BSE Sensex, Nifty indecisive: Friday Closing Report

While the uptrend is not broken, a close below the day’s low may pull down the Nifty further

The market pared all its gains in the second half of trade and settled lower even as the government won the vote in the Rajya Sabha on FDI in retail. Although today the Nifty made a higher high and a higher low the index closed in the negative. While the uptrend is not broken, a close below the day’s low may pull down the Nifty further. The National Stock Exchange (NSE) saw volume of 87.59 crore shares and an advance decline ratio of 826:940.
The domestic market opened with marginal gains ahead of the crucial vote in the Rajya Sabha (Upper House) for allowing FDI in retail. On the global front, US stocks closed higher on Thursday ahead of the release of the monthly jobs report and a boost in technology stocks. The Asian pack was mostly higher on hopes that the US government would avoid additional taxes and spending cuts.
The Nifty opened three points higher at 5,934 and the Sensex resumed trade at 19,515, up 28 points over its previous close. Gains in auto, metal, consumer durables and capital goods stocks led the benchmarks to their intraday highs in early trade. At the highs, the Nifty rose to 5,950 and the Sensex climbed to 19,562.
However, the indices could not sustain the gains and dipped into the negative a short while later. The cautious market was flat to positive in the remaining part of the morning session. 
A huge bout of selling in noon trade pushed the indices into the red once again. Selling in IT, realty, metal and banking sectors kept the market in the negative, despite a positive opening of the key European markets.
Meanwhile, the animated debate on FDI in the Rajya Sabha today saw clashes between the government and the opposition, which accused commerce minister Anand Sharma of misleading the House and demanded an apology. The uproar led to abrupt adjournment of the House for over an hour, while the minister was speaking on the motion moved against bringing FDI in retail sector.  
The benchmarks fell to their intraday lows in the last half hour of trade dragged by a sell-off in IT stocks. At the lows, the Nifty touched 5,889 and the Sensex dropped to 19,363.
However, the indices managed to close off the lows, albeit in the red. The Nifty closed 24 points (0.40%) lower at 5,907 and the Sensex lost 63 points (0.32%) to finish at 19,424.
Among the broader indices, the BSE Mid-cap index shed 0.08% and the BSE Small-cap index slipped 0.10%.
With the exception of the BSE Consumer Durables (up 0.53%) and BSE Auto (up 0.51%), all other sectoral gauges settled lower. The top losers were Realty (down 1.68%); BSE IT (down 0.98%); BSE TECk (down 0.96%); BSE Metal (down 0.77%) and BSE Bankex (down 0.52%). 
Eleven of the 30 stocks on the Sensex closed in the positive. The main gainers were Maruti Suzuki (up 1.94%); Tata Power (up 0.87%); BHEL (up 0.77%); Mahindra & Mahindra (up 0.74%) and Hindalco Industries (up 0.69%). The key losers were Sterlite Industries (down 2.25%); Tata Steel (down 1.19%); TCS (down 1.13%); Reliance Industries (down 0.89%) and Sun Pharmaceutical Industries (down 0.85%).
The top two A Group gainers on the BSE were—Gitanjali Gems (up 8.92%) and Motherson Sumi (up 6.96%).
The top two A Group losers on the BSE were—Hexaware Technologies (down 9.30%) and Eicher Motors (down 3.78%).
The top two B Group gainers on the BSE were—Revathi Equipment (up 19.98%) and Shirpur Gold Refinery (up 19.96%).
The top two B Group losers on the BSE were—Bhanot Construction & Housing (down 19.95%) and Marg (down 13.44%).
Out of the 50 stocks listed on the Nifty, 13 stocks settled in the positive. The major gainers were Maruti Suzuki (up 1.83%); M&M (up 0.99%); Tata Power (up 0.92%); Jaiprakash Associates (up 0.91%) and Lupin (up 0.87%). The key losers were DLF (down 3.24%); Axis Bank (down 2.95%); Sesa Goa (down 2.55%); HCL Tech (down 2.01%) and Tata Steel (down 1.75%).
Markets in Asia settled mostly higher as hopes of a budget deal which would lead to avoidance of new taxes in the US boosted exporters in the continent. Signs of a recovery in the Chinese economy also supported the sentiments.
The Shanghai Composite surged 1.60%; the KLSE Composite added 0.10%; the Straits Times climbed 0.94%; the Seoul Composite gained 0.40% and the Taiwan Weighted rose 0.25%. On the other hand, the Hang Seng declined 0.26%; the Jakarta Composite slipped 0.04% and the Nikkei 225 fell 0.19%.
At the time of writing, the European indices which had opened in the positive were trading lower and the US stock futures were marginally lower.
Back home, foreign institutional investors were net buyers of shares totalling Rs838.14 crore on Thursday while domestic institutional investors were net sellers of equities amounting to Rs662.74 crore. 
Shree Ganesh Jewellery House, makers and exporters, of handcrafted gold and studded jewellery, today said it has set up joint venture (JV) with Bangladesh’s Rocks Creation. The initial investment for this 75:25 JV, which is yet to be named, will be Rs10 crore each by both the companies and in phases it will be scaled to a total of Rs50 crore. Shree Ganesh Jewellery jumped 3.87% to close at Rs124.90 on the NSE.
SKS Microfinance is raising Rs54.48 crore by securitising receivables from 64,579 micro loans extended to rural women, a company statement said today. The announcement comes close on the heels of its Rs200 crore securitisation transaction with a leading public sector bank in November 2012. SKS declined 1.42% to settle at Rs169.95 on the NSE.
Tiles maker Somany Ceramics today said it will invest over Rs100 crore in the next three years for enhancing its production capacities by 10 million square metres annually. The company is looking to form a new joint venture within the next six months for a new facility with an installed capacity of 2.5-3 million square metres annually in Gujarat. The stock surged 2.18% to close at Rs96 on the NSE.



