BSE Sensex, Nifty still fighting the downtrend: Thursday Closing Report

Previous day’s low on the Nifty continues to be the crucial level to watch

The market, which was in the green for a major part of today’s session, pared part of its gains in late trade on profit booking. Yesterday we mentioned that a close above 5,640 on the Nifty may add strength to this weak upmove. Today although the index managed to cross this level it ended a bit lower. A strong close above 5,655 may bring more momentum to the uptrend, however, a previous day low on the Nifty continues to be the crucial level to watch. The National Stock Exchange (NSE) saw a volume 53.12 crore shares and an advance decline ratio of 749:677.

The Indian market opened on a positive note tracking the global markets which were in the green on hopes that European leaders are likely to reach a deal to release emergency funds to Greece. A report indicating a growth in China’s factory output in November also boosted investor sentiments across Asia.
Back home, the Nifty started off at 5,629, up 14 points over its previous close, and the Sensex resumed trade 51 points higher at 18,460. Buying interest in capital goods, banking, technology and PSU sectors pushed the indices higher in early trade.
However, the benchmarks were unable to sustain their early gains and began a gradual descent. Opposition to the government’s reforms on the first day of the Winter Session of Parliament saw the indices touching the day’s lows in noon trade. At the lows, the Nifty fell to 5,608 and the Sensex went back to 18,456.
A positive opening of the European indices as policymakers resume talks on the EU budget supported the domestic market in subsequent trade. The inability of the Trinamool Congress to muster sufficient numbers for a no-confidence motion against the UPA government also supported sentiments. 
The gains helped the benchmarks touch their intraday highs in the post-noon session. At the highs, the Nifty climbed to 5,643 and the Sensex went up to 18,568. But profit booking at the highs resulted in the market paring part of its gains in the last hour, albeit closing in the green.
The Nifty rose 13 points to settle at 5,628 and the Sensex finished the session at 18,517, up 57 points.
Among the broader indices, the BSE Mid-cap index closed 0.32% higher and the BSE Small-cap index gained 0.39%.
The top sectoral gainers were BSE Capital Goods (up 1.07%); BSE IT (up 0.85%); BSE TECk (up 0.80%); BSE Fast Moving Consumer Goods (up 0.62%) and BSE PSU (up 0.55%). The losers were BSE Oil & Gas (down 0.49%); BSE Consumer Durables (down 0.36%) and BSE Auto (down 0.24%).
Sixteen out of the 30 Sensex stocks closed in the positive. The main gainers were State Bank of India (up 1.9%); Larsen & Toubro (up 1.7%); Infosys (up 1.6%); Mahindra & Mahindra (up 1.2%) and ITC (up 1.2%) while key losers were Tata Motors (down 2.5%); ICICI Bank (down 1.0%); Sun Pharma (down 0.6%); Reliance Industries (down 0.5%) and Cipla (down 0.5%).
On the A Group, top two gainers on the BSE were—Hindustan Copper (up 11.3%) and Strides Arcolab (up 5.5%) while top losers were—Pantaloon Retail India (down 5.6%) and Max India (down 3.4%).
The top two B Group gainers on the BSE were—Metroglobal (up 2449.27%) and Rama Newsprint (up 20%) while SEL Manufacturing Company (down 19.52%) and Bisil Plast (down 12.50%), ended as top two losers.
Out of the 50 stocks listed on the Nifty, 27 stocks settled in the positive. The major gainers were Grasim Industries (up 2.3%); Larsen & Toubro (up 1.9%); SBI (up 1.8%); HCL Technologies (up 1.7%) and NTPC (up 1.7%). Tata Motors (down 2.8%); Siemens (down 2.1%); UltraTech Cement (down 1.8%); ICICI Bank (down 1.3%) and IDFC (down 1.2%) were the major losers today.
Markets in Asia, with the exception of the Shanghai Composite and the KLSE Composite, settled higher on the expansion in Chinese manufacturing sector in November, as revealed by a preliminary report from HSBC PMI.
The Hang Seng surged 1.0%; the Jakarta Composite advanced 0.43%; the Nikkei 225 jumped 1.56%; the Straits Times climbed 0.9%; the Seoul Composite gained 0.8% and the Taiwan Weighted gained 0.2%. Bucking the trend, the Shanghai Composite dropped 0.7% and the KLSE Composite lost 0.3%.
At the time of writing, the key European indices were trading with gains in the range of 0.255 and 0.78% and the US stock futures were trading with gains. Markets in the US will be closed for the Thanksgiving Day holiday today.
Back home, foreign institutional investors were net buyers and bought shares worth Rs182.59 crore on Wednesday while domestic institutional investors sold shares worth Rs133.08 crore.
Ashapura International, a subsidiary of Ashapura Minechem is planning to set up a kaolin powder making plant at Bhuj in Gujarat, which would make the company one of the largest producer of kaolin in Asia. The project is likely to be stationed close to the mineral reserves in Kutch. However, the quantum of investments and capacity has not been disclosed. Ashapura Minechem rose 4.9% to close at Rs40.55 on the BSE
Blue Dart Express, which was in news after its promoters announced plans to sell 6.03%  of their stake through offer for sale route, today informed BSE that "floor price" for the sale shares shall be Rs. 1,720 per equity share. DHL Express (Singapore) Pte Ltd, submitted a notice of offer for sale of 1.43 million shares of Rs10 each of Blue Dart Express representing 6.03% of the equity share capital. Blue Dart Express rose 20% to close at Rs2,056 on the BSE


