Banking, metal stocks lead gains

Tue, 11 Jan 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   Closing   

Buying activity led the Indian markets to rise above the dotted line during the previous two hours of trade. Barring stocks from the realty and IT spaces, buying activity is seen in stocks across sectors. Leading the pack are stocks from the banking, metal and healthcare spaces.

The BSE-Sensex is trading higher by about 140 points (up 0.7%), while the NSE-Nifty is trading higher by about 40 points (up 0.8%). The BSE Midcap Index is trading up by 0.1%, while the BSE Small cap Index is trading higher by 0.2%. The rupee is trading at 45.22 to the US dollar.

Sugar stocks are trading mixed with Dalmia Bharat Sugar, Dhampur Sugar Mills, Renuka Sugar and Uttam Sugar trading firm, while Simbhaoli Sugar, Dwarikesh Sugar and EID Parry are trading in the red. As a preemptive measure against rising food inflation, the government has extended the zero-duty regime on refined and raw sugar imports by three months to March 31. The country’s food inflation touched a 23-week high of 18.32% for the week ended December 25 on the back of rising prices of onion, vegetables, wheat and milk. Sugar prices are at present hovering at Rs 35 per kg which is considerably lower compared to the corresponding period last year recording Rs 50. Sugar has a weight of 1.7% per cent in the wholesale price index inflation.

In April 2009, the government had done away with import duty on sugar following a sharp decline in domestic output to nearly 15 m tonnes against the annual domestic demand of 23 m tonnes. Sugar output in India, the world’s second biggest producer, is estimated to touch 24.5 m tonnes in 2010-11 sugar year (October-September), against the annual domestic demand of 23 m tonnes.

Over the past five months or so, stocks of tyre manufacturers have been under pressure over the spiraling raw material costs. While they have been been passing on costs to the OEMs, from whom demand has increased substantially over the past year and a half, the extent of the same is not as desired. Rubber prices currently stand at about Rs 215 per kg, which is higher by about 85% as compared to last year. A leading business daily has reported that natural rubber consuming industries, including tyre manufacturers, are increasingly turning skeptical about the Rubber Board’s high inventory projection of 307,710 tonnes as on December 31. The reason they believe the same is the high spot prices. Some of the people involved in the business, including traders believe that this data may be highly exaggerated. And the real figures (of the readily available stock) could be close to a much lower figure of 50,000 tonnes. It is also believed that the rubber production has not increased during the past few years.

Another possible reason for the same could be the Rubber Board’s optimism at the beginning of the year, leading to a reduction in output levels. It must be noted that the board has ended up revising its production projections downwards in the past two years. On the other hand, it also ended up revising upwards the demand projections last year. While the people involved in the industry are not too happy with the way things have been going, they have offered measures to counter such issues. Some of these include the board making quarterly projections instead of annual, amongst others. Stocks of tyre manufacturers are nevertheless trading firm today led by Ceat, MRF and Apollo Tyres.