BSE Sensex, Nifty getting oversold: Monday Closing Report

The Nifty could bounce back from today’s lows or from 5,955

The market closed lower on selling in PSU, healthcare and power stocks and on weak global cues. The market is getting oversold. The Nifty could bounce back from today’s lows or from 5,955. The National Stock Exchange (NSE) reported a volume of 65.62 crore shares and advance-decline ratio of 539:990.


The market opened firm tracking positive trends in the Asian pack which was higher in morning trade. The Asian markets received a boost from strong macro-economic indicators from the US over the weekend.


The Nifty opened 26 points higher at 6,025 and the Sensex started off at 19,861, up 80 points over its previous close. Buying in auto and banking shares lifted the benchmarks to their day’s high in early trade. At the highs, the Nifty touched 6,039 and the Sensex climbed to 19,903.


A minor bout of profit booking saw the market paring part of its early gains. The indices were range-bound in subsequent trade. Selling pressure in PSU, healthcare, oil & gas and power stocks resulted in the benchmarks losing momentum in noon trade. A quiet opening of the European indices led the domestic market lower in post-noon trade.


The market dropped to its intraday low in the last hour of trade as selling intensified. At the lows, the Nifty fell to 5,981 and the Sensex went down to 19,728.


The market settled near the lows and down for the third day in a row. The Nifty lost 12 points (0.19%) to 5,987 and the Sensex dipped 30 points (0.15%) to settle at 19,751.


The broader indices underperformed the Sensex today as the BSE Mid-cap index dropped 0.83% and the BSE Small-cap index declined 0.71%.


With the exception of the BSE Auto index (up 0.47%), all others settled lower. The top losers were BSE PSU (down 1.56%); BSE Healthcare (down 1.40%); BSE Power (down 1.36%); BSE Oil & Gas (down 1.12%) and BSE Metal (down 1.11%).


Ten of the 30 stocks on the Sensex closed in the positive. The chief gainers were HDFC (up 2.49%); Tata Motors (up 2.40%); ICICI Bank (up 0.94%); Jindal Steel & Power (up 0.61%) and TCS (up 0.46%). The main losers were BHEL (down 2.73%); Cipla (down 2.64%); State Bank of India (down 2.41%); Tata Power (down 2.29%) and ONGC (down 2.08%).


The top two A Group gainers on the BSE were—Godrej Consumer Products (up 5.14%) and Rural Electrification Corporation (up 4.69%).

The top two A Group losers on the BSE were—Bank of Baroda (down 7.50%) and Opto Circuits (down 7.39%).


The top two B Group gainers on the BSE were—Noveau Global Ventures (up 19.90%) and Valuemart Info Technologies (up 19.80%).

The top two B Group losers on the BSE were—Commercial Engineers & Body Builders Company (down 19.98%); and DFM Foods (down 14.43%).


Out of the 50 stocks listed on the Nifty, 16 stocks settled in the positive. The major gainers were Tata Motors (up 3.50%); UltraTech Cement Company (up 3.38%); HDFC (up 2.68%); Asian Paints (up 2.59%) and DLF (up 1.90%).


Markets in Asia closed mostly higher on positive macro-economic indicators from the US and China over the weekend. China’s non-manufacturing Purchasing Managers’ Index climbed to 56.2 in January from 56.1 in December, the National Bureau of Statistics and China Federation of Logistics & Purchasing said yesterday. However, the Seoul Composite index slipped as subdued earnings reports offset early gains.


The Shanghai Composite gained 0.38%; the Jakarta Composite rose 0.20%; the KLSE Composite advanced 0.43%; the Nikkei 225 climbed 0.62%; the Straits Times rose 0.19% and the Taiwan Weighted surged 0.86%. On the other hand, the Hang Seng lost 0.16% and the Seoul Composite declined 0.23%.


At the time of writing, the CAC 40 of France was down 0.44%; DAX of Germany fell 0.25% and UK’s FTSE 100 was trading 0.37% lower. At the same time, the US stock futures were flat.

