Buy at dips: Monday Closing Report

Four-day upmove on the Nifty paused for breath today

The market settled marginally down amid volatile trade snapping its four-day winning streak on profit booking. We had mentioned in our Friday's closing report that the Nifty may rise to the level of 5,500 subject to dips. We continue to maintain that stance. The index today managed to make a higher high and higher low, however, it settled unchanged at Friday's levels. The National Stock Exchange (NSE) saw a volume of 69.46 crore shares.

The market consolidated its Friday's gains and opened flat this morning as investors booked profits after four days' of continuous gains. The Nifty opened five points higher at 5,284 and the Sensex started off at 17,439, up nine points over its previous close.

However, in the absence of any fresh triggers the indices were range-bound and hovered near their previous closing levels in subsequent trade.

Meanwhile, the HSBC India Manufacturing Purchasing Managers' Index (PMI)-a measure of factory production-improved slightly to 55 in June, from 54.8 in May. HSBC, however, cautioned that going ahead, a slight moderation in output is likely as new order growth decelerated slightly led by export orders amid the sagging global economic situation.

On the other hand, India's exports declined by 4.16% year-on-year in May this year to $25.68.billion, mainly due to demand slowdown in the western markets. Imports too dipped by (-)7.36% in May to $41.94 billion, leaving a trade deficit of $16.26 billion.

The market fell to its intraday low in the noon session on selling pressure in heavyweights like ICICI Bank, Reliance Industries, TCS, ONGC and Tata Motors. The lacklustre opening of the key European indices also weighed down on the investors. At the lows, the Nifty fell to 5,263 and the Sensex went back to 17,363.

Bargain hunting at the lows saw the market emerge into the positive in the post-noon session enabling the benchmarks hit their intraday highs. The Nifty rose to 5,302 and the Sensex climbed up to 17,487.

The market once again dipped into the red in the last half hour amid volatile trade and closed flat with a negative bias. The Nifty closed unchanged at 5,279 and the Sensex lost 31 points to settle at 17,399.

The advance-decline ratio on the NSE was tilted in favour of the gainers at 966:477.

Among the broader indices, the BSE Mid-cap index climbed 0.90% and the BSE Small-cap index advanced 1.09%.

The top gainers in the sectoral space were BSE Realty (up 2.32%); BSE Consumer Durables (up 1.24%); BSE PSU (up0.74%); BSE Bankex (up 0.66%) and BSE Power (up 0.65%). The losers were BSE Fast Moving Consumer Goods (down 2.08%); BSE Auto (down 0.56%) and BSE IT (down 0.27%).

HDFC Bank (up 1.84%); Bharti Airtel (up 1.59%); Sterlite Industries (up 1.56%); BHEL (up 1.31%) and Tata Steel (up 1.29%) were the top gainers on the Sensex today. The key losers were ITC (down 3.42%); Jindal Steel (down 2.49%); Hindustan Unilever (down 1.61%); Tata Motors (down 1.53%) and TCS (down 1.36%).

Top two A Group gainers on the BSE were-Pantaloon Retail (up 6.13%) and Unitech (up 6.12%).
Top two A Group losers on the BSE were-ITC (down 3.42%) and Jindal Steel (down 2.49%).

Top two B Group gainers on the BSE were-Accel Frontline and Lok Housing (up 20% each).
Top two B Group losers on the BSE were-Manjeera Constructions (down 12.97%) and Globus Corporation (down 10.26%).

The top performers on the Nifty were ACC (up 3.98%); DLF (up 3.02%); Grasim Industries (up 2.16%); HDFC Bank (up 2.03%) and Bharti Airtel (up 1.93%). The main laggards on the index were ITC (down 4.21%); Jindal Steel (down 3.41%); Hero MotoCorp (down 1.93%), Tata Motors (down 1.92%) and HUL (down 1.74%).

Markets in Asia closed mostly higher on positive economic data from China and Japan.  In China, the government's Purchasing Managers' Index, a measure of the country's factory output was 50.2 in June, little changed from 50.4 in May. A closely watched Bank of Japan survey showed the headline index for big manufacturers' sentiment was minus 1 in June, up from minus 4 in March. Big manufacturers expect conditions to improve over the next three months, with the index for September seen at plus 1, compared with analysts' estimates of minus 3.

The Shanghai Composite added 0.03%; the Jakarta Composite surged 0.91%; the KLSE Composite rose 0.11%; the Straits Times climbed 1.12% and the Taiwan Weighted advanced 0.67%. On the other hand, the Nikkei 225 slipped 0.04% and the KOSPI Composite lost 0.13%. The Hong Kong market was closed for trade today.

At the time of writing, the key European indices were up between 0.63% and 1.23% and the US stocks futures were trading with marginal gains.

Back home, foreign institutional investors were net buyers of stocks totalling Rs3,046.76 crore on Friday while domestic institutional investors were net sellers of shares amounting to Rs250.71 crore.

Urban infrastructure development major Pratibha Industries today said it has bagged orders worth Rs 1,491.59 crore in tunnelling and building segments. Following these orders, the current order book of the company stood at Rs7,170 crore. The stock jumped 7.98% to close at Rs50.05 on the NSE.

State-run telecom company MTNL has stopped its promotional offer for plans under which customers were charged on a per minute basis. This will lead to MTNL customers paying up to 50% more compared to the previous rates on calls. The stock rose 1.69% to close at Rs24 on the NSE.

Tanla Solutions has developed a socially connected Games Club for BlackBerry smartphone users in the Asia-Pacific region. Besides the free games available on smartphones, the club offers a wide range of games on subscription model. The stock gained 1.72% to close at Rs5.90 on the NSE.