BOI AXA Gold Income Stabilizer Fund: A hybrid mutual fund scheme with a fixed asset allocation strategy

BOI AXA Mutual fund plans to launch a scheme maintaining a fixed allocation of 40% towards gold. Not only do hybrid funds don’t work, but allocating 40% towards gold could be highly risky

BOI AXA Mutual Fund plans to launch an open-ended hybrid scheme—BOI AXA Gold Income Stabilizer Fund. According to the draft scheme information document filed the scheme would allocate 60% to debt and money market instruments and the balance 40% would be invested in gold. The fund manager would rebalance the portfolio at the end of every quarter to bring it back to the prescribed limits. Usually, many schemes set a range for the asset allocation and the fund manager had the flexibility to invest within the stated range depending on the market outlook. Therefore if the fund manager feels that gold is currently attractive, he would increase the allocation towards gold reducing the debt component. The new scheme from BOI AXA Mutual Fund, however, does not depend on the fund manager’s analysis to vary the allocation but will follow a fixed allocation strategy. This would be risky because as much as 40% would be invested towards gold.
Why has the scheme chosen 40% to allocate towards gold is not mentioned. Gold is a highly speculative asset and there is no specific way to value it. Unlike other financial assets, gold does not pay interest or dividend. Besides, in inflation-adjusted terms gold has not been a great performer. During a period of economic prosperity, gold can go down quite a bit in a continuous fashion over years. Too many complex and global factors influence the price of gold. Not only is it impossible for individual investors but even for teams of fund managers to get all these elements right to make any worthwhile bet on the direction and magnitude of gold prices. Therefore allocating 40% of an investment towards gold could be highly risky.

Please read more about mutual funds, here.
There are other schemes which invest their assets in both debt and gold. An analysis by us earlier this year showed that adding gold did not help. (Read: Hybrid Funds: Adding gold did not help ) Though most of the schemes we analysed had an equity component, Canara Robeco InDiGo has an allocation of 65%-90% towards debt and 10%-35% towards gold. Launched in 2010, the scheme has returned 6.69% over the past one year. The BSE Sensex on the other hand returned 15.46% for the same period, gold was up by just 6.58%.
Alok Singh would be the fund manager of the scheme. He has only seven years of experience in the fund industry, working earlier with BNP Paribas Asset Management. The performance of the scheme would be benchmarked against a customized composite benchmark comprising of 60% CRISIL Short Term Bond Fund Index and 40% the price of gold. Exit load would be 1% if redeemed within one year from the date of allotment. The annual scheme recurring expenses would be 2.25% per annum of the average daily net assets. Expenses would eat up a lot of the return.



siddharth biswal

4 years ago

i totally wean away retail invesors from FD's towards MF's debt funds & hybrid's are best form as LT gain tax is much lesser than interest being taxed.Morever as long as Govt loves printing money gold will remain favourite.It may not reach Rs 1lac/10gm in recent future but will provide decent returns,beat inflation for sure with safety net & dependable in uncertain stock market.Perfect hedge against rupee.this is the same reason RBI itself is stocking up on gold.Instead of buying physical gold paper gold in ETF is much better option.Here fund manager bias is restricted who tend to copy sensex in equity schemes & brag about their performance.

CII Capital Market summit has no place for retail investors!

