Downtrend on Sensex, Nifty may end soon: Monday Closing Report

If the Nifty manages to close above 5,920, we may see a few days of gains again

The market ended flat amid choppy trade on concerns of the rupee hitting its all-time low and political developments in Delhi. If the Nifty manages to close above 5,920, we may see some days of gains again. The National Stock Exchange (NSE) reported a turnover of 53.46 crore shares and advance-decline ratio of 443:952.


The domestic market opened higher on support from its Asian peers which were mostly in the positive in morning trade today on firm US jobs data that was released on Friday. However, concerns of the weakening rupee kept local investors on guard.


The Nifty opened 27 points higher at 5,908 and the Sensex started the day at 19,530, a gain of 101 points over its previous close. Gains in power, realty, capital goods, metal, IT and PSU stocks led the benchmarks to their highs in the first 15 minutes. The Nifty touched 5,932 and the Sensex climbed to 19,586 at their respective highs.


However, the weakening of the rupee to an all-time low of 57.54 to a dollar in morning trade made investors nervous which led to the market paring its gains. Selling pressure from consumer durables, healthcare, banks and metal sectors saw the indices entering the negative terrain shortly after 10.30am.


Meanwhile, the rupee breached its all-time low of 57.32 against dollar in early trade today. It traded at 57.52 against Friday's close of 57.06/07 as of 09.28 am. The Indian currency had earlier hit a low of 57.54 against the greenback.


The indices managed to venture back into positive territory but were range-bound on both sides of their previous closing levels in subsequent trade.


However, a big bout of selling in heavyweights like Jindal Steel & Power, BHEL, Maruti Suzuki, ICICI Bank and Tata Motors led the market to its low in post-noon trade. At the lows the Nifty fell to 5,857 and the Sensex declined to 19,367.


While the market managed to recover from its lows, it closed flat with a mixed bias on worries about the weakening rupee and political developments in Delhi.


The Nifty shed three points (0.05%) to 5,878 while the Sensex gained 12 points (0.06%) to settle at 19,441.


In the broader market space, the BSE Mid-cap index declined 0.88% and the BSE Small-cap index dropped 0.79%.


BSE IT (up 1.01%); BSE TECk (up 0.46%); BSE FMCG (up 0.14%) and BSE Oil & Gas (up 0.11%) were the gainers in the sectoral segment. The main losers were BSE Consumer Durables (down 2.08%); BSE Realty (down 1.52%); BSE Bankex (down 1.12%); BSE Healthcare (down 1.04%) and BSE Metal (down 0.96%).


Out of the 30 stocks on the Sensex, 14 settled higher. The top gainers were Wipro (up 2.12%); Infosys (up 1.64%); NTPC (up 1.55%); HDFC (up 1.53%) and Bajaj Auto (up 1.29%). The major losers were Jindal Steel & Power (down 4.46%); BHEL (down 3%); Maruti Suzuki (down 2.18%); ICICI Bank (down 2.03%) and Tata Motors (down 1.82%).


The top two A Group gainers on the BSE were—GlaxoSmithKline Consumer Healthcare (up 3.79%) and MCX (up 3.59%).

The top two A Group losers on the BSE were—Jet Airways India (down 11.18%) and United Breweries (down 9.25%).


The top two B Group gainers on the BSE were—Harita Seating (up 20%) and Mold-Tek Packaging (up 19.66%).

The top two B Group losers on the BSE were—Opto Circuits (down 23.33%) and Rathi Steel (down 19.38%).


Of the 50 stocks on the Nifty, 19 ended in the in the green. The main gainers were HDFC (up 1.95%); NTPC (up 1.76%); Infosys (up 1.71%); Bajaj Auto (up 1.69%) and HCL Technologies (up 1.65%). The major losers were Jindal Steel & Power (down 4.19%); BPCL (down 2.51%); BHEL (down 2.46%); IndusInd Bank (down 2.16%) and IDFC (down 2.14%).


Markets across Asia, with the exception of the Jakarta Composite, closed in the positive as Japan revised its first quarter GDP growth. Optimism emanating from the US also supported the gains. The Chinese market was closed for a local holiday.


