Fertilizer stocks soar at BSE on positive sentiment

Shares of fertiliser firms on Tuesday jumped up to five per cent at the BSE spurred by the release of Rs 3,610 crore worth bonds by the government and expectations on the price front from the Budget.

Shares of Nagarjuna Fertilisers were trading up by 3.6 per cent at Rs 54.65, while Chambal Fertilisers rose 3.1 per cent to Rs 63.25, Rashtriya Chemicals and Fertilisers was at Rs 86.50 (2.31 per cent up), National Fertilisers by 4.93 per cent at Rs 67.10 and GSFC at Rs 247 (3.07 per cent up) during the afternoon trade at the BSE.

The Government of India Special bonds, carrying 7.95 per cent coupon rate, is the second and final tranche of the total Rs 7,500 crore bonds which were announced in December last year to subsidise the companies which sell fertilisers below the cost of production.

The government had already issued bonds worth Rs 3,890 crore to 22 companies in December 2007.

The upward movement of fertiliser stocks at BSE is also being attributed by analysts to the market speculation that the government may fix the fertiliser prices at par with the global rates in the coming budget.

The mood is upbeat as the government had earlier announced it was thinking of bringing price parity in the fertiliser sector to attract investment, which has stopped for over 15 years despite 100 per cent FDI, an analyst with a leading brokerage firm said.

SMC Global Vice-President Rajesh Jain said the uptrend in fertiliser shares is due to positive expectations for the budget.

The Fertiliser Association of India has sought withdrawal of customs duty on fertiliser project imports, tax holiday for 15 years to all new projects after the budget and VAT exemption on fertiliser inputs.