MARKETS CONTINUE TO TRADE HIGHER

The Indian benchmark equity indices continue to trade higher in late afternoon session due to strong global cues, European markets were trading mostly in green and US index futures were also trading higher, adding positive sentiments to the domestic markets. On the other hand, most of the other Asian markets settled in red. Back home, in BSE sectoral front Capital Goods, Bankex, Auto and CD indexes gained more than one percent and are witnessing strong buying, while profit booking was seen among the IT shares after two consecutive sessions of gains last week. The BSE IT index was down 0.40%. However, the broader indices are holding on to modest gains; the BSE Mid-cap and Small-cap indices soared 0.51% and 0.34%, respectively.

The Overall market breadth on BSE was negative; decliners outnumber the advances in the ratio 1580:1294, while, 109 shares remained unchanged.

The BSE Sensex surged 145.68 points or 0.77% at 18,961.32. The index touched a high and a low of 19,024.18 and 18,799.57, respectively.

The BSE Mid-cap and Small-cap indices soared 0.51% and 0.34%, respectively.

In the BSE sectoral indices Capital Goods up 1.71%, BANKEX up 1.46%, Auto up 1.40%, CD up 1.34% and FMCG up 0.74% were the major gainers. While Health Care down 1.17%, Realty down 0.49% IT down 0.40%, Metal down 0.30% and TECk down 0.05% were the major losers.

The top gainers on the Sensex were L&T up 3.23%, Tata Motors up 2.89%, Reliance Infra up 2.21% Bharti Airtel up 2.03% and ONGC up 1.85%.

On the flip side, JP Associates down 1.77%,Reliance Communication down 1.36%, Infosys down 0.92%, Sterlite industries down 0.92% and Cipla down 0.84% were the only losers on the index.

Following the substantial increase in export duty on iron ore, the price of the key raw material has been coming down in the country. According to the steel makers and miners, iron ore prices have gone down by around 10% in the last few weeks. Going forward, there is expectation of a further decline as demand remains soft.

The Union Government had increased export duty on iron ore fines by four-fold to 20% in the General Budget for 2011-12 in a bid to discourage exports and conserve the material for use by the steel makers within the country. While this has been a major demand of steel players for quite some time and will take pressure off the cost side of steel makers, the increase in duty will certainly hit the prospects of miners.

According to the industry insiders, percentage drop from mid February to mid March in iron ore prices range between 10-15%, depending on the grades, where lower grades have got a bigger hit than the higher grades. However, it is difficult to say where the ore will bottom out because there have been global developments too that can significantly impact the contract prices at international level.

Iron ore prices have come down significantly in China as well in recent days following apprehension of slowdown in demand because of the double natural calamity in Japan and the following nuclear crisis that is still continuing. Japan is second largest steel maker in world after China and decline in production there can have substantial impact on demand and hence prices of iron ore.

Though most of India's iron ore is shipped to China, the demand slump in Japan is expected to have significant impact on international contract prices. These in turn will serve as benchmark for spot prices and most analysts expect spot iron ore prices to come down further once the next quarterly agreements are signed. An additional factor in case of India is that domestic steel capacity is significantly low compared with iron ore output and as the surplus increase at home due to higher export duty; the fall in prices can be greater than global softening in the key raw material. 

The S&P CNX Nifty gained 40.50 points or 0.72% at 5,694.75. The index touched high of 5,709.10 and a low of 5643.20, respectively.

The top gainers on the Nifty were L&T up 3.59%,Tata Motors up 2.99%, IDFC up 2.38%,Reliance Infra up 2.085 and HUL up 2.05%.

On the other hand, Sun Pharma down 3.72%, JP Associates down 1.83%, GAIL down 1.68%, Sesa Goa down 1.63% and Reliance Communication down 1.50% were the major losers on the index.

On the other hand ,most of the other Asian markets settled in red. Hang Seng down 0.39%, Jakarta Composite declined 0.12%, KLSE Composite down 0.09%, Nikkei 225 down 0.60%, Taiwan Weighted down 0.67% and Straits Times declined 0.44%, while Seoul Composite advances 0.11% and Shanghai Composite surged 0.21%,

Most of the European markets trading positive; FTSE advanced 0.25% and CAC 40 surged 0.11% while DAX decreased 0.06%.