Funny facts from factsheet of mutual funds

The factsheet of a mutual fund displays its investment information. But, do the investments in the factsheet, match their mandate?

The fact sheet of a mutual fund is a very important document for a prospective investor as well as an existing investor. It won’t be an exaggeration to call the fact sheet an ocean of information. Where else will an investor get information about investment objective, expense ratio, beta, standard deviation, etc, of various schemes of a mutual fund? Factsheets need to read by every investor extensively in order to get a fair idea about how investments are being made by a mutual fund. But more important than all this is that fact sheets also reveal some strange investments made by mutual funds which do not match with the investment objectives.

A Moneylife article on global funds had stated that how Fidelity International Opportunities Fund was not a truly global fund, “Fidelity International Opportunities Fund, which will soon be christened L&T Global Real Assets Fund, led the list with an annualised return of 21.21%. However, it is important to note that this scheme is not a pure global scheme. Amazingly, there are just two foreign picks in its top 10 holdings—Samsung Electronics and Origin Energy. The other top picks include HDFC Bank, HDFC and ITC. It appears more like a multi-cap, multi-country fund.”

Read more news and analysis on mutual fund by Moneylife.

Let us have a look at some other mutual fund schemes where the investment objective and actual practice of mutual fund do not match well. Here are some such examples:

Case-1: Reliance Small Cap Fund

Investment Objective: The primary investment objective of the scheme is to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of small-cap companies and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Actual Practice versus Investment Objective:  The scheme has investment in Infosys which is 1.64% of total investment. Whether Infosys is a small-cap or not is an open secret. On the lighter side, is the fund confident that Infosys will turn into a small-cap shortly?  Similarly the scheme has invested in several mid-cap companies. There is no investment made in debt and money market by the scheme as per the fact sheet. (Source: Nov 2012 factsheet)


Case-2: Reliance Diversified Power Sector Fund

Investment Objective: The primary investment objective of the scheme is to seek to generate continuous returns by actively investing in equity and equity-related or fixed income securities of power and other associated companies

Actual Practice versus Investment Objective:  The scheme has invested 5.19% of total corpus in ICICI Bank. It is not sure if ICICI Bank qualifies as associated company of power sector companies and if that is the case why only “ICICI Bank”.  Investment objective and actual practice do not seem to gel well. (Source: Nov 2012 factsheet)


Case-3: ICICI Prudential Banking and Financial Services Fund

Investment Objective: Long-term investment of funds having potential for capital appreciation in banking and ļ¬nancial services sector

Actual practice versus investment objective: The scheme has invested 1.5% of total corpus in Max India. Though Max India has interest in the finance business, it is predominantly into healthcare, so the actual investment and investment objective does not seem to match perfectly.


All these three cases reflect that mutual funds are not consistent with their investment objectives always. This highlights the need for an investor to go through factsheet end-to-end and decide before investing in a mutual fund. The actual practice versus investment objective is a fair reflection of how a mutual fund operates.