The Hang Seng rose 0.18%; the KLSE Composite surged 0.69%; the Nikkei 225 jumped 4.94%; the Straits Times advanced 0.50%; the Seoul Composite gained .46% and the Taiwan Weighted climbed 0.81%. Bucking the trend, the Jakarta Composite tanked 1.81%.


At the time of writing, two of the three the key European indices were in the positive and the US stock futures were trading in the green.


Back home, institutional investors—both foreign and domestic—were net buyers in the equities segment on Friday. FIIs pumped in fund totalling Rs157.90 crore and DIIs pooled in Rs172.70 crore.


VA Tech Wabag has received an order worth Rs115 crore from the Chennai Metropolitan Water Supply and Sewage Board. The order comprises of construction of pumping stations and pipeline works for providing comprehensive water supply and sewerage scheme for residents of Sholinganallur – Karapakkam on the old Mahabalipuram road in Chennai city under Chennai mega city development mission project. The completion of the project is scheduled for 24 months for water supply scheme and 30 months for sewerage scheme. The stock fell 1.36% to close at Rs443.50 on the NSE.


The board of directors of Comfort Fincap has decided to make an application to the Delhi Stock Exchange and Uttar Pradesh Stock Exchange for delisting of securities. It also has considered and approved the sub division of face value of each equity share from Rs10 to Re1 each. The stock rose 0.08% to close at Rs394.40 on the BSE.


Reliance Life launches new pension plan

The new scheme Reliance Life Insurance Smart Pension Plan is a comprehensive non-participating unit-linked pension plan

Reliance Life Insurance has launched a new pension plan, which encourages early saving for post-retirement financial independence.


The new scheme Reliance Life Insurance Smart Pension Plan is a comprehensive non-participating unit-linked pension plan, the company said in a statement.


It claims to be the only retirement plan that offers rider options to customers to safeguard against accidental death, illnesses and even life insurance, guaranteed returns and loyalty additions safeguard against volatile market conditions.


Equity mutual funds suffer massive redemption of Rs6,580 crore in May

Sales of equity mutual fund schemes may have marginally increased, but huge redemptions led to a net outflow of Rs3,357 crore in May 2013. The business will not revive unless the fund companies and the regulators take responsibility for their actions.

Equity mutual fund schemes continue to face net outflows. Over the past 12 months there has been only a single month which drew in a net inflow. Over the past year, from June 2012 to May 2013, there has been a total outflow of Rs17,967 crore. In January 2013, the total redemptions for the month had peaked to as high as Rs8,289 crore, the highest since October 2010. Sales of equity schemes have also failed to pick up. Compared to the same month the last year, equity MF sales have fallen by 4% to Rs3,223 crore from Rs3,343 crore in May 2012.


Moneylife has been constantly highlighting declining sales of mutual funds which has a lot do with the attitude of both fund companies and the regulator. The actions of the Securities and Exchange Board of India (SEBI) have been consistently ill-informed and capricious. After the regulator abruptly banned upfront commissions in August 2009, SEBI has been trying to tinker around with the rules without any clue about how the buyers (investors) and the sellers (distributors) perceive equity funds.

In September last year, under the current chairman, it introduced a new category of fund sellers. This new cadre of distributors which would include postal agents, retired teachers, retired government and semi-government officials will sell units of ‘simple’ and ‘performing’ mutual fund schemes. Despite a waiver in registration fees for first-time distributors for five months (February to June 2013) very few distributors have been enrolled under this category, according to news reports. When SEBI had released this circular in September 2012, we had pointed out a number of issues with this. (Read: Retired teachers selling ‘simple’ & ‘performing’ schemes: Another harebrained idea from SEBI)

Two new fund offers (NFOs) that were launched during the period brought in Rs146 crore. Over the past three months as many as nine NFOs have been launched, but they were able to bring in an inflow of just Rs641 crore. The number of NFOs launched witnessed a spike because many of the new schemes launched were Rajiv Gandhi Equity Savings Schemes. In the calendar year 2012 saw just seven NFOs being launched.

Equity assets under management fell by nearly 2% to Rs1.75 lakh crore in May 2013 from Rs1.89 lakh crore in April 2013. On the other hand, the S&P BSE Sensex gained 1.31% over the one-month period ending 31 May 2013.


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