The removal of restriction would boost domestic supply of DAP in the ongoing Kharif season as the fertiliser companies are free to pass on high global prices to consumers
New Delhi: The government on Friday notified the Cabinet decision to allow fertiliser companies to fix the retail price of phosphatic (P) and potassic (K) nutrients such as DAP but asked them to keep the rates at 'reasonable level', reports PTI.
In April, the Cabinet had allowed firms to increase DAP price by up to Rs600 per tonne over and above the maximum retail price (MRP) of Rs10,750 a tonnes prevailing then.
"The market price of subsidised P and K fertilisers including DAP will be open and will be fixed by the fertiliser companies at reasonable level," the fertiliser ministry said in a notification issued yesterday.
Under the nutrient-based subsidy (NBS) regime introduced from 1 April 2010, the retail prices of 22 varieties of P & K fertilisers have been freed. For the 2011-12 fiscal, government raised NBS of P&K fertiliser to insulate companies from high global prices, but restricted them from hiking the MRP beyond Rs600 a tonne.
"The restriction was against the objective of the NBS policy. Last week, the Cabinet gave approval to remove the anomaly in the NBS policy to free P&K fertiliser prices completely," a senior fertiliser ministry official said.
The removal of restriction would boost domestic supply of DAP in the ongoing Kharif season as the fertiliser companies are free to pass on high global prices to consumers, he said.
At present, there is short supply of DAP and other P & K fertilisers as the companies have been shy of importing them due high global prices.
While the companies are entitled for import subsidy on the benchmark price of $612 a tonne only, international prices are ruling high.
According to the notification, the fertiliser companies will be required to print MRP on each fertiliser along with applicable nutrient-based subsidy per bag.
Any sale above the printed MRP is punishable under the Essential Commodities Act, it added.
The annual requirement of DAP in India is about 11-12 million tonnes. Over 8 million tonnes is met through imports from Morocco, Jordan, China, the US and the rest is produced indigenously.
Buy on dips close to the support levels, with a strict stop loss below the 5,400 level, keeping in mind target levels
S&P Nifty close: 5660.65
SHORT term: Up; MEDIUM term: Sideways; LONG term: Up
After a subdued first half, the Nifty rallied to the projected resistance area of 5,700-5,770 and corrected marginally on the last day of the week. In the process it failed to cross the resistance line (depicted in purple in the weekly chart above), resulting in some profit-taking by the Bulls that saw the Nifty close a paltry 33 points (+0.59%) higher. However, volumes were lower during the week. The sectoral indices which led the rise were BSE Realty (+7.12%), BSE Consumer Durables (+4.15%), while the laggards were BSE Metal (-1.22%), BSE Oil & Gas (-0.20%) and BSE PSU (-0.18%).
The sustained rise of the last few weeks has resulted in the histogram MACD moving above the median line, implying that the intermediate term bias is turning sideways, if not up at this moment. The Nifty seems to be retracing either the fall from 6,181 or the entire decline from 6,338 points, which gives upside targets of 5,767 (50% of 6,338-5,195 came very close to this), 5,804 (61.8% of 6,181-5,195) and 5,902 (61.8% of 6,338-5,195).
We saw the Nifty close above the 20wema pegged at 5,588 points for the second week running and this should provide immediate support. The Fibonacci retracement levels of the recent rise from 5,195-5,740 are 5,532 (38.2%), 5,468 (50%) and 5,403 (61.8%), which are the support levels to watch out for in corrections. The 5,403 points level also coincides with the trendline support (in black).
Here are some key levels to watch out for this week.
The Bulls have succeeded in putting the Bears on the back foot. The Fibonacci support levels mentioned above should act as support in declines. As long as any correction does not break the 5,400 level on a weekend close, the Bulls hold the edge and the Nifty should try to get to the 5,804 or 5,902 levels in the weeks ahead. For this to materialise, the Bulls have to push the Nifty above the resistance line (in purple) on significantly higher volumes. In a nutshell, one should buy on dips close to the support levels, with a strict stop loss below the 5,400 level, keeping in mind the target levels.
(Vidur Pendharkar works as a consultant technical analyst and chief strategist at www.trend4casting.com.)
