A decisive break above 6,100 on the Nifty will attract more bulls
The market closed marginally higher on hopes of a rate cut in the Reserve Bank of India’s (RBI) in its policy meeting next week. Analysts are of the view that the central bank would reduce rates by 25 basis points. However, the gains were capped by corporates, which reported subdued earnings in the December quarter.
The Sensex settled 64 points (0.32%) higher at 20,104 and the Nifty closed the week at 6,075, a rise of 10 points (0.17%). We may now see the market moving sideways. However, a decisive break above 6,100 on the Nifty will attract more bulls.
The market closed in the green on Monday on buying in blue-chips and positive in Europe. The market gave up its early gains and settled near the lows of the day on selling pressure in realty, consumer durables and FMCG stocks. The benchmarks managed to close higher on Wednesday on a smart bounce back in late trade.
The market ended lower on Thursday on selling pressure in mid-cap and small-cap shares. Gains in the realty and auto sectors and good global cues helped the market close in the green on the last trading day of the week.
The BSE Capital Goods index closed 2% higher and the BSE Fast Moving Consumer Goods rose 1%. On the other hand, BSE Realty (down 5%) and BSE PSU (down 2%) were the top sectoral losers.
The top Sensex gainers were Larsen & Toubro (up 5%), ITC, Maruti Suzuki (up 4% each), Bharti Airtel and Dr Reddy’s Laboratories (up 3% each). The key losers were Tata Motors, GAIL India (down 8% each), Hindalco Industries (down 5%), Coal India (down 4%) and Hindustan Unilever (down 3%).
The Nifty was led by Kotak Mahindra Bank (up 6%), L&T (up 5%), ITC (up 4%), Maruti Suzuki and Bharti Airtel (up 3% each). The chief losers on the benchmark this week were Tata Motors, GAIL India (down 8% each), Ranbaxy Laboratories, Hindalco Industries (down 5% each) and Cairn India (down 4%).
Global ratings agency Moody’s on Monday said it has a ‘negative’ outlook on the country’s banking system due to concerns over asset quality and the high interest rates. The agency further said though the government is “likely to remain supportive”, options for the RBI to slash lending rates are limited due to high inflation and the “modest fiscal capacity”.
Among corporates, FMCG major Hindustan Lever, which reported disappointing Q3 results, was down for two days in a row this week as the company'’ board has approved a proposal to increase the royalty payment to 3.15% to its parent firm Unilever Plc. The amount, equivalent to 3.15% of total turnover, would be paid for various provisions related to trademark licenses and technology, among others.
In international news, media reports say the US Federal Reserve’s bond buying has pushed the Fed’s balance sheet to a record $3 trillion in the attempt to bring unemployment down to 7.8%. Policymakers have voiced concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases.
Moneylife Foundation held an exclusive, in-depth session conducted by Raj Pradhan, in which...
For the first time, investors of scores of portfolio management schemes run by banks and brokers will be able to access information on their performance and track-record on the SEBI website. This follows an order by the Chief Information Commissioner under the RTI Act. SEBI has been asked to upload this information from April 2013
In a pathbreaking order, the Chief Information Commissioner (CIC) Satyananda Mishra, at a hearing conducted on 17 January 2012 in Mumbai has directed the Securities and Exchange Board of India (SEBI) to put up monthly information of individual Portfolio Management Services (PMS) on its website effective from April 2013. Once the data is put up, it will allow investors to compare and contrast various PMS schemes and make careful and informed decisions, based on their track record before entrusting sums starting from a whopping Rs25 lakh or more to portfolio managers.
This order not only represents a big victory for Indian investors and comes at the end of a long battle by Moneylife to ask the regulator to make PMS schemes more transparent. For the past three years, Moneylife has also helped several investors recover funds, wrongly deducted by PMS. The wrongful losses have extended from a few lakh to as much as Rs1 crore.
