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.
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).
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.