to 40% higher as compared to countries like Singapore, Japan, and those in the Gulf and in Europe. Hence cash-strapped Indian carriers, particularly Kingfisher, have been demanding allowing of direct imports.

Most of the Indian airlines owe substantial amounts to oil companies on account of jet fuel. Air India owes over Rs 4,170 crore to public sector oil companies in unpaid jet fuel bills, according to figures tabled in Parliament, while all other private carriers together have dues worth over Rs 2,000 crore. Flight schedules of airlines like Air India and Kingfisher have been disrupted on several occasions in the past few months due to these oil firms stopping ATF supplies due to non-payment of dues.

Since the days of Praful Patel, successive civil aviation minister, including incumbent Ajit Singh, have written to the chief ministers of all states to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers. However, most of the states have not responded favourably. Revenue from sales tax on ATF contributes only 0.5% to 2% of the total sales tax collection of the states. But for the airlines, it is almost 40% of the total operational cost, imposing a heavy burden on the beleaguered companies.

The decision is also likely to bring down the cost of working capital to the airlines, as suppliers' credit on lower interest rates would become feasible.

The S&P CNX Nifty is currently trading at 5,573.35, higher by 51.40 points or 0.93% after trading as high as 5,606.70 and as low as 5,567.20. There were 35 stocks advancing against 15 declines on the index.

The top gainers on the Nifty were BHEL up 8.40%, Sterlite Industries up 4.89%, Axis Bank up 4.84%, Reliance Power up 4.43% and Tata Power up 3.86%.

Maruti Suzuki down 2.63%, BPCL down 2.18%, Hero MotoCorp down 1.62%, GAIL India down 1.40% and Bajaj Auto down 1.18% were the major losers on the index.

In the Asian space, Hang Seng climbed 1.01%, Shanghai Composite inched up 0.01%, Jakarta Composite advanced 0.91%, KLSE Composite gained 0.49%, Nikkei 225 jumped 1.58%, Straits Times added 0.37%, Seoul Composite surged 1.30% and Taiwan Weighted amassed 0.31%.

The European markets were trading in green with, France's CAC 40 ascended 0.90%, Germany's DAX added 0.68% and Britain's FTSE 100 jumped 0.26%.