Stocks
Chance of further fall still there: Friday Closing Report

Nifty has to close above 5,420 for uptrend to resume

Late buying amid a highly volatile session saw the indices closing in the positive. As we had mentioned yesterday that a rally is on the cards, the Nifty opened in the positive and made a higher high and higher low during the session. If the index closes above 5,420, it may to go up to 5,575. However, if the benchmark ends below 5,300, we may see it fall to the level of 5,270. The National Stock Exchange (NSE) saw a volume of 77.63 crore shares.

The market opened in the green supported positive cue from the global arena as the European Central Bank on Thursday announced a second fund infusion for European banks to cope up with the liquidity crunch. The Nifty opened 29 points up at 5,369 and the Sensex added 77 points to its previous close to resume trade at 17,661.

However, early profit booking led the indices into the red wherein they touched their intraday lows. At the lows, the Nifty slipped to 5,315 and the Sensex was down to 17,504. Buying interest in banking and capital goods stocks helped the market recover from the lows and venture into the positive terrain.

Continued buying interest saw the market hitting the day’s high in noon trade. At the highs, the Nifty rose to 5,393 and the Sensex moved up to 17,732 but a huge sell-off in the midst of volatile trade resulted in the market paring all its gains and slipping lower once again.

The indices fluctuated on both sides of the neutral line in the post-noon session. A recovery in the last half hour ensured a green close, albeit with small gains. The Nifty ended with a gain of 20 points at 5,359 and the Sensex settled at 17,637, up 53 points.

The advance-decline ratio on the NSE was almost balanced at 870:891.

While late buying helped the Sensex close higher, the broader indices lagged behind—the BSE Mid-cap index fell 0.12% and the BSE Small-cap index shed 0.09%.

The sectoral gainers were led by BSE Bankex (up 1.40%); BSE Healthcare (up 0.83%); BSE Capital Goods (up 0.58%); BSE Metal (up 0.16%) and BSE TECk (up 0.12%). The ones that ended lower were BSE Realty (down 2.39%); BSE PSU (down 0.66%); BSE Fast Moving Consumer Goods (down 0.37%); BSE Oil & Gas (down 0.34%) and BSE Auto (down 0.30%).

Sun Pharma (up 3.11%); Jindal Steel (up 2.15%); ICICI Bank (up 2.08%); Larsen & Toubro (up 1.66%) and NTPC (up 1.33%) topped the Sensex list. The key losers were DLF (down 5.03%); ONGC (down 2.22%); Hindalco Industries (down 1.86%); Bajaj Auto (down 1.56%) and Tata Power (down 1.34%).

The main gainers on the Nifty were Sun Pharma (up 3.04%); IDFC (up 2.85%); Jindal Steel (up 2.82%); Ambuja Cement (up 2.22%) and ICICI Bank (up 1.98%). The major laggards on the index were DLF (down 5.30%); Siemens (down 2.65%); ONGC (down 2.53%); Bajaj Auto (down 2.09%) and Hindalco Ind (down 1.96%).

The Asian pack closed in the positive following optimism from Europe after the ECB infused fresh funds into European banks, leading to hopes that the debt problems plaguing the continent would ease. Meanwhile core consumer prices in Japan fell 0.1% in January, implying that lower demand and a slowdown in economic growth has led to a deflation despite high energy costs.

The Shanghai Composite surged 1.43%; the Hang Seng advanced 0.81%; the Jakarta Composite climbed 1.07%; the KLSE Composite rose 0.66%; the Nikkei 225 gained 0.72%; the Straits Times gained 0.49%; the Seoul Composite added 0.22% and the Taiwan Weighted was 0.32% higher.

Back home, foreign institutional investors were net sellers of shares totalling Rs 126.52 crore and domestic institutional investors were net sellers of stocks amounting to Rs9.97 crore on Thursday.

With less than a month for the current financial year to end, Rural Electrification Corporation’s board of directors today approved raising Rs1,500 crore through tax-free bonds with an option to retain double that amount of oversubscription. The company proposes to issue tax-free secured redeemable non-convertible bonds of face value of Rs1,000 each, in the nature of debentures, during 2011-12, with an option to retain oversubscription up to an aggregate amount of Rs3,000 crore. The stock fell by 0.31% to close at Rs207.50 on the NSE.

REpower Systems SE, a wholly-owned subsidiary of Suzlon Energy, has signed an agreement with a consortium of banks headed by BayernLB, Commerzbank AG and Deutsche Bank AG for a syndicated loan of 750 million euros (Rs4,921-crore). The loan, which has a term of 2.5 years, enables REpower to secure follow-on financing early for credit facilities of 600 million euros agreed in May 2009. Suzlon tanked 2.02% to settle at Rs29.05% on the NSE.

