NEGATIVE BIAS

Indian equity benchmarks made a flat-to-negative opening with frontline indices trading tad below their crucial 5,900 (Nifty) and 19,500 (Sensex) levels. The market participants remained cautious after the RBI Governor, D Subbarao said that there is a limited scope for easing of monetary policy over the next few months, as there is a risk of inflation escalation as well as concerns over fiscal and current account deficits. However, the losses remain capped as sentiments got some support from continued buying in sugar stocks on news that Centre is likely to take a decision on giving freedom to the Rs 80,000 crore sugar industry to sell the sweetener in the open market in few days. Sugar stocks including Balrampur Chini, Triveni Engineering and Rana Sugar all edged higher in the trade. Meanwhile, government's decision to cancel its last bond auction for 2012-13 in view of its improving cash position also boosted the sentiments of the traders.

Global cues too remained sluggish as US markets remained closed on Monday for the President's Day holiday while, most of the Asian equity indices were trading lower on Tuesday's morning deals with Japanese Nikkei trading lower as the yen strengthened, weighing down the exporters. Some investors remained on the sidelines, waiting for Japan to announce the next head of its central bank to replace Bank of Japan Government. Back home, on the sectoral front, healthcare witnessed the maximum gain in trade followed by realty and auto while, metal, technology and oil and gas remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the market breadth on the BSE was positive; there were 1,036 shares on the gaining side against 747 shares on the losing side while 88 shares remain unchanged.

The BSE Sensex opened at 19,523.70; about 22 points higher compared to its previous closing of 19,501.08, and has touched a high and a low of 19,531.51 and 19,483.41 respectively.

The index is currently trading at 19,499.91, down by 1.17 points or 0.01%. There were 16 stocks advancing against 13 declines and one stock remains unchanged on the index.

The overall market breadth has made a strong start with 59.03% stocks advancing against 37.26% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.46% and 0.51% respectively.

The top gaining sectoral indices on the BSE were, Health Care up by 0.58%, Realty up by 0.40%, Auto up by 0.34%, Consumer Durables up by 0.28% and FMCG up by 0.23% while, Metal down by 0.25%, TECk down by 0.19% and Oil & Gas down by 0.16% were the losers on the index.

The top gainers on the Sensex were Cipla up by 1.77%, Hindustan Unilever up by 0.94%, ONGC up by 0.63%, Mahindra & Mahindra up by 0.58% and Sun Pharma up by 0.54%.

On the flip side, Bharti Airtel was down by 1.58%,  Gail India was down by 1.12%, Coal India was down by 0.89%,  Tata Steel was down by 0.57% and RIL was down by 0.45% were the top losers on the Sensex.

Meanwhile, the government is likely to announce a credit guarantee fund in the coming Budget for Farmer Producer Organizations (FPOs) with equity participation to boost small and marginal farmers. FPO is typically a company comprising only farmers and producers, formed under the Companies Act. The role of FPOs in alleviating the plight of small and marginal farmers has also been recognized by the government's National Advisory Council (NAC).

As per the working group of the NAC, FPOs are a necessity in the Indian environment, if one has to effectively address issues such as shrinking land, difficulty in accessing critical inputs like fertiliser and credit, a fragmented value chain, weak bargaining with market agents and low return on investments.

By June, government targets to have 500 FPOs, with a combined membership of almost 10 lakh farmers. However, there are almost 60 crore farmers in the country who can be brought under the FPO umbrella. Presently, there are close to 300 FPOs, covering a little over 500,000 farmers. The Small Farmers' Agri-Business Consortium (SFAC), which is promoted by the department of agriculture, is to act as a nodal agency to provide support for creation of FPOs.

Meanwhile, FPOs are being mobilized by the network of about 25 grassroots non-governmental organizations and takes six to nine months for an FPO to get registered. However, the biggest problem they face since inception in the past decade has been access to funds.

The S&P CNX Nifty opened at 5,900.20; about 2 points higher as compared to its previous closing of 5,898.20, and has touched a high and a low of 5,904.15 and 5,891.75 respectively.

The index is currently trading at 5,895.85, lower by 2.35 points or 0.04%. There were 28 stocks advancing against 21 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were Cipla up by 1.70%, ACC up by 1.49%, Hindustan Unilever up by 0.88%, DLF up by 0.79% and Ambuja Cements up by 0.71%.

On the flip side, Bharti Airtel down by 1.51%, Gail down by 1.44%, Jaiprakash Associates down by 0.87%, Reliance Infrastructure down by 0.86% and Coal India down by 0.82%, were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 24.66 points or 1.02% to 2,396.90, Hang Seng dipped 62.00 points or 0.27% to 23,319.94, Jakarta Composite decreased 7.59 points or 0.16% to 4,604.45, KLSE Composite slipped 4.62 points or 0.29% to 1,616.31 and Nikkei 225 was down by 27.51 points or 0.24% to 11,380.36.

On the flip side, Straits Times rose 11.54 points or 0.35% to 3,299.68, KOSPI Composite added 0.99 points or 0.05% to 1,982.90 and Taiwan Weighted was down by 16.35 points or 0.21% to 7,959.88.