January 9, 2012
Potential new Indian policy fuel fertiliser stocks
Reports of a soon-to-be unveiled investment policy for the urea sector by the Indian government led to rallying shares of fertiliser companies in the special trading session on Saturday (Jan 7).
Stocks of state-run Rashtriya Chemicals and Fertiliser (RCF) and National Fertiliser Ltd (NFL) gained the maximum of close to a fifth on the NSE, which held a special session to upgrade its trading infrastructure.
The BSE also conducted a special session. The benchmark BSE Sensex and Nifty ended marginally lower on Saturday (Jan 7).
Other fertiliser stocks, including DeepakFertilisers and Chambal Fertilisers, also gained in Saturday trade. NFL gained 19.97% to close at INR81.10 (US$1.54), while RCF gained 19.95% to end at INR67.75 (US$1.28) on the NSE.
Deepak Fertilisers gained 13.18% to end at INR143 (US$2.71), while Gujarat Narmada Fertiliser Company gained 8.91% to close at INR85.85 (US$1.63). Zuari Industries gained 5.41% to end at INR486 (US$9.22), while Coromandel International gained 3.61% to close at INR292 (US$5.54) on the NSE.
The government, which has been talking of a new investment policy for urea for quite some time now, is likely to announce one in the Budget 2012-13, Business Line had reported recently.
A core group, comprising Planning Commission member and secretaries of ministries concerned, had recently approved a new policy for urea that envisages creating a 1.5 million tonne capacity over a five-year period.
A Group of Ministers will examine the policy before being sent for Cabinet approval.
No new capacity addition in urea has taken place in the past 13 years due to the absence of an appropriate policy framework.
This has widened the demand supply-gap over the past decade.
Domestic urea production is estimated at 22 million tonnes, while the consumption is pegged at 29 million tonnes. At present, the country faces a shortfall of 7 million tonnes, which is bridged through imports.