Stocks
BSE Sensex, Nifty in a strong uptrend: Thursday Closing Report

But buying only on declines would be the right strategy 

 
Resuming after a day’s break, the Indian market was in the positive for the entire session and closed in the green for the third day in a row. The end of the stalemate in Parliament and Goldman Sachs’ upgrade of India to ‘overweight’ from ‘market-weight’ also supported the gains. In our previous closing report, we had mentioned that the Nifty should continue to register a higher high and a higher low to maintain the upmove. For the third trading day today the Nifty managed to make a higher high and a higher low and closed at it highest points since 27 April 2011. At present the index is in a strong uptrend and a close below any previous day’s low may be a sign of reversal. The National Stock Exchange (NSE) saw a high volume of 111.71 crore shares on account of the November F&O contract expiry and an advance decline ratio of 1018:709.
 
The Indian market, which opened after a day’s holiday, started in the green tracking firm global cues and hopes that the logjam in Parliament will end with the Lok Sabha speaker Meira Kumar allowing a discussion that involves voting on the issue of allowing FDI in multi-brand retail. 
 
The Nifty opened 10 points higher at 5,737 and the Sensex resumed trade at 18,874, up 32 points over its previous close. The opening figure on the Sensex was its intraday low while the Nifty’s low was at 5,736. 
 
An upgrade of India to ‘overweight’ from ‘market-weight’ by global investment bank Goldman Sachs boosted sentiment in the domestic market today. The benchmarks gained strength as trade progressed on buying interest in consumer durables, fast moving consumer goods, realty and auto sectors.
 
A positive opening of the European markets boosted domestic investor sentiment in the second half of the trading session. The market continued to trade firm in the late session with the benchmarks hitting their highs in the last hour. At this point, the Nifty rose to 5,834 and the Sensex jumped to 19,205.
 
A minor bout of profit towards the end of the session resulted in the market closing off the highs. The Nifty gained 98 points to 5,825 and the Sensex jumped 329 points to settle above the 19,100 mark at 19,171.
 
Although the broader indices settled higher, they lagged the Sensex. The BSE Mid-cap index surged 1.26% and the BSE Small-cap index rose 0.45%.
 
 
With the exception of the BSE IT (down 0.36%) and BSE TECk (down 0.05%), all other sectoral gauges closed up. The top gainers were BSE Realty (up 3.38%); BSE Bankex (up 2.76%; BSE Auto (up 2.08%); BSE Capital Goods (up 1.55%) and BSE Consumer Durables (up 1.45%).
 
Twenty six of the 30 stocks on the Sensex closed in the positive. The main gainers were Bajaj Auto (up 5.01%); ICICI Bank (up 4.59%); Tata Motors (up 4.45%); Cipla (up 3.59%) and Sterlite Industries (up 3.09%). The losers were Hero MotoCorp (down 1.035); Infosys (down 0.98%); BHEL (down 0.71%) and Maruti Suzuki (down 0.39%).
 
The top two A Group gainers on the BSE were—Indiabulls Financial Services (up 10.61%) and Suzlon Energy (up 8.80%).
The top two A Group losers on the BSE were—Apollo Hospitals Enterprise (down 7.95%) and NHPC (down 3.64%).
 
The top two B Group gainers on the BSE were—ABG Infralogics (up 20%) and De Nora India (up 19.99%).
The top two B Group losers on the BSE were—Kiri Industries (down 19.75%) and Spectacle Infotek (down 11.56%).
 
Out of the 50 stocks listed on the Nifty, 43 stocks settled in the positive. The major gainers were ICICI Bank (up 4.92%); Asian Paints (up 4.51%); Tata Motors (up 4.46%); Bajaj Auto (up 4.11%) and Cipla (up 4.02%). The main losers were Infosys (down 1.40%); Maruti Suzuki (down 0.84%); Hero MotoCorp (down 0.83%); BHEL (down 0.76%) and HCL Technologies (down 0.45%).
 
Markets in Asia, with the exception of the Shanghai Composite, closed in the positive on hopes that US policymakers would reach a deal on avoiding higher taxes. Meanwhile, Japanese retail sales declined 1.2% in October on an annual basis, adding to the signs of a slowdown in the country.
 
The Hang Seng advanced 0.99%; the Jakarta Composite gained 0.33%; the KLSE Composite added 0.05%; the Nikkei 225 surged 0.99%; the Straits Times climbed 1.13%; the Seoul Composite jumped 1.15% and the Taiwan Weighted settled 0.92% higher. Bucking the trend, the Shanghai Composite declined 0.51% with brokerages leading the losers on speculations of a reduction in trading fees.
 