The upcoming meet of Confederation of Indian Industries to discuss ways of expanding and ‘deepening’ the Indian capital markets has no place for the retail investor. Has corporate India written off retail investors? Or do they continue to think that retail investors have nothing to contribute to policy making?

On 12 December, the Confederation of Indian Industries (CII) will hold its 4th Capital Market Summit in Mumbai. A quick look at the agenda and the speakers shows that almost every capital market segment has a role and a space at the summit except the biggest stakeholder of all—the 10 million retail investors.

The theme of the summit is  “Deepening of Capital Markets: Faster Growth of the Economy” and the objective is: Facilitating raising of capital from domestic resources; restore capital markets as the centre for capital formation; and, building stable and mature capital markets. To our mind, all three objectives need to take into account the retail investor. More specifically, it should address why 20 years of economic liberalization and so-called capital market growth has halved the number of retail investor. The most recent survey commissioned by SEBI (Securities and Exchange Board of India) puts the retail investor population at 10 million, which is two million more than that reported by the D Swarup Committee report.

Without the presence of retail investors, markets lack depth and companies find it hard to make successful IPOs.

However, CII is apparently unconcerned. It has put together industry representatives of every kind -- investment bankers, private equity investors, mutual funds, at least four stock market chiefs, regulators, law firms and banks (which hard-sell products to investors) – to deliberate on how to grow the size of the capital market. It is satisfied that if they interact with lawyers, policy makers, investment bankers, advisors and other corporate stakeholders who are helpfully listed under “who should attend”, the summit should be successful.

Is it any surprise then that investors’ fury at repetitive, cumbersome Know Your Customer (KYC) processes are never addressed. It is any surprise that transmission of shares remains a slow, expensive and endless process? And is it any wonder that investors have voted with their feet and switched to bank fixed deposits, gold or real estate or tax-free bonds?

Retail mutual fund investors have also been pulling out of SIPs (systematic investment plans) in large droves. As many as 5.10 lakh SIPs were ceased before the completion of the stipulated tenure (

Here’s the irony—excluding trustee members, there is no direct representative from the mutual fund industry to speak either in the CII summit. In the past, summits of this sort at least had a token representation from investors, investor groups or at least analysts who were seen as the voice of the ordinary investor. But industry has now chosen to dispense even with this pretense.

Keeping retail investors out of capital market summits would have made sense if there were other forums for the regulators to address their concerns or interact with them. But this does not happen either.

The chief guest at CII’s summit is UK Sinha, the chairman of SEBI. In over two years at SEBI, Mr Sinha has diligently addressed a plethora of corporate summits or events organized by industry associations and chambers of commerce, but there is no record of his having addressed any genuine investor meets or directly engaging with investors.

In fact, under his tenure, SEBI does not even respond to investors’ email suggestions; worse even letters from retired secretaries of the government of India are mechanically transferred to the outsourced grievance redressal mechanism which sends out absurd replies like “the issue is not under SEBI’s jurisdiction”. This happened specifically in the case of former expenditure secretary EAS Sarma and has been published by Moneylife.

The bigger irony is that the finance ministry, the ministry of corporate affairs is forever exhorting market intermediaries and stock exchanges to conduct “financial literacy” seminars, as though lack of financial literacy and not bad policy making or mis-selling or regulatory apathy have driven away investors.




4 years ago

Those who want to deepen the capital markets seem to be clueless about how to get the retail investor to invest again.

They are just hoping, retail investors will flock back to the capital markets with rising equity market indices.

The sensex has gone past 19000 but, yet, there are no signs of the retail investor coming back.

We need to remember, Equity also means fair and impartial distribution of wealth - Till that happens, retail investors are not at fault if they prefer to stay away.
Financial literacy and Tax breaks may not be the solution by themselves.

K G Krupal

4 years ago

Backyard plant is not medicine is a proverb in Kannada. We are forgetting our real strength i.e.huge retail base and focusing on few big institutions including FIIs for the market directions. If one thinks of involving huge retail base into the capital market through the registered brokers and Sub-brokers numbering more 80 thousand, our markets will be more strong and stable. By this our country's financial literacy ranking can be improved from the present level of 23 and financial literacy should be improved from present level of 35% to achieve higher ranking. This will yield good long term results. WITHOUT INVOLVING OUR RETAIL BASE NOTHING CAN BE ACHIEVED. THAT IS WHY EVERY foreign institution is looking at India. Better late than never.

Vaibhav Dhoka

4 years ago

Retail investor has absolutely no place in policy making.Retail investor is MEAL for these sharks and moreover during scams,for brokers/mutual funds or corporates.

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