Nifty will be volatile on way up to 5,800
The market fluctuated between losses and gains during the week, mainly on global cues. While positive economic indicators from the US kept hopes of the global recovery alive, the Moody's downgrade of Portugal's bond rating to junk capped the gains. The market ended the week with a gain of 1%.
On Monday, the market recorded modest gains, riding on the news of robust US manufacturing data for April. The indices settled lower on the next two days, on concerns over the downgrade of Portugal's bond rating. On Thursday, the announcement of a decline in the weekly food inflation numbers helped the market overcome negative global cues. However, the indices gave up more than half of those gains on the last trading day of the week.
Overall, the Sensex closed the week up 95 points at 18,858 and the Nifty put on 33 points at 5,661. The Nifty, which has been trading above the 5,600 mark all week, is expected to move between 5,600 and 5,800 over the next few days.
In the sectoral space, the BSE Realty index jumped 7% and the BSE Consumer Durables index gained 4%, but the BSE Metal index shed 1%. The BSE Fast Moving Consumer Goods index settled unchanged.
The top Sensex gainers in the week were Reliance Infrastructure (up 8%), DLF (up 7%), Tata Motors (up 6%), Bharti Airtel and Mahindra & Mahindra (up 4% each). The losers were led by Sterlite Industries (down 4%), BHEL, ICICI Bank (down 3% each), Jaiprakash Associates and Jindal Steel & Power (down 2% each).
The government announced that food inflation was at 7.61% for the week ended 25th June, a seven-week low. In the previous week, inflation was at 7.78%. However, finance minister Pranab Mukherjee said he believed that inflationary pressure is likely to continue following the recent increase in the prices of petroleum products. While the inflation for non-food primary articles fell, a rise was noticed in the fuel and power index.
Merchandise exports aggregated $29.2 billion in June, a 46.4% increase despite uncertainties in the US and European markets. Though imports grew by 42.4% to $36.9 billion in June, the trade deficit of $7.7 billion was about half the $14.9 billion deficit in May, easing concerns over the balance of payments situation.
In the April-June quarter, shipments grew by 45.7% to $79 billion. Imports, too, increased by 36.2% to $110.6 billion, led by $30.5 billion worth of petroleum products, in the three-month period.
However, the Federation of Indian Exporters Organisation (FIEO) has cautioned that the high growth trend of exports is unlikely during the third and fourth quarters, due to concerns over inflation and high interest rates.
Earlier this week, a group of ministers (GoM) on mines, unanimously approved the draft Mines and Mineral Development and Regulation (MMDR) Bill, 2011, which provides for 26% profit sharing by coal miners and 100% royalty sharing for other miners with project-affected people. The total burden on miners is estimated in the region of Rs11,000 crore, according to a minister who participated in the meeting.
On the corporate front, the oil ministry has blocked Cairn India's plans to begin crude oil production from the Bhagyam oilfield, the second biggest find in the prolific Rajasthan block, giving a new twist to the Cairn-government of India impasse.
Cairn had plans to put the Bhagyam oilfield into production by October to take the total output from the Rajasthan block to 175,000 barrels per day. At the 10th June meeting of the panel that oversees operations of the block, the oil ministry stonewalled any discussion on the production rate, work programme and budget for the Bhagyam field for FY11-12.
In political news, textiles minister Dayanidhi Maran resigned from the Union Cabinet on Thursday, the day after the Central Bureau of Investigation (CBI) named him in the 2G spectrum allocation case. Mr Maran is the second Union minister of the DMK to become a casualty in the telecom scandal.
Former telecom minister A Raja resigned in November 2010 after a report of the Comptroller and Auditor General on the matter. Mr Karunanidhi's daughter Kanimozhi, who is a member of parliament, is also in jail along with Mr Raja in the scam.
On the international front, China's consumer price inflation rose to 6.4% in June from 5.5% in May, the government said on Saturday. The data came three days after the People's Bank of China hiked interest rates by 25 basis points, suggesting that inflation pressures may persist even if global commodity prices fall.
Moody's Investors Service on Tuesday downgraded Portugal's long-term bond ratings to 'Ba2' from 'Ba1' with a negative outlook. The rating agency also downgraded the country's short-term debt rating to 'Non-Prime' from 'Prime-2'. Moody's said the motive behind the downgrade is the growing risk that Portugal will require another round of financing from its European neighbours.