The local equity markets were trading higher in late morning session despite the surge in India's food inflation to 17.05% for the period ended 22 January 2011 compared to 15.57%. Buying in select counters as a bottom up approach post a correction of nearly 12% last month from investors was helping the markets. However, majority of the regional markets were closed for the Chinese Lunar New Year holidays whereas Nikkei 225 was trading marginally lower and US Dow futures was down marginally by 10 points in the screen trade. Back home, The S&P CNX Nifty and BSE Sensex have moved past the psychological 5,500 and 18,300 levels respectively. In the sectoral front all the sectoral indices are trading in positive, Realty shares gained on fresh buying after the recent steep slide in banking stocks saw an across the board rally on fresh buying. Index biggies like DLF jumped 5.61%, Bharti Airtel up 3.08%, ICICI Bank gained 2.11%, Reliance Industries (RIL) gained over 1.63%.The broader indices continue to under-perform their frontline peers. The market breadth on the BSE remained in favour of advances; there were 1525 shares on the gaining side against 930 shares on the losing side, while 89 shares remain unchanged.
The BSE Sensex surged 280.27 points or 1.55% at 18,370.89. The index touched a high and a low of 18,408.99 and 18,064.61, respectively.
The BSE Mid-cap and Small-cap indices climbed 0.66% and 0.67%, respectively.
The BSE sectoral space, Realty up 2.96%, Metal up 1.73%, Bankex up 1.73%, TECk up 1.45% and IT up 1.59% were the major gainers. While there were no loser.
DLF up 5.42%, Tata motors up 4.29%, Hindalco Industries up 3.49%, Bharti Airtel up 3.03% , JP Associates up 2.97% and Hero Honda up 2.41% were the major gainers on the Sensex. There were no losers on the index.
Union finance minister Pranab Mukherjee said on Wednesday that while the rising crude oil price in wake of the ongoing unrest in Egypt was a concern, the government had enough resources to manage these and the development will not have any substantial impact on Indian economy which will attain a growth of 8.5% plus in the current financial year ending March 31.
'Unfortunately, because of developments in the Middle East and its impact on the Arab world... it is causing uncertainty about production, about availability (of the crude oil). We are constantly watching the situation,' Mukherjee said, adding that the finance ministry was in touch with the petroleum ministry on the unfolding situation and will take appropriate steps when needed.
Mukherjee said that government will take care of rising crude prices, which perhaps indicates that finance ministry will offer greater share of under-recoveries to oil marketing companies rather than letting them hike prices of diesel and cooking fuels. While the minister did not divulge into details, the likelihood is that this fiscal the government will bear more subsidy and for the next fiscal the indirect taxation structure on fuels could be eased to help bring down prices.
The publically controlled fuel retailers continue to sell diesel and cooking fuels at prices set by the government which are significantly lower cost, with the gap increasing as crude oil prices in international markets rise. Currently, the fuel retailers are selling diesel at a loss of around Rs 9 a litre and Rs 275 on the sale of a cooking gas cylinder. At these levels, under-recoveries are likely to be over Rs 75,000 crore for FY11.
There have been demands for rationalizing the duty structure on petroleum products as the analysts feels that there was no point in earning revenue by taxing and then giving it back to fuel retailers by way of compensation for under-recoveries. The finance ministry however, has so far stood its ground and is only likely to change the duty structure in the budget so that he fiscal math of the current financial year remains intact.
The S&P CNX Nifty surged 78.20 points or 1.44% to 5510.20 .The index touched a high and a low of 5,518.35 and 5,418.00 respectively.
The top gainers on the Nifty were DLF up 5.61%, Hindalco up 3.66%, Bharti Airtel up 3.08%, JP Associates up 2.96% and Hero Honda up 2.25%.
The top losers on the index were HCL Tech down 1.30%, ACC down 0.91%, BPCL down 0.77%, Dr Reddy down 0.15% and IDFC down 0.14%.
Majority of regional peers are closed today, while Nikkei 225 trimmed 0.25%
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