Puravankara Projects plans to raise Rs150 crore through the sale of non-convertible bonds to garner funds for a housing project in Bangalore and also for the repayment of debt. Puravankara expects to pay 17% interest rate to investors. The scrip settled at Rs74.05 on the NSE, down 2.63% from its previous close.

User

Does your bank FD pay less interest than your savings account?

HDFC, Axis and ICICI Bank offer less than the minimum savings rate interest (4% p.a.) for fixed deposits with a tenor less than 15 days. Do you wish to sign-up for a 7-14 day FD from Kotak Mahindra bank at 0% p.a.? Who is the target customer segment for these products?

It may sound strange, but leading private banks like HDFC, Axis and ICICI offer less than the savings account interest rate of 4% per annum (p.a.) for fixed deposits (FDs) with a tenor of less than 15 days. The FD rate for up to 30 days is also meagre in many cases. Several customers roll over existing FDs and may be caught unawares by the pathetic returns offered on these short-term products.

HDFC and Axis Bank offer 7-14 day FDs at a 3.5% p.a. interest while ICICI Bank gives 3.75% p.a. for the same duration. HDFC and ICICI Bank offer 4% p.a. for 15-29 days FD. Interestingly, Kotak Mahindra bank is giving 0% interest for 7-14 day FDs (investment less than Rs15 lakh). Keeping your money in a savings account will make more sense in all these cases!

State Bank of India (SBI) started offering 8.5% p.a. for 7-180 days FDs for a minimum Rs15 lakh investment earlier this week. Today, it is offering 9% p.a. for the same period. It is certainly a good opportunity for savers looking to park their money for a very short duration. The high interest may also represent the liquidity crunch in SBI. Till last week, this kind of deal was only available to those investing Rs1 crore and above. With deposit interest rate at their peak, such an increase in rates by SBI is startling.

There is no penalty for withdrawal after seven days. This means that if a person opens a 180-day SBI FD for Rs15 lakh, the interest rate will be 9% p.a. If you need to prematurely withdraw the FD after seven days, you will still get 9% interest. It is a combination of high returns and full liquidity.

For a person investing less than Rs15 lakh, the SBI FD rate is 7% p.a. for 7-90 days, 7.25% p.a. for 91-179 days and 7% for 180 days. There is no penalty for premature withdrawal of an FD with a tenor of up to 180 days provided the money has remained with the bank for at least seven days. It is certainly a good option because SBI savings account interest rate is still 4% p.a. SBI’s customers, who are unwilling to open new accounts with banks like Kotak Mahindra or Yes Bank to get high savings account interest rate, can do a short-term SBI FD for a minimum of seven days. The FD gets rolled over automatically on maturity for same duration and at the interest rate prevailing on the date of maturity without the person having to intervene.

Moneylife tried to contact several banks, but their answers on FD rates were generic in nature – rates depend on bank liquidity and its strategy, need for having long-term customer relation and that a short-term FD makes less business sense.

 

Source – www.ratekhoj.com and Moneylife research. Annual bank interest rate for specific FD duration shown in percent for deposits below Rs15 lakh (non-senior citizen). 

User

COMMENTS

Avinash Murkute

5 years ago

In one recent case of one of my friend, when we wrote to HDFC bank to reverse the penalty for non-maintenance of AQB without informing the customer for change in policy from 5K to 10 K, first they refused but later reversed 3.5 K penalty. This info can correspondence from HDFC cab be shared if anyone is having similar issue with HDFC (AQB) penalty reversal. Hope HDFC being an ISO certified, honors their decisions PAN-India.

REPLY

Rambabu Shastri

In Reply to Avinash Murkute 5 years ago

Thanks. I know this is case with several banks and this is the reason data in their annual and quarterly results shows spikes. Penalizing without notification is a just reason to even approach a consumer forum for exemplary damages. Unless for Rs. 350 they are penalized Rs. 350000, they will never learn their lesson. That is also one reason why in India, people get away with grand larceny due laxity of penal provisions in the laws.

Harish Kohli

In Reply to Rambabu Shastri 5 years ago

One big earning for the banks is the credit/debit card fees. Despite advice to the contrary, the cards were issued. I surrendered them without using them. But still my account gets debited for the fees. It is reversed when I protest.

Rambabu Shastri

5 years ago

Banks are now indulging in open window dressing. They are charging the account holders penalties or inflated charges, and only reversing them when they are notified that they have wrongly charged the account holder. HDFC bank introduced Average Monthly Balance unnotified to many customers and charged penalty for non maintenance. They did this to all their account holders who earlier were told they could have 0 balance if they kept FDs with the bank. Such decisions point us to only the fact that there is an upcoming bubble in the way their profits have been shown by window dressing.