The CIC’s order said, “We have carefully considered the facts of the case and the submissions made before us. It is an admitted fact that the desired information is available with SEBI, if not on an annual basis, at least on a monthly basis. Since this information is received electronically, it’s publication through the website would not be a difficult task. By publishing such information about all Portfolio Management Services (PMS) regulated by it, SEBI would serve two objectives. One, help the investing public to access all information at one place and not have to visit 50 different websites and, two, eliminate the need for seeking such information under RTI, from time to time”.
The CIC goes on to say, “We would like to direct that the monthly information received from the Portfolio Management Services (PMS) which can be disclosed without attracting any of the exemptions provisions of the Right to Information (RTI) Act should be published on the SEBI website beginning April 2013 and an intimation sent to the Appellant in this case about this.”
This has been a long battle for Moneylife. Our request for information was repeatedly rejected until we approached the CIC. Interestingly, Moneylife has been informally requesting SEBI to upload PMS performance information on its website for several years, but it refused to do so. In fact, after several hard-hitting reports about how leading banks and finance companies had damaged investors’ savings, SEBI issued an order asking them to disclose three years performance on its website and on application forms. But this was clearly not enough, since it did not allow comparison of authentic records.
In the final hearing before the CIC through a video conference, Gaurang Damani, a well known Mumbai-based activist appeared on our behalf. He argued that PMS is a very complex product requiring careful comparative analysis as parting with serious investment in the region of Rs25 lakh. Therefore, it was of utmost importance for people to have comparative data and it was not feasible to access the websites of 40 odd PMS providers to get the required information. While SEBI had irrationally taken the stand that this information was “fiduciary” in nature, we made the point that this information was already in the public domain, under SEBI’s own direction. All that we wanted was that the data be made available at one source. It is ironical that information dissemination, which is key to SEBI’s disclosure based regulatory regime, is likely to be put in the public domain only after a long battle with the regulator. The CIC heard our appeal on 17 January 2012. Convinced of our argument, CIC directed SEBI to put up information on the website.
Moneylife filed its first RTI query in 8 February 2012 after over two years of following up with SEBI to put out information on portfolio returns, assets under management (AUM), fees, etc, for individual PMS schemes on its website. Our application had been rejected on flimsy grounds (SEBI misrepresents public information on PMS as fiduciary; offers mindless response to simple RTI query).
We filed a first appeal to SEBI’s appellate authority on 26 April 2012. This was rejected on the grounds that—“It maybe true that AUM of PMS may be available on the website of PMS. It may also be true that SEBI may receive AUM from each of the PMS for regulatory purposes. However, to provide the information in the form sought, SEBI will have to compile the information. SEBI is not expected to compile the information to suit the need of individuals.” The arrogant callousness of the response should be seen in the context that SEBI itself has an investor education fund with crores of rupees, but won’t make the effort to compile and upload data and information that is crucial for a sensible investor to make an informed decision. The attitude also exposes the hypocrisy of all the spending on financial education and financial literacy that is being mandated and pushed by the regulator.
The genesis of our battle for transparency in PMS performance was the saga of investor Rajan Manchanda, who lost a whopping Rs1 crore when it invested more than Rs2 crore with Kotak PMS (Sordid tales). In other words, half of his portfolio got wiped out and SEBI did little to help.
Another investor who approached Moneylife saw 30% of his Rs52 lakh evaporate when he invested in a PMS scheme. For more details, check out this article we had written: Broking Houses Make Investors Go Broke.
A doctor saw a big chunk of her PMS investment vanishing after investing in JM’s portfolio schemes. She managed to get a few lakh rupees back after help from Moneylife. We had also compiled investors’ views on PMS here: Bad Experience.
Simply put, most investors do not know where to find information regarding PMS. Since they do not have information readily, they will not be able to verify deceiving numbers thrown around by ambitious sales persons. At the end of the day, they need to know if the high commission is worthwhile before parting with Rs25 lakh. Thus, with the information put up, now they will be in a better position to decide.
Other stories covered by Moneylife on PMS can be accessed below: