Nifty may head to 5,556
Global events like the International Energy Agency releasing strategic crude stockpiles to overcome the supply disruptions from Libya and easing of the Greek debt crisis helped to offset the rise in weekly food inflation on the domestic front. The positive developments led the market 2% higher in the week.
However, after the market closed for the week the government announced a Rs3 per litre increase in diesel prices, Rs2 a litre hike in PDS kerosene prices and a steep Rs50 hike per domestic LPG cylinder. It also reduced customs and excise duties on petroleum products, sacrificing Rs49,000 crore a year. The under-recoveries which stood at Rs1,71,140 crore will now come down by Rs21,000 crore after Friday's decision.
Giving details of the duty restructuring, oil minister S Jaipal Reddy said the elimination of 5% customs duty on crude oil and all petroleum products will result in a revenue loss of Rs26,000 crore and the excise duty cut on diesel from Rs4.60 a litre to Rs2 a litre which will entail a revenue loss of Rs23,000 crore during the current fiscal.
Terming the hike as 'modest', finance minister Pranab Mukherjee expressed hope that state governments would reduce their taxes to provide relief to consumers. However, the fuel price hike saw the government coming under fire from ally Trinamool Congress and political rivals BJP and Left parties which decided to hit the streets on the issue while AIADMK demanded an immediate rollback of the increase.
Talks of the review of the double taxation avoidance agreement with Mauritius resulted in a huge sell-off on Monday, but the market bounced back and posted marginal gains the next day. The indices ended flat with a mixed bias on Wednesday in the absence of any domestic triggers.
The market showed strong resilience on Thursday as it shrugged off weak global cues and high food inflation to close with decent gains. The gains were extended on Friday on news that the IEA will release two million barrels a day for the next 30 days. India, which imports nearly 70% of its crude requirements, was upbeat on the news. The Sensex closed the week at 18,241, a gain of 370 points for the week, and the Nifty settled at 5,471, up 105 points. The market might see a small rally with the Nifty going up to 5,556.
Food inflation touched a two-and-half month high of 9.13% in the week ended 11th June, higher from 8.96% in the previous week. The latest food inflation numbers are the highest since the week ended 26 March 2011, when the rate of price rise of food items touched 9.18%.
On the international front, the International Energy Agency on Thursday announced that it would release two million barrels a day for 30 days, to make up for supplies choked off by an armed rebellion in Libya.
The Greek cabinet earlier in the week approved a 2012-2015 austerity budget plan as well as laws for its implementation, a key condition for further EU-IMF help to tame a massive public debt. Eurozone ministers have insisted on the latest measures before they would release the next tranche of debt funding worth 12 billion euros ($17 billion), part of a 110-billion-euro rescue package agreed with the European Union and International Monetary Fund last year.
As the intermediate trend is down, the strategy should be to use rallies to exit long positions
S&P Nifty close: 5471.25
SHORT term: Down; MEDIUM term: Down; LONG term: Up
The S&P Nifty recovered smartly (+2.84%) on the last day of the week to close above the trendline support (in pink). It ended the week 1.95% higher, on significantly higher volumes. The sectoral indices which led the recovery were BSE IT (+2.97%), BSE Bankex (+2.50%) and Teck (+2.12%), while the laggards were BSE Reality (-4.91%) and BSE CDS (-2.76%).
It is visible from the weekly chart that the S&P Nifty continues to be in an intermediate term decline, as depicted by a lower top and lower bottom formation. Despite the smart recovery, the histogram MACD continues to be below the median line, implying that the intermediate trend is still down.
It must have been a big relief for the already battered Bulls when the S&P Nifty recovered sharply on the last day of trading for the week, to close above the trendline support (in pink). In the process it has completed the 38.2% retracement of the fall from 5,944-5,195 points and the 50% and 61.8% retracement levels are pegged at 5,570 (which also coincides with the 20wema) and 5,658 points, respectively. One has to keep a close watch on the trendline (in pink) which is pegged at 5,373 points, this week, as only a breach of this would make the Bears more aggressive. What this means is that the Bulls can afford the Nifty to slip close to this level, but certainly not below it, on a weekend.
For any bullish possibility (which was mentioned last week) the S&P Nifty had to survive above the support line this week and bounce, which it has done. The 20wema pegged at 5,575 points is the first major hurdle that it has to cross and the trendline resistance (in purple) pegged at 5,715 points is the next hurdle to watch out for, from an intermediate term perspective.
The only hope for the Bulls at this moment is that the market maintains symmetry to the movement in the period August 2009 to June 2010. In this scenario, we would see a sideways move in the weeks ahead.
Here are some key levels to watch out for this week.
Last week, the Bulls barely managed to avoid crossing the crucial resistance area of 5,486-5,501 points, though they came within handshaking distance of this level.