Das

5 years ago

No minimum balance to be maintained in SBI Savings bank A/c?

As per news paper reports, circular has been issued by the State bank of India to do away with Minimum Balance requirement in Savings bank Accounts.

Any comments?

REPLY

Rahul Mulchandani

In Reply to Das 5 years ago

Yes, that's true. As per one of our internal circulars, there are no charges for non maintainence of minimum balance.

ps - I work at SBI.

Underclass

In Reply to Rahul Mulchandani 5 years ago

Good news !

m kumar

5 years ago

HDFC BANK+MAY BE OTHER BANKS ARE PLAYING A HUGE NATIONAL FRAUD WHICH, RBI, THE GODFATHER OF ALL, IS OBLIVOUSLY IGNORANT/UNAWARE/INDIFFERENT ABOUT!
FOR SB TO FD AUTO SWEEP ACCOUNTS, INSTEAD OF LIFO(LAST IN FIRST OUT) METHOD, THEY HAVE DELIBERATELY CREATED A SYSTEM OF FIFO(FIRST IN FIRST OUT), SO WHEN THE FD IS BROKEN, YOUR ORIGINAL/FIRST/EARLIEST FD IS BROKEN MAKING YOU LOSE INTEREST & MONEY. EVEN MOST NATIONALIZED BANKS HAVE LIFO, WHICH IS WHAT IT SHOULD BE AS DEFAULT.
EVEN IN RISING INTEREST RATE SCENARIO, THIS SYSTEM IS BETTER THAN FIFO, WHERE CUSTOMERS LOSE HUGE AMOUNTS OVER A LONG PERIOD!

IS RBI GOING TO BE BOTHERED ABOUT THIS?

REPLY

Harish Kohli

In Reply to m kumar 5 years ago

ICICI Bank follows LIFO policy for my Sweep account. Both FIFO and LIFO have benefits depending whether the interest rate is downhill or uphill. Correct me if I am wrong.
I was once protesting against the LIFO policy. More than FIFO/LIFO a greater loss in Sweep accounts is due to the 1% penalty.

Nagesh Kini FCA

5 years ago

Looks like the interest rate war has really set in.
A banker I was speaking to rightly remarked that CASA/Current and Savings Accounts are more revenue effective and not costly FDs and his bank is disinclined to promote them except perhaps for the big numbered.

Harish Kohli

5 years ago

You have made no mention of the penalty. There is a 1% reduction in the applicable interest rate in case of premature withdrawl.

REPLY

raj

In Reply to Harish Kohli 5 years ago

As mentioned, SBI FD of 7-180 days does not currently have 1% reduction (also called penalty). This is true for deposit Rs15 lakh (9%) or less than Rs15 lakh (7%). There is no penalty.

Currently, SBI FD of tenor >180 days has 0.5% penalty (instead of 1%).

Ashok Visvanathan

5 years ago

Short term FD rates may be lower than Savings bank rate, as they may be targeting Corporates and Business Partnerships, which are ineligible to have savings account.

REPLY

raj

In Reply to Ashok Visvanathan 5 years ago

True. SBI 7-180 days FD offering 9% for Rs15 deposit is also targetting individuals, companies, institutions, firms, trusts, associations, societies, etc.

The same is target segment for SBI if deposit is less than Rs15 lakh (7% interest).

akshaya

5 years ago

This article is totally misleading. Large corporates and large current acct holders who earn 0 % int on curr acc r happy to even earn 3 or 4 per on otherwise idle funds coz hardly any other investment avenues come with such high liquidity like money in a bank fd

REPLY

raj

In Reply to akshaya 5 years ago

what is totally misleading? The article is highlighting that many private banks have less than 15 days FD at 3.5% to 3.75% when SBI is offering the same at 7% (9% for Rs15 lakh deposit). Large corporates are also target customer for SBI short-term FD. Will they really want 3.5% from private bank FD or 7% from SBI (9% for Rs15 lakh deposit) for same duration FD?

vishal

5 years ago

The Target customers are current a/c holders. Since there is no interest for current a/cs, it makes sense for corporates to book FDs even for such low rates instead of keeping the funds idle in current a/c.

avinash murkute

5 years ago

I have already fought this issue with kotak for their sweet "Chori" auto sweep in and auto sweep out and reported fraud with their Nodal officer, but he couldn't understand the official "chori" and accepted fault by default in the product design. This i have exposed in Jan 2010 and closed my relations with this bank forever. As on date i have Rs. 250 plus due to this dafulter kotak mahindra bandit bank. And why should i forget to mention - they run on software designed by company named infosy s.

