CAUTIOUS APPROACH

Markets are trading flat in the late morning session with a positive bias, though barring metal most of the sectoral indices are trading in green but the traders are opting cautious approach lacking any major upside triggers for the market. PSU stocks are leading the pack supported by the opening of IPO of NBCC, a government entity after a long time. National Buildings Construction Corporation Ltd (NBCC) is entering the capital markets with an initial public offer of 1.2 crore equity shares at a price band of Rs 90-106. Though the NBCC offer is small, it is considered very important for the government perspective as it the part of its ambitious divestment target for the fiscal. Back on street the gold loan companies have taken a hit after the Reserve Bank of India came out with curbs on the business, restricting loans to 60% of the jewellery value and bar loans against coins and gold biscuits. Muthoot Finance was down by 11.18% while Manappuram Finance was down by 17%.

The BSE Sensex is currently trading at 17,662.65, up by 60.94 points or 0.35%. The index has touched a high and a low of 17,687.01 and 17,522.24 respectively. There were 24 stocks advancing against 6 declines on the index.

The broader indices were slightly outperforming benchmarks; the BSE Mid cap index was up by 0.41%, while the Small cap index was up by 0.51%.

The top gaining sectoral indices on the BSE were, PSU up by 1.34%, FMCG up by 0.80%, CG up by 0.65%, Auto up by 0.58% and bankex was up by 0.46%, on the other hand Metal down by 0.45% was the lone loser index.

The top gainers on the Sensex were Coal India up by 2.18%, Tata Motors up by 1.63%, Wipro up by 1.32%, Hero MotoCorp up by 1.25% and BHEL was up by 1.19%.

On the flip side, Jindal Steel down by 5.15%, maruti Suzuki down by 0.99%, Infosys down by 0.58%, Tata Steel down by 0.48% and Cipla down by 0.36% were the top losers on the Sensex.

Meanwhile, the government will make all attempts to implement the food security bill by December 2012, as per the Food Minister, K V Thomas. The minister has further clarified that the government has enough foodgrains to meet the requirements of the food bill as well as export requirements till 2014.

The Food Security Bill was introduced in the Lok Sabha in December and is currently being examined by the Parliamentary Standing Committee. It is estimated that the bill will increase the subsidy burden of the government by Rs 88,000 crore this year, which will go upto Rs 1.09 lakh crore with the revision in the 2000 census and 1993-94 poverty line estimates.

The bill will be a taxing affair for the government unless it tries to cut on the subsidies it is providing on fuel. The Finance Minister has stated that efforts are being made to reach a political consensus over the issue but whether all political parties agree to it, remains to be seen.

Another factor that is a cause for worry is that the economy may grow at a subdued pace even in the next fiscal, which will lead to a fall in revenue collections of the government. Additional income will come due to the recent increase in the rates of excise duty and service tax, but the extent shall vary depending on the economic growth.

The S&P CNX Nifty is currently trading at 5,379.40, up by 14.45 points or 0.27%.  The index has touched a high and a low of 5,385.95 and 5,337.15 respectively. There were 34 stocks advancing against 16 declines on the index.

The top gainers of the Nifty were Coal India up by 2.16%, Reliance Infra up by 1.95%, Tata Motors up by 1.67%, hero MotoCorp up by 1.47% and Sterlite Inds was up by 1.34%.

On the flip side, Jindal Steel down by 5.11%, IDFC down by 1.80%, Maruti Suzuki down by 0.88%, Powergrid down by 0.78% and HCL Technology down by 0.73%, were the major losers on the index.

The Asian equity indices were trading mixed; Shanghai Composite declined by 0.40%, Nikkei 225 was down marginally by 0.02%, Straits Times lost 0.27%, Seoul Composite was down by 0.21%

On the flip side, Hang Sang was up by 0.16%, Jakarta Composite gained 0.07%, KLSE Composite added 0.18% and Taiwan Weighted was trading higher by 0.76%.