You might also want to read other articles by the same writer. To visit these articles, click here.

(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post-graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)



Balaji GK

4 years ago

The view expressed by vivek sharma on Mutual Fund scheme portfolio seems to lack some understanding. Any scheme objective as laid out by the Fund will deemed to be complied if 70% of the portfolio is kept in said objective(count out debt invt since it is temporal). So there is no major deviation when the keep some money outside the purview which could some times act as natural hedge. Also in the specific instance of ICICI Bank being included in Power sector Fund is not bad if in the opinion of the Fund Manager, the scheme will benefit due to ICICI power sector exposure. Also sectoral fund and thematic Fund by definition will include allied sectors or services that stand to benefit directly or indirectly. So in my sense dont sensationalise the issue without knowing the barfe facts...

Baaji GK
Chief Mentor
VIVA Finishing Skool
[email protected]


vivek sharma

In Reply to Balaji GK 4 years ago


You must learn to quote regulations in right perspective. Let me quote the SEBI regulation here as per the master circular on mutual funds which says,' The amended Regulation mandates that AMCs shall appoint separate fund manager for each separate fund managed by it unless the investment objectives and assets allocations are the same and the portfolio is replicated across all the funds managed by the fund manager. The replication of minimum 70% of portfolio value shall be considered as adequate for the purpose of said compliance’.

Hence, this requirement is for appointment for separate fund managers and not meeting investment objectives. Also note that there is no dearth of good power sector companies in India. A power sector fund can easily invest in power sector companies in India without deviating from fund's objective.

Banks exposure to power sector has been a cause of concern and hence the question of bank's benefiting from power sector exposure is more of a wishful thinking. If you read various reports on power sector exposure, you will realise that banks are struggling to recover money invested in power sector.

Last but not the least; I will request you to once again refer to a good dictionary to understand the meaning of word,' sensationalize'. Whatever, I have written are the facts sourced from fact sheets of mutual funds. The question of sensationalisation does not arise.


In Reply to vivek sharma 4 years ago

Mr Balaji is a mentor of some finishing 'skool'. He needs some basic education about mutual funds

Deepti Nair

4 years ago

The avive view specifically in the case of the ICICI Prudential Banking and Financial Services Fund would not be right. Max has business interests in life insurance, health insurance, hospitals and old age service providing.
As per fund manager valuations estimates, only between 12% to 16% of the value of the company is attributable to hospital business and old age service providing. The remainder of the valuation is attributable to life insurance, health insurance ( which comes under the discription of financial services ) and the cash in the books. So, this company is predominantly a financial services provider

P V Deshpande

4 years ago

I somwhat disagree on the views sighted by the author. If you see offer document of any mutual fund scheme, objectives are mentioned whereby the fund manager has to work out the strategy. But he has given some leverage too. With this freedom, he can divert some amount towards buying some scrips way out of the main stream so as to outperform the benchmark. Take for example of 'infosys' in 'Reliance Small Cap fund' where allocation is just 1.64% as author has mentioned.



In Reply to P V Deshpande 4 years ago

If fund managers have so much of leeway, then why launch so many different funds?
The reason is when they launch a fund, they sell different'flavours. I guess you don't know this angle which is why you response is so theoretical

Ramesh Poapt

4 years ago

Bahot achheji, kya baat hai?
pl keep it up...


4 years ago

The "primary" investment objective, that means there are some secondary objective!

Being a part of a global fund, I can tell you that most of the fund manager will not remember their own objective because its written (copy and pest) by lawyers or by some analyst!

They all should write:

The "primary" objective of the fund to maximize AUM for the fund and the secondary objective to maximizing return by taking any amount of risk...

Customer, reader, do not give a damn about Sharpe ratio, all they see is "1Y, 3Y and 5Y return) and so does the moneylife meg in their "best fund recommendation"



In Reply to Winmyid 4 years ago

Moneylife is not into 1y, 3y, 5y fixed period analysis
Pls read carefully before commenting


In Reply to Winmyid 4 years ago

Moneylife is not into 1y, 3y, 5y fixed period analysis
Pls read carefully before commenting

Sushila Pursnani

4 years ago

How about highlighting this to SEBI Chief?



In Reply to Sushila Pursnani 4 years ago

As if he cares!
Please wake up

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