The Bears still hold a slight edge in the short term till the 5,521 points level is crossed. As the intermediate term trend is down, the strategy should be to use rallies to exit long positions and wait to see whether we get a higher bottom in the next decline. If we do, then we could see the Nifty test the 5,658 points of trendline resistance in the weeks ahead. For the Bulls to capitalise on the comeback made last week, they must defend 5,362 points (in lows), this week. It would be an absorbing week of trading as the Bulls and Bears resolutely try to defend 5,362 and 5,575 points levels, respectively.
(Vidur Pendharkar is a consultant technical analyst and chief strategist at www.trend4casting.com.)
Over 5.5 lakh RTI applications were filed in Maharashtra in 2010, but the number of appeals were lower, according to the official annual report. Last week, activists discussed with state information commissioners the ways to make RTI more vibrant and effective
A total 5.5 lakh RTI applications were submitted to various government departments in Maharashtra in 2010, confirming the state's pre-eminent position in the use of the Right to Information and public activism. According to the annual report of the chief information commissioner Vilas Patil, of the total applications, 59,000 (or about 10%) went into first appeals. However, the number of second appeals declined from 23,000 in 2009 to 19,000 in 2010.
These numbers are encouraging. But there are issues to be sorted out to ensure effective use of the Right to Information (RTI) Act. Some of these issues were brought up at a meeting of the state information commissioners with regular RTI users, held at the office of the State Information Commission at Mantralaya on Friday.
RTI users, activists of the Mahiti Adhikar Manch and Maharashtra RTI Council, yesterday appealed to the seven information commissioners who were present at the meeting along with the chief commissioner to "enforce" on public authorities to suo moto disclose information on their websites, which is mandatory under Section 4 of the RTI Act.
In response to this plea, Mr Patil said he had sent a circular to about 350 public authorities across the state, in December 2010, directing them to do this by 31 January 2011. But he reported, sounding quite helpless, "About 60% of the public authorities have not even replied to me. What am I supposed to do? I suggest that RTI activists take up this matter with the chief secretary to ensure its implementation.''
Bhaskar Prabhu, convener of Mahiti Adhikar Manch and Maharashtra RTI Council, suggested that since YASHADA (the Yashwantrao Chavan Academy of Development Administration) had already worked out a format that facilitates monitoring of public authorities regarding suo moto disclosure under Section 4 of the Act, the information commission should use that to keep tab on them.
Navin Kumar, information commissioner for the Konkan Region, suggested that since there was a shortage of manpower, outsourcing to NGOs was a possibility. "Since the state commission has already drawn out a list of the 60% of those public authorities who have defied this rule, citizen groups could file RTI applications on each one of them, and file a complaint with the information commissioners, and we ensure you action."
Aurangabad information commissioner DB Deshpande said, "There are many instances of public authorities having followed this rule and having made their functioning transparent, like MSEDCL (Maharashtra State Electricity Distribution Company), PMC (Pune Municipal Corporation) and the University of Mumbai. The archaic system of punishment will not help.'' Activist Vijay Kumbhar suggested that if strong action is taken, like "issuing summons or levying penalty", public authorities would be motivated to adhere to Section 4.
On reducing pendency and hastening disposal of second appeals, Mr Kumar suggested that all ten posts of information commissioners should be filled, which means that three more officials should be added to the seven, currently. The average clearance of cases is around 300 per month. Activists lamented that "more than increasing the number of commissioners, the state should provide each information commissioner with full-fledged 'relevant' staff, in order to increase efficiency of disposing appeals." Mr Patil confessed that funds or manpower do not come by very easily.
Pune division state information commissioner Vijay Kuvlekar is said to have succeeded in reducing pendency, with a novel exercise to bringing the applicant and the appellate authority/PIO together on a one-on-one basis, to try and sort out the issue at that level. Of the 300 appeals, 200 were solved by mutual consent. Mr Kuvlekar suggested this could be one of the ways in reducing pendency. However, this line of action was unreasonably criticised by various quarters.
Mr Patil confessed that "most of the second appeals did not adhere to the norms of the RTI Act and were irrelevant. Many of them gave multiple appeals on the same issue, but we are compelled to go through each appeal, which wastes our time." Mr Kuvlekar pointed out that of the 2,700 appeals, 900 appeals belonged to 60 individuals. Mr Patil said that "in Maharashtra much of the information is being successfully given by the public information officers and the first appellate authority. We have not received complaints about documents under the Adarsh case, etc." He says information commissioners are left with a large number of trash appeals.
Regarding digitalisation and computerisation of the State Information Commission's website, Mr Kuvlekar suggested a public-private partnership in which no money will be involved, but citizens and citizen groups come forward to undertake the digitalisation work. Mr Patil confessed that a sanction of Rs18 lakh to upgrade the website is still pending with the state government.
The two-hour interaction session concluded with the information commissioners agreeing to take up the compliance with Section 4 as top priority, with the help of citizens' groups, and towards having a full strength of ten information commissioners.