Back home, foreign institutional investors were net buyers of shares amounting to Rs763.28 crore on Friday. On the other hand, domestic institutional investors were net sellers of equities aggregating Rs1,088.62 crore.


Welspun India (WIL) was ranked first in the Top 15 Supplier Giants (USA) by Home Textiles Today in a recently concluded survey based on its 2011 sales figures.  The company was in the second spot last year. As per the survey, refocusing on core competencies helped Welspun report higher volumes and has improved margins in terry towels, towels and rugs. The stock dropped 0.90% to close at Rs77.50 on the NSE.


Construction major Supreme Infrastructure has bagged contracts worth Rs505 crore in five states, including a Rs267 crore contract for building additional office complex for the Supreme Court of India. The stock gained 0.36% to settle at Rs212 on the NSE.


Electrical equipment maker Crompton Greaves (CG) has entered into a pact with New Zealand-based Transpower NZ for supply of transformers, with a potential to supply equipment worth $ 15 million per annum. The transformers are being manufactured at CG's Jakarta, Indonesia facility, the company said in a statement. CG shed 0.09% to settle at Rs106.15 on the NSE.


E-gov projects and generous giveaways by govt prop up faltering IT companies?

During 2012, IT companies recorded insipid performance. However, with general elections on the horizon, several state governments and the central government through UIDAI, are eager to lend a “helping hand” to these IT companies

When the governments start spending huge money, one thing is sure; elections are on the horizon. This is true with states as well as the union government. No wonder, for every election, there are big, bigger promises (poll freebies) announced by all political parties and its affiliates. For example, recently the Uttar Pradesh government ordered 15 lakh laptops from HP, while Redington expects to execute and bill in fourth quarter an order worth Rs200 crore from the UIDAI. Separately, the Akhilesh Yadav-led UP government has floated a tender to procure 26 lakh units of tablet PCs, for distribution to class X students, in the first phase. The state government has budgeted Rs2,400 crore and Rs400 crore for procuring and distributing laptops and tablet PCs, respectively. Such orders lend a “helping hand” to faltering Information Technology (IT) companies.


While providing laptops is the new gimmick played by all political parties to lure voters, especially youth, the large order from the UIDAI however raises a question about the motive of the government. Over the past two quarters, growth expectations from IT companies have moderated progressively as concerns over stability of IT budgets, pricing power and client-specific issues have piled up. And who is better than a former chief of one of the largest IT companies to extend the “helping hand” in this scenario. No wonder, the entire IT industry is lining up to praise the UID project and the ‘brain’ behind it.


However, it is not only Indian IT companies that are vying the UIDAI contracts. Several global IT and IT enabled service providers are already into the fray. According to UIDAI’s own admission, the authority, so far has awarded contracts to about 38 companies and agencies, including Tata Consultancy Services (TCS), Wipro, Mahindra Satyam, Accenture, HCL Infosystems, HP India, Geodesic and MindTree. Wipro alone has won four contracts from UIDAI.


HCL had won the contract for managed service provider (MSP) worth Rs2,200 crore from the UIDAI beating giants like TCS, Accenture, TechMahindra, Wipro and few others backed by IBM and HP. HCL would implement and manage the Central ID repository (CIDR) of the UIDAI for seven years.


In another incident, TCS, India’s largest IT company was replaced by Infosys for managing the portals of ministry of corporate affairs (MCA). TCS had won the contract to manage the MCA 21 portal in 2005. The contract is worth $50 million and Infosys would manage the portal over next five years.


According to brokerages, the Indian economy is likely to witness consumption stimulus of around Rs1,300 crore over the next 12 to 14 months, without taking into consideration of the budgetary provisions. Over the next one and a half year, 13 states would witness assembly elections culminating into general elections and there are 2,100 electoral seats for grabs. This would contribute about Rs800 crore in consumption while the United Progressive Alliance (UPA) government’s ambitious Aadhaar-linked direct cash transfer is worth about Rs500 crore, says Axis Capital, in a research note.