REPLY

Rambabu Shastri

In Reply to avinash murkute 5 years ago

Well, most of them do run on Finacle software by Infosys.

Avinash Murkute

In Reply to Rambabu Shastri 5 years ago

And many suffer from automated nuisance and technological terrorism of this s/w. Take example of CPC Bengaluru managed by abovenamed company. Employees over their can't read letters as they are suffering letter blindness or paper blindness and software is making double entries in taxation entries and actual entries are suppressed and they have limited knowledge write CIT of CPC Bengaluru. After the first RTI appeal order written in favour of Infosys I am going in appeal with CIC at Delhi to showcase debacles of so called finnacles.

Are companies withholding information from the stock exchanges?

Media reports are not always the source of trouble for the company. But why are the exchanges not taking any action to curb such reports?

The saga of companies, denying price-sensitive media reports continues and since the bourses merely act as post offices, investors remain clueless and confused. In a single day on 2 March 2012, the National Stock Exchange (NSE) reported these corporate clarifications in its daily press release. Here is the upshot:

On 1 March 2012, Economic Times reported that Pantaloon Retail plans to exit the joint venture with Staples Inc. It had the photograph of Kishore Biyani, CEO of Future Group and it said quoting him that Pantaloon’s exit from the joint venture with Staples is part of the group’s strategy to raise funds and focus on fewer yet scalable businesses such as food and fashion. Mr Biyani added, “We are looking at exiting such non-core business, including joint ventures.”

Following the report, the NSE sought a clarification from the company. Pantaloon Retail (India) stated, “We deny any such transaction at this stage. We shall inform about any firm and binding decision no sooner approved by the board, to the regulators and our shareholders, as required by law.” NSE has dutifully posted this response. So, whom does the investor believe?

The press release was an anti-climax and Pantaloon Retail (India) was trading on the Bombay Stock Exchange (BSE) at Rs181.50 (0.06% down from the previous close). The 52-week high and low for the share price was Rs364.15 and Rs125.30, respectively. The share price is stable and well away from both the 52-week high and low. Shouldn’t the NSE at least report this to SEBI (Securities and Exchange Board of India)?

Another case is that of Bajaj Finserv. The NSE saw a media report of Bajaj Finserv planning to buy Fidelity India's mutual fund business. The NSE sought clarifications from Bajaj Finserv and it gave a press release which read: "We wish to inform you that as of now, we have no such proposal under consideration." The Bajaj Finserv share price is at a stable Rs633.30 (0.2% down from its previous close).

In both the above cases, clearly the investors are left clueless. So, were the media reports baseless? The first report even quoted the promoter. There is a strong case that companies are withholding information from the stock exchange and consequently from the public.

Media reports are not always the source of trouble for the company. Nuchem was questioned by the NSE for non-compliance with certain provisions of the listing agreement. The company could not provide satisfactory replies to the queries raised. The NSE press release read: “The equity shares of Nuchem will be suspended from trading with effect from 12 March 2012 (i.e. closing hours of trading on 09 March 2012) until further notice on the capital market segment of the National Stock Exchange of India for non-compliance with certain provisions of the listing agreement”.

In this case, there is no protection for the investor from volatility in the share price. The NSE has said that trading itself is suspended.

We have to wait and see how the NSE and BSE supervise listed companies and how the companies dodge the investors by withholding information from the stock exchanges.

User

COMMENTS

Nagesh Kini FCA

5 years ago

MCA, SEBI, RBI are all toothless tigers that neither growl nor bark, leave alone biting. They only indulge in frivolous exercises like suppressing or pulling up Veritas type reports when they ought to have suo moto investigated the irregularities.
I'd like to know what they have done with the auditors' qualifications in Kingfisher accounts, DLF for aggressive accounting.
BSE/NSE are equally at fault for not initiating action against the big guns even when blatant corporate governance misdemenours are pointed out.
What about the fudging by PwC - SEBI/RBI will coolly pass on the buck to ICAI who as usual will come out with face savers as they are mortally scared of the Big 4!

arun adalja

5 years ago

i have come across lot of controvercies what listed companies are doing without knowledge of exchanges and other regulating bodies.exchanges take care when they come to know such things by the time damage is already done in the price of shares and loss to the investors.media channels are doing the same thing by telling information from sources.

Nagesh Kini FCA

5 years ago

I've yet to see DLF response to the Veritas Investment Research report or any from SEBI/ICAI on "aggressive accounting approved by auditors,perpetuated and aided by investment bankers" more particularly when the stock, that has a 12% weightage in BSE Reality Sector Index, tanks on both the BSE and NSE.
Are the so-called Regulators still sleeping?

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