At the time of writing, key markets in Europe were trading 0.65% to 1.03% higher and the US stock futures were in the positive, indicating a green opening for US stocks.
 
Back home, foreign institutional investors were net buyers of shares totalling Rs1,082.74 crore on Tuesday while domestic institutional investors were net sellers of equities amounting Rs208.50 crore. 
 
Unichem Laboratories today said it has received the USFDA’s approval to market Tizanidine tablets, a drug used to relieve muscle pain, in the US market. The approval is for tablets in strengths of 2 mg and 4 mg. The stock surged 3.26% to close at Rs186 on the NSE.
 
Amid government directive to PSUs to invest their surplus funds, Coal India (CIL), which is sitting on huge cash-pile, has lined up Rs 50,000 crore investment plans for the next five years. “If they (PSUs) have not invested and they still have surplus cash, they have been told to invest... The principle is use it or lose it,” the finance minister had said. Coal India gained 1.32% to close at Rs368.10 on the NSE.
 
Agro-chemical firm Bayer CropScience today said that it has sold its property at Thane in Maharashtra for Rs1,250 crore to Agile Real Estate. The company said it has entered into two agreements and executed all other incidental documents with Agile and also undertaken all the requisite acts to close the transaction. The stock closed 2.22% higher at Rs1,225 on the NSE.
 

 

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Why do ministries interfere with the functioning of statutory bodies?

Statutory bodies like the Reserve Bank of India should not be made subservient to the whims and fancies of officials in ministries for exercising the powers they are expected to exercise as part of their mandated functions

 
Finance minister P Chidambaram has denied any rift with the RBI (Reserve Bank of India) and has concluded that the equation between the government and the central bank in India is the same as the equation between the government and central bank of any country. “It is always arguing for growth on the part of government and arguing for stability and taming inflation on the part of the central bank”, the FM is reported to have told media persons. 
 
This conforms to the RBI governor’s own observation earlier this month that he had checked with other central bank heads and found that relationship issues are the same in other countries too (I think, the occasion was a meeting attended by several central bank governors and treasury heads, which was attended by Mr Chidambaram also!). It has to be said to the credit of Dr Subbarao that he had understood this earlier and observed in an interview immediately after the “walk alone” threat from the finance minister thus: “I don’t feel very lonely. I think people are making too much of the finance minister’s response to our policy action. After all, we have shared goals. Both of us want high growth and low inflation. And there is a division of responsibilities. There is a point of view that we must walk together. But, you know, what is called walking together is understood differently. I think that will be resolved in the course of time.”
 
So far, so good. The confusion in the media about GOI-RBI friction evolved from the way in which the FM under pressure almost asked RBI to cut base interest rates in October, made a statement that RBI can go ahead with preliminary work for issue of new private sector bank licences without waiting for changes in Banking Regulation Act and gave freedom to his ministry officials to instruct banks on issues which the RBI thought were under the domain of the central bank as the banking regulator.
 
Finance Minister P Chidambaram, today, is a man in a hurry. Any FM of a country of India’s size and economic problems should be. But the speed should not blind vision or overtake priorities. The pressure being put on banks and the banking regulator makes one think on these lines.
 
Last week a letter said to have been written by the finance ministry to the RBI on new bank licences was quoted by a newspaper. The letter seems to assert that the powers RBI is seeking via an amendment to the Banking Regulation Act, 1949, are already available under various legislations and the amendments would be passed within six months during which period the RBI can go ahead with accepting applications for new banks and start processing them.
 
If the finance ministry is confident that an amendment is not necessary to ‘give’ the powers sought by the RBI (which include powers to supersede the board, to authorize the acquisition of shares beyond 5% as well as powers for consolidated supervision and dispensation necessary to deal with companies that entered the banking sector), for approving new banks, why not convince the RBI about the position? Why is the FM announcing to the media that the ministry has ‘written’ to the RBI to receive applications and start processing? How can any genuine promoter submit an application without knowing the regulatory environment in which the new bank will be functioning, in the first place?
 
During October, reports were there that the finance minister had asked RBI officials whether the banking regulator could be given these powers without an amendment to the Banking Regulation Act. The RBI governor said in an interview on 31st October that the central bank could not offer an informed response to this query from the FM, because the RBI believed that it needed those powers. North Block seems to have ignored the message in Dr Subbarao’s comment. The message was RBI would be happy if the powers come through a legislative amendment. The powers ‘given’ outside the provisions of the Act could be with stings and can also be taken back in a different situation through the same process (without a legislative process).
 
