Stocks
Decline to continue: Weekly market report

The Nifty may go down to the level of 4,460

The market settled lower on lack of consensus among policymakers to push key legislations like the Companies Bill and the Pension Fund Regulatory and Development Authority (PFRDA) Bill. While infrastructure industries’ growth bounced back in November and weekly inflation for 17th December fell to a six-year low, investors were wary about the weak economic indicators.

The Indian market was the worst performing one among global bourses—down nearly 25% in 2011. The Nifty ended at 4,624 down 1,510 points and the Sensex closed the year at 15,455, down 5,054 points. If the trend of lower low continues and the Nifty is unable to hold itself above the days high, we may see it going down to the level of 4,460.

For the week, the market settled 2% down. Overall, the Sensex lost 284 points and the Nifty fell by 90 points in the week.

The market closed near the day’s high on Monday on supportive global cues. However, the slide began the very next day and continued right to the end of the week. Political developments in Delhi following the tabling of the Lokpal Bill kept the benchmarks down on Tuesday. The market closed lower on Wednesday on weak Asian cues.

Concerns about the slowdown raised fresh worries in the minds of investors and resulted in a negative close on Thursday. The indices, which were firmly in the green till noon on Friday, gave up all gains and fell sharply on a sell-off in blue-chips in the second half.

Among the sectoral indices, BSE TECk gained 2% and BSE IT rose 1% while BSE Oil & Gas tumbled 5% and BSE Bankex dropped 4%.

Bharti Airtel (up 4%), Hero MotoCorp, Infosys (up 3% each) and NTPC (up 1%) were the Sensex toppers in the week. The top losers were Reliance Industries, Jindal Steel & Power (down 7% each), DLF, Maruti Suzuki (down 6% each) and ICICI Bank (down 5%).

The top Nifty stocks were Reliance Communications, Bharti Airtel (up 4% each), Hero MotoCorp, Infosys (up 3% each) and SAIL (up 2%). The key losers on the index were Axis Bank (down 8%), Reliance Industries, IDFC, Jindal Steel & Power (down 7%) and Maruti Suzuki (down 6%).

After touching five-year low of 0.3% in October, growth in key infrastructure industries bounced back in November to 6.8%, thus brightening prospects for industrial production for the month. Riding on a stellar growth in cement, electricity and refinery products, the eight infrastructure sectors which have weightage of 38% in the overall Index of Industrial Production (IIP), considerably improved year-on-year as well from 3.7% in November 2010.

Food inflation fell sharply to a six-year low of 0.42% in the week ended 17th December from 1.81% in the previous week and a high of 15.48% in the corresponding week of 2010. With food inflation declining well below 1%, to the lowest level since April 2006, finance minister Pranab Mukherjee said the overall inflation would drop to 6% by March end.

On the global front, nearly $6.3 trillion was wiped off from the global markets in 2011 as the Eurozone debt crisis resounded across the world in the latter half of the year. Global stock market capitalisation tumbled 12.1% to $45.7 trillion according to Bloomberg data, while the euro ended the year as the worst performing major currency. The New Year is likely to start on a bleak note as Europe continues to struggle with the crisis.

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BSE fixes 3,100 point Sensex trigger for trading halt in Q1 2012

According to a statement by BSE, market circuit breakers would be triggered at three stages of the index movement either way at 10%, 15% and 20%. It further said that market-wide circuit breakers would be triggered by the movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier

Mumbai: The Bombay Stock Exchange (BSE) on Friday said trading would halt for the day if the benchmark Sensex moves up or down 20%, or 3,100 points, in a single day for the January-March quarter, reports PTI.

According to a statement by BSE, market circuit breakers would be triggered at three stages of the index movement either way at 10%, 15% and 20%.

It further said that market-wide circuit breakers would be triggered by the movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier.

In case of a 10% or 1,550 points movement either way before 1pm, there would be a one-hour market halt. If it is after 1pm but before 2.30pm, the halt is for half an hour. There will be no trading halt, if Sensex or Nifty moves 10% up or down at or after 2.30pm.

In case of a 15% movement or 2,325 points in index before 1pm, there will be a two-hour market halt. If the 15% trigger level is reached on or after 1pm but before 2pm, there will be a halt of an hour. If this trigger is reached on or after 2pm, the trading will be halted for the remainder of the day.

Further, in case of a 20%, or 3,100-point movement of the index, trading will be halted for the remainder of the day, it said.

The circuit breaker brings about a co-ordinated trading halt in all equity and equity derivative markets nationwide.

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Key economic bills make no headway in Winter Session

The only important financial business that was successfully transacted by Parliament was passage of the third batch of supplementary demands for grants (general) and for Railways and the relevant appropriation bills

New Delhi: Key economic legislations, including the Companies Bill and the pension reforms law, made no headway in the stormy Winter Session of Parliament that ended on Thursday mid-night, reports PTI.

These legislations, which could have played a crucial role in promoting investment and boosting the economic growth, will now have to wait for the Budget Session which is likely to begin sometime in February or March.

While the Companies Bill is seeking to modernise the corporate laws by replacing the Companies Act, 1956, the Pension Fund Regulatory and Development Authority (PFRDA) Bill is aimed at encouraging private and foreign investment in the pension sector.

These legislations, however, could not be taken up for consideration and passage because of stiff opposition by the ruling party ally Trinamool Congress, among other things.

The list of pending legislations includes the Insurance Law Amendment Bill, the Banking Laws Amendment Bill, Direct Taxes Code (DTC) and the constitutional amendment bill to facilitate implementation of Goods and Services Tax (GST).

The only important financial business that was successfully transacted by Parliament was passage of the third batch of supplementary demands for grants (general) and for Railways and the relevant appropriation bills.

The government can also take some credit for getting certain minor legislations like LIC Amendment Bill and Exim Bank Amendment Bill approved during the Session.

The government also introduced the Prevention of Money Laundering (Amendment) Bill, 2011, in the Lok Sabha. It proposes sweeping changes in the procedures relating to attachment and confiscation of property.

As regards the Direct Tax Code and the Bill for Goods and Service Tax, they are still pending with the Standing Committee on Finance, now headed by former finance minister and senior Bharatiya Janata Party leader Yashwant Sinha.

The DTC Bill, which will overhaul the five-decade old Income Tax Act, was introduced in August 2010 and the Bill for GST in the Budget session.

The government needs to take the opposition parties on board, particularly for the GST, since it would require a two-third majority in both Houses of Parliament and ratification by at least half of the state assemblies.

Since the Standing Committee has rejected the proposal to raise foreign direct investment (FDI) limit in private insurance companies from 26% to 49%, it is unlikely that the government will pursue the insurance sector reforms.

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