Last month, HP competing with PC makers like HCL, Acer and Lenovo, won a contract to supply 15 lakh laptops to the UP government. HP quoted Rs19,058 per laptop, while HCL, Lenovo and Acer quoted a price of Rs21,983, Rs23,919 and Rs25,199, respectively. These laptops would be provided to students from UP, who have passed Standard XII during the 2011-12 academic year. The order is worth Rs2,585 crore.


Separately, the Akhilesh Yadav-led UP government floated a tender to procure 26 lakh units of tablet PCs, for distributing to Class X students, in the first phase. The state government has budgeted Rs2,400 crore and Rs400 crore for procuring and distributing laptops and tablet PCs, respectively.


During the 2001 assembly elections in Tamil Nadu, Jayalalithaa-led AIDMK promised free laptops for all higher secondary students. The Tamil Nadu government has started distributing 9.06 lakh laptops in the first phase. The Jayalalithaa government expects to distribute about 68 lakh laptops worth Rs10,200 crore to students in government-aided schools and colleges in the state. Last year, Electronics Corporation of Tamil Nadu (ELCOT) distributed 6,600 laptops, at various schools in the district, supplied by HP and Acer. Chinese Lenovo was the biggest supplier of laptops in the first phase. The second phase of procuring 7.24 lakh laptops is under way in Tamil Nadu.


No wonder, last week Lenovo, for the first time, had its board meeting in India. The Chinese vendor is also eying a contract from the UIDAI. According to media reports, Amar Babu RK, managing director of Lenovo India, has shown readiness to engage with the government on working jointly to provide cost-effective education solutions and even participating in the Aadhaar-based cash transfer with “specialised instruments” linking the beneficiaries’ bank account.



Vaibhav Dhoka

4 years ago

In India elections are fought on public money only.Freebies is not from politicians pocket but it is going to be collected post election in form of increased taxes.


4 years ago

What author want to convey ? Procusing PC/Laptop is good or bad ? Distributing them to students is good or bad ? Procuring laptops from least bidder is good or bad irrespective of company being from india, china or USA ?

Govt spending is MUST to boost the economy. Otherwise from where money will come ? Money has to flow in some way. Govt gets money from taxes (mostly salaried employee) and gives them back to PSU/Private companies to do some work. This money flow cycle is required for everyone to grow. Only we need to make sure that leaks are kept to minimum. And this article do not say about leaks/fraud any where.


pravin varma

In Reply to Sachin 4 years ago

Oh my god.this perpetual motion vision of economics is most funny.the money which is with private citizens is not lying is invested in banks/capital markets or spent on their wants and needs.with the govt in betweern,all that happens is a transfer of wealth from the productive people to rent seekers(babus/netas -remember rajiv gandhi's 85% comment?).when private people spend,it is spent on the things they really want.when politicians spend others money,it is spent on things that get them votes.kindly rethink your economic view of the is a bit 17th century old.


In Reply to pravin varma 4 years ago

Pravin, Thanks for enlightening my 'perpetual motion vision of economics'. Issue discussed here is not what is level of my knowledge or your HIGH IQ knowledge. I wanted to say in a very layman language that govt spending is must.That is why govt collects taxes so it can return that in some or other form. And I hope this is not 17th century thinking.
Please do not politicize the issue saying politicians are corrupt, bubu swindle money in between blah blah. Every one knows what happens in India and that is the reason i said we have to plug holes (leaks) in the system. And yes i even remember Justice Katju's remark of 90% indian...

Ravi Duggal

4 years ago

Interesting story. But what would be more interesting is the underlying story of the loot that must have happened in awarding these contracts. Something worth investigating because a huge amount of resources from the public budget is being grabbed by private players through such contracts under crony capitalism.

Mukesh kamath

4 years ago

So what does yogesh want to say ultimately? That such IT spend is useless? It may benefit people also how can he be so sure?

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