Details of Rajiv Gandhi Equity Scheme by month-end: Finance ministry

Under the proposed scheme, the investors would be allowed to invest up to Rs50,000 in a year, with a lock-in period of 3 years

New Delhi: The finance ministry is likely to come out with details of the Rajiv Gandhi Equity Scheme, which is aimed at boosting retail investments in capital market, by the end of this month, reports PTI.

"We are working on it and the norms should be ready by this month end," a senior finance ministry official said.

The market regulator, the Securities and Exchange Board of India (SEBI), has been pitching for routing this tax-saving equity scheme through mutual fund so as to minimise the risks associated with direct stock investments for the investors.

In order to make the scheme more attractive for retail investors, the ministry has been considering reducing the lock-in period under the scheme to one year from the proposed three years.

Former finance minister Pranab Mukherjee, in the Budget for 2012-13, had announced introduction of the Rajiv Gandhi Equity Scheme under which 50% tax deduction would be provided to retail investors with annual income less than Rs10 lakh.

Under the proposed scheme, investors would be allowed to invest up to Rs50,000 in a year, with a lock-in period of three years.

The scheme, it was proposed, could be availed once in a life time by investors. It was the first ever, tax benefit scheme in India, for direct investment in equities to encourage retail investors' participation. By offering this scheme, the government aims at channelizing household savings into stock markets.

In 2010-11, net inflow in equity schemes of mutual fund had declined by Rs13,000 crore, but in the following year, it is positive by few hundred crore, the official said, adding the number of folios that have declined.

The ministry, he added, was also working on several other issues with a view to streamlining the path for investment by qualified financial institutions (QFIs).

"There are 57 action points we are working on for streamlining the QFI investment process. We will be addressing them and also the withholding tax issue," he said.

The ministry is also considering a proposal to bring the taxation structure of the QFIs in line with that of the foreign institutional investors (FIIs). A short-term capital gain tax of 15% would be deducted at source in case the QFI makes a profit on investment.

A qualified foreign institutional investor (QFI) is an individual, group or association in a foreign country that is compliant with financial action task force (FATF) standards. They do not include FIIs/sub-accounts.

The finance ministry had last month conducted roadshows in five nations in the Middle-East-Riyadh, Dubai, Muscat, Kuwait and Bahrain-projecting India as an "incredible investment destination".


Upmove subject to dips: Weekly Market Report

Nifty may move up to the level of 5,500

The market settled higher in the week on positive domestic factors and global cues, making it the fourth successive weekly gain. The draft guidelines on the general anti-avoidance rules (GAAR) released by the finance ministry on Thursday and the clarifications that followed from prime minister's office on Friday saw foreign investors cheering the move, pumping in Rs3046.76 crore in equities on Friday (according to BSE data).

The Sensex closed the week at 17,430, up 457 points (2.70%) and the Nifty surged 133 points (2.58%) to settle at 5,279. We may now see the index making an upmove to the level of 5,500, subject to dips.

The market erased all its gains and settled in the negative on Monday as the government's initiatives to boost growth did not meet market expectations. The range-bound market witnessed a good recovery in late trade on Tuesday which enabled a green close. Hopes of the prime minister ushering in reforms for boosting growth, after taking charge of the finance portfolio, pushed the market higher on Wednesday. Positive sentiments ahead of the outcome of the two-day EU summit saw the indices closing marginally higher on Thursday. News from the Eurozone helped the market close sharply higher on Friday.

All sectoral indices on the BSE settled higher in the week, led by BSE Power (up 5%) and BSE Metal (up 4%).

The top gainers on the Sensex were Tata Power (up 11%), Jindal Steel & Power (up 8%), Maruti Suzuki, ICICI Bank (up 6% each) and Tata Steel (up 5%). The main losers on the index were Tata Motors, Bharti Airtel (down 2% each) and Hindustan Unilever (down 1%).

The top performers on the Nifty were Tata Power (up 11%), Jindal Steel & Power (up 8%), Maruti Suzuki, ICICI Bank (up 6% each) and Tata Steel (up 5%). Cairn India (down 6%), BPCL (down 3%), Tata Motors, Bharti Airtel (down 2% each) and HUL (down 1%) settled at the bottom of the index at the end of the week.

The RBI on Monday increased the FII limit in government bonds by $5 billion to $20 billion, while allowing up to $10 billion from the overseas borrowings by India Inc for refinancing rupee loan.

Ratings agency Moody's has retained outlook on India's rating at stable despite the slowdown in GDP growth rate saying that it is unlikely to be even a medium-term feature.

The finance ministry on Thursday proposed a monetary limit for invoking the controversial GAAR in its draft guidelines. Although the draft did not specify the monetary limit, it said that those deals which are over a prescribed limit should be covered by GAAR provisions.

The guidelines further said that GAAR provisions would be invoked only in cases where foreign institutional investors (FIIs) choose to take the benefit of double tax avoidance treaties.

However, the Prime Minister's Office on Friday clarified that "These (draft guidelines) have not been seen by the prime minister and will be finalised with the approval of the prime minister, who holds the finance portfolio, only after considering the feedback received".

Morgan Stanley has upgraded Indian stocks to "equal weight" after being 'underweight' since the first quarter of 2011, saying India is now trading at a price to book multiple of 2.1x, close to the trough valuations of 2.0x in the 2002 and 2008 cycles.

On the global front, leaders at the European Union (EU) summit agreed on Friday that EU rescue funds could be used to stabilize bond markets, without forcing countries that comply with EU budget rules to adopt extra austerity measures or economic reforms. It was also agreed that a single supervisory body for euro zone banks, controlled by the European Central Bank, would be created by the end of the year-much faster than previously envisaged. The deal had followed Spain and Italy's earlier threat to withhold support for a growth package.


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