Statutory bodies like the RBI should not be made subservient to the whims and fancies of officials in ministries for exercising the powers they are expected to exercise as part of their mandated functions. The RBI has faced problems on such issues relating to banks earlier due to blurred clarity in powers and interpretation of law. Perhaps, the RBI has learnt from the recent experiences while handling new generation private sector banks which did not survive and the interests of the clientele had to be protected by the regulator with GOI support.
 
Last ten years or so, the RBI has been loitering around North Block for permission to continue a pension updation granted by RBI in exercise of powers available under the Reserve Bank of India Pension Regulations which is being questioned by the finance ministry that has interpreted the pension regulations differently. An amendment to RBI Pension
Regulations made to conform to the GOI interpretation of the regulations is pending with finance ministry for more than a year.
 
Such experiences too, can put the RBI on guard while acting on trust. The pressure on banks to open Aadhar-based accounts for transfer of ‘benefits’ under the pilot project in 51 districts even before the credibility of UID is established is another move from the FM flagging the lopsided priorities of UPA-II which is in a hurry to show results before approaching voters!
 
To read more articles by MG Warrier, click here
 
(MG Warrier is a former general manager of Reserve Bank of India.)
 

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COMMENTS

nagesh kini

5 years ago

From professional experience I vouch for the fact that the RBI is the best authority to deal with as it is relatively taint free.
We need more upright YV Reddys and D.Subbaraos to stand up to
"intellectually arrogant" - the term used by Congres'own Digvijay Singh to describe PC - FMs.
Thank God for RBI and CAG are constitutionally mandated who will brook no interference from North and South Blocks!

REPLY

M G WARRIER

In Reply to nagesh kini 5 years ago

I do appreciate your comments. But the efforts to weaken institutions are from several vested interests. All statutory bodies including judiciary and the entire public sector are victims. The haste with which Financial Sector Legislative Reforms, New Pension Scheme, UID etc are being pushed through, destabilising the top (see the experience of UTI, RBI etc) are all manifestations of the same thought process. There is a limit for individual resistance from people like T N Seshan, Kalam, Y V Reddy, Vinod Rai, Subbarao and even Dr Manmohan Singh or A K Antony, if you feel they are trying their bit.

Winmyid

5 years ago

Why do ministries interfere with the functioning of statutory bodies?

I will tell you why:
Because they are stupid (those who does interfere; Ex: when you don't understand the role of RBI and build a pressure on then, publicly, you are either stupid or working against constitutions' values and I am happy to give a benefit of doubt to our finance minister PC ). I think, PC (unfortunately my Sr at Harvard) belives that he is better (qualified) than RBI Gov.
He may also be extremely arrogant and may not like to take no for an answer.
Or, he doesn't understand finance the way he understand the politics or not being advised by wise people.
Many people from Harvard have ben like this when they become a leader (Bush was another one)
If any of you wants to get in touch with me, use my email and I will give you more detail reply about my opinion.

REPLY

M G WARRIER

In Reply to Winmyid 5 years ago

I appreciate your forthright views. Moneylife and I would look forward to any suggestions for bringing about a change in the attitude of individuals with the kind of character you have described so that millions of people who are affected by their approach to people, institutions and policies will get some relief. We may not be able to replace people in position. But some change in their attitude may make a big difference.

MCX-SX joins United Nation's SSE initiative

MCX-SX has joined the global league of six other exchanges that have committed to the UN's Sustainable Stock Exchanges initiative

 
Mumbai: MCX Stock Exchange (MCX-SX) has signed the voluntary commitment to the UN's Sustainable Stock Exchanges (SSE) initiative to promote long-term investment and improved environmental, social and corporate governance disclosure and performance among listed companies, reports PTI.
 
With this, MCX-SX has joined the global league of six other exchanges that have committed to the UN SSE initiative, a statement issued here said.
 
"We are committed to market-based approaches to sustainable development. We intend to achieve inclusive and enhanced market access through knowledge and empowerment. I am sure our commitment to the SSE initiative will enhance sustainability reporting standards in India," MCX-SX Managing Director and Chief Executive Joseph Massey said.
 
The other six exchanges that have so far publicly committed to the SSE initiative are NASDAQ OMX, the Brazilian stock exchange BM & FBOVESPA, Johannesburg Stock Exchange (JSE), Bombay Stock Exchange (BSE), Egyptian Exchange (EGX), and Istanbul Stock Exchange (ISE).
 

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