Nifty may go down to 5,600 and Sensex to 18,400
The local market opened flat as Asian markets showed little gains following the Chinese central bank's decision to hike reserve requirements for banks. Poor quarterly numbers of Infosys and the rise in headline inflation for March continued to weigh on investors' minds for the second day. The Sensex opened at 19,390, three points higher than its close on Friday and the Nifty resumed trade a point lower at 5,824.
Select buying in metals, banking, capital goods and oil & gas stocks pushed the indices to the day's high at around 10.30am. At the high, the Sensex was up 262 points at 19,649 and the Nifty had gained 73 points at 5,898. After range-bound trading for an hour, the market witnessed a steep fall with the indices crashing down into the red on profit booking.
Sideways trading continued into the post-noon session with the market gradually edging lower and it touched the intra-day low in the last half hour, the Sensex at 19,071 and the Nifty at 5,722. The indices saw a marginal recovery from those levels, but still ended lower for the second straight day. The Sensex retraced 296 points at 19,091 and the Nifty closed at 5,729, down 95 points from its Friday close. Today's intra-day highs and lows were lower than those recorded on Friday, an indication that the market is on a downward trend. The advance-decline ratio on the National Stock Exchange was 379:1030.
Among the broader markets, the BSE Mid-cap index declined 1.29% and the BSE Small-cap index fell by 1.29%.
The sell-off was partly caused by short-term foreign traders selling, as debt troubles in Europe resurfaced and signals of interest rate hikes were visible around the world. The market benchmarks, the Sensex and the Nifty, have been on a downtrend from 6th April. It was punctuated by a rally on 13th April. That rally turned out to be a one-off affair. Given the way the market sold off today after a rousing start, expect further declines to 5,600 on the Nifty and 18,400 on the Sensex.
All sectoral gauges ended in the red today. BSE Realty (down 3.17%), BSE IT (down 2.73%), BSE TECk (down 2.32%), BSE Capital Goods (down 2.12%) and BSE Metal (down 1.92%) were the top losers.
Hero Honda (up 1.80%), Hindustan Unilever (up 1.65%), Bajaj Auto (up 1.09%), ONGC (up 0.66%) and Maruti Suzuki (up 0.19%) were the major gainers on the Sensex. On the other hand, DLF (down 4.69%), TCS (down 3.43%), Jaiprakash Associates (down 3.13%), Tata Steel (down 2.92%) and Infosys Technologies (down 2.80%) ended at the bottom of the Sensex list.
India's gross domestic product (GDP) is projected to continue to grow at a brisk pace of 8.8% in 2011-12 (FY11-12), according to the Centre for Monitoring Indian Economy (CMIE). The domestic environment is conducive for growth and private consumption expenditure is projected to grow by a healthy 7.5% and gross fixed capital formation by 14.6%, the leading economic think-tank said in its latest monthly review of the country's economy.
In FY10-11, the performance of India's economy has been robust, it said, and added that real GDP is estimated to have grown by 9% during the fiscal.
The People's Bank of China's rate-tightening initiative on Sunday spooked most markets across the region today. Investors were concerned that higher prices might induce other central banks in the region to take firm steps towards curbing inflation.
Meanwhile, media reports indicate that the Fukushima Daiichi plant will take at least six to nine months to resume operations after the nuclear power plant was damaged in the devastating earthquake in Japan last month.
The Hang Seng was down 0.74%, the Jakarta Composite fell 0.09%, the Nikkei 225 lost 0.36%, the Straits Times declined 0.28%, the Seoul Composite was down 0.13% and the Taiwan Weighted shed 0.04%. On the other hand, the Shanghai Composite gained 0.21% and the KLSE Composite rose 0.36%.
Back home, institutional investors-both foreign as well as domestic-were net sellers in the equities segment on Friday. Foreign institutional investors offloaded stocks worth Rs253.43 crore and domestic institutional investors sold shares worth Rs360.88 crore.
Aban Offshore (down 1.48%) has received firm orders from ONGC for the deployment of jack-up rigs, Aban III and Aban IV, for a period of three years each. The total value of these orders is around $138 million (equivalent to Rs620 crore), the company said in a filing with the exchanges.
McNally Bharat Engineering Company (1.40%) has informed the BSE that the company has received an order from SAIL's Bhilai Steel Plant for its New Coke Oven Battery No 11. The order, valued at Rs379 crore, is scheduled for completion in 24 months.
Maharashtra government is offering incentive to its employees for enrolling more residents for the UID number scheme. The incentive part could be dangerously misused by the state government employees by promising fake benefits to get more people enrolled under the controversial Aadhaar project.
The Maharashtra government has decided to give incentives to its employees for hassling…sorry, enrolling common residents for the unique identification number (UIDN) or Aadhaar number. There are already several stories about the fake promises given by employees, like the Aadhaar number would help in getting foodgrains under the public distribution scheme (PDS), several other benefits given under the below poverty level (BPL) initiatives and so on. The additional attraction of incentive would pose serious risks for people who are unaware of the dangers of the Aadhaar number.
The Maharashtra government has in a resolution (GR) issued on 11 April 2011, said it will pay 25 paisa per enrolment to its employees working in the taluka and municipal zones who are engaged in the enrolment work for Aadhaar. This incentive would be derived from the Rs5 per UID number provided to the district collectors and municipal commissioners in the state. The balance Rs4.75 would be spent on daily expenses incurred for items like electricity, maintenance of the enrolment centre as well as travelling and daily allowances and training and seminar expenses.
The GR also mentions that the union government has sanctioned Rs50 per UID number for enrolling the first 20 crore residents for the Aadhaar project by March 2012. The incentive of 25 paisa per UID number would effectively be paid out of this amount.
Many activists are aghast over issues related to the UID number and this incentive has angered them even more. One activist says, "It (the GR) quotes the central government as having issued a target for the first phase. How can one find out, who precisely defined this target and how does it translate into an objective that can be incentivised?"
Already, many voices have been raised against the forceful implementation of the UID project, with most objections focused on concerns over privacy. The incentive issue will certainly push government employees to enrol more residents by any means, when they don't know what Aadhaar is and how it would affect their lives.
Moreover, there are issues over the legality of Aadhaar itself. The National Identification Authority of India (NIA) Bill is still pending before Parliament. The Bill seeks to constitute a statutory authority and lay down its powers and functions, besides deciding the framework to issue the UID or Aadhaar numbers. Yet, the Indian government and UID Authority of India (UIDAI) has been gone about implementing the scheme and issuing Aadhaar numbers without any constitutional validity as yet.
According to an expert, the government is the executive not empowered by the Constitution to implement projects spending public money without legislative sanction. "In the case of UIDAI, while the executive may appoint anyone to head it, the government is legally constrained from implementing the project and issuing Aadhaar numbers," the expert said.
The NIA Bill is under the consideration of the Parliament Standing Committee on Finance, headed by former finance minister Yashwant Sinha and has members from across the political spectrum.
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The detailed report on customer services has not yet been released despite it being ready; committee members are being kept in the dark over the progress of the report by the head, M Damodaran, who is incommunicado on this issue
The M Damodaran Committee set up by the Reserve Bank of India (RBI) to look into the improvement of bank customer services has prepared its final report. But the report is in limbo, even as the committee members are clueless about its progress. Despite the detailed report being ready, it has not yet been released for reasons best known to the committee head, M Damodaran.
Moneylife had reported earlier (RBI panel puts final report on bank customer service improvements in cold storage). On 24th March, the head of the committee and former SEBI (Securities and Exchange Board of India) chief M Damodaran, had informed Moneylife that the report would be out in the next ten days. In response to our query, Mr Damodaran had said, "All we have just now is a draft report, or working paper. This is the first important report on customer services after the MN Goiporia report. Our committee met a lot of stakeholders and we want to make sure that their views are properly represented in the report. I am in the process of redrafting it and the report should be out in the next ten days."
It's been more than ten days and the report is not yet out. When Moneylife contacted Mr Damodaran again on the same subject, he saw red and replied, "I am not supposed to submit the report to Moneylife. I will submit it to the RBI." He even banged the phone down before Moneylife could ask him any other question.
This reply has left the issue in limbo. Even the members of the committee are clueless whether the detailed report-which is in the custody of Mr Damodaran-is the final one, or would there be any more changes made as per the panel's recommendations.
There were several meetings held between the M Damodaran Committee and various other stakeholders for their considered views on the subject. According to our sources, this detailed report is believed to have pro-consumer suggestions.
Thus, banks do not want the report to be out, as it will increase pressure on them for improving customer services.
Such an indefinite answer from Mr Damodaran over the release of the report has raised many doubts. Informed sources from the RBI have confirmed to Moneylife that no one apart from Mr Damodaran is aware of anything related to this report-and there is no one in the RBI who can provide any clarity over this issue.
The committee members are even unaware if there would be any further meetings held for discussion over this report.
Ashok Rawat, one of the members of the committee and Hon. Secretary of the All-India Bank Depositors' Association (Mumbai) had earlier confirmed to Moneylife that the report was supposed to be released in mid-February. "The Damodaran Committee will table the report on customer services by the 15th of this month. If the logistics are properly taken care of, we may even see the report being released earlier-before the 10th of this month," Mr Rawat had told Moneylife on 7th February. (See: Damodaran Committee may release final report on customer service in banks by mid-February).
Moneylife had subsequently reported on how the report, which was supposed to be released in mid-February, was not released. (Read here)
The committee is expected to undertake a strict review of the existing system of the Banking Ombudsman Scheme and attending to customer service in banks, including the approach, attitude and fair treatment to customers from the retail, small and pensioners' segments. The committee was also asked to evaluate the existing system of the grievance redressal mechanism prevalent in banks, its structure and efficacy and recommend measures for expeditious resolution of complaints.
Moneylife sincerely hopes that the report is released in the shortest possible period-for people who have been clamouring for better banking services for years now.