Flat-to-positive opening for Indian shares indicated: Thursday Market Preview

Global issues, leading to higher crude prices, continue to weigh on investors worldwide

The local market is likely to see a flat-to-positive opening on concerns about rising crude on account of the tensions in West Asia but strength in the global markets could keep the momentum going. Wall Street ended higher on Wednesday on support from material stocks. Reports of the resignation of Portuguese prime minister Jose Socrates after the country’s parliament rejected latest austerity initiatives indicates that the European debt crisis is far from over. Tracking overnight gains in the US, the Asian pack was mostly higher in early trade on Thursday. The SGX Nifty gave up some early gains but was 12 points up at 5,515 over its previous close of 5,503.

The weekly food inflation figures, expected at noon today, will give some direction to the local market later in the day.

The market opened flat with a negative bias on Wednesday, following a weakening trend in Asian markets, on concerns over the effect of high crude prices on the economy. It succumbed to profit booking within 15 minutes of opening, falling to the day's low, the Sensex down 38 points at 17,950 and the Nifty also losing 12 points to 5402.

Buying in select sectors soon helped the indices to erase early losses and pushed them into a higher trajectory. The indices gained some momentum to breach the psychological 18,000 and 5,400 levels, respectively, then moved sideways. The market scaled to the intra-day high in the last half an hour, but closed trade a tad off the highs. The Sensex ended 218 points higher at 18,206 and the Nifty closed at 5,480, a gain of 66 points.

Markets in the US were boosted by material stocks on Wednesday following a rise in metal prices. However, the rise in crude prices due to the ongoing political crisis and the resignation of the Portuguese prime minister curbed the gains. Stocks fell early in the session on disappointing news from the housing sector but an uptick around mid-session showed that the rally was intact.

Materials stocks gained on speculations that Japan’s reconstruction could be costly, a boost to companies that produce commodities like aluminium, steel and copper. Oil traded near the highest since September 2008 in New York as the conflict in Libya and the Middle East bolstered concerns that supplies will be further disrupted.

Crude for May delivery gained 78 cents, or 0.7%, to $105.75 on Wednesday, the highest since 26 September 2008. Prices have advanced 31% in the past year. Brent oil for May settlement slipped 15 cents to end the session at $115.55 a barrel on the London-based ICE Futures Europe exchange yesterday.

Meanwhile, New US single-family home sales fell to a record low in February and prices were the lowest since December 2003. Sales tumbled 16.9% to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January.

The Dow rose 67.39 points (0.56%) to 12,086.02. The S&P 500 added 3.77 points (0.29%) to 1,297.54 and the Nasdaq gained 14.43 points (0.54%) to 2,698.30.

Markets in Asia were in the green in early trade on Thursday taking cues from the US markets that closed in the positive territory on Wednesday. The gains were also supported by higher commodity prices and on optimism from Japan following reports that some manufacturers are gearing to resume production at some factories after the devastating earthquake and resultant tsunami that struck the country earlier this month.

The Shanghai Composite gained 0.22%, the Hang Seng surged 0.77%, the Jakarta Composite added 0.03%, the Straits Times rose 0.36%, the Seoul Composite was up 0.80% and the Taiwan Weighted advanced 0.35%. On the other hand, the KLSE Composite was down 0.04% and the Nikkei 225 fell by 0.20% in early trade.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminium rose 2.3% on Wednesday to a three-week high while gold rose for the sixth straight session yesterday, nearing a record in New York.

Back home, Anil Ambani group firm Reliance Life, which recently announced selling 26% stake to Japanese insurer Nippon for $680 million, will have to seek government nod, said the Insurance Regulatory and Development Authority (IRDA).

Under the Insurance Act, promoters wanting to sell 26% stake (maximum permissible limit), could offload their equity only after 10 years into operations. However, Reliance Life has not yet completed 10 years of operation. IRDA chairman J Hari Narayan said Reliance Life is in touch with the insurance watchdog over the issue and the company has to approach the government for approval.


SEBI diktat to broking houses, intermediaries to get strict with staff on rumours, market manipulation

The Securities and Exchange Board of India has in a circular observed that “unauthenticated news related to various scrips is being circulated” through various online channels by employees of broking houses and other intermediaries, which violates the Code of Conduct for Stock Brokers

Market watchdog, the Securities and Exchange Board of India (SEBI), has decided to clamp down on the staff of various broking houses and financial intermediaries, because these employees have been circulating "unauthenticated news related to various scrips."

SEBI has come down hard on various entities dealing in securities, especially the quality and calibre of staff that these market brokers tend to recruit. In a hard-hitting statement issued today, the watchdog has said: "In various instances, it has been observed that the intermediaries do not have proper internal controls and do not ensure that proper checks and balances are in place to govern the conduct of their employees. Further, due to lack of proper internal controls and poor training, employees of such intermediaries are sometimes not aware of the damage which can be caused by circulation of unauthenticated news or rumours."

SEBI has gone a step further, saying, "It is a well-established fact that market rumours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms," and it has directed market intermediaries to prevent such kind of activities.

The market regulator has also directed market intermediaries to impose a proper internal code of conduct and controls so that employees/temporary staff/voluntary workers, etc, employed/working in the offices of market intermediaries do not encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other sources without verification.

Market intermediaries should impose restrictions on access to blogs, chat forums and messenger sites. Logs for any usage of such blogs, chat forums or messenger sites (called by any nomenclature) shall be treated as records and the same should be maintained as specified by the respective regulations which govern the concerned intermediary, SEBI said in the statement.

Employees should be directed that any market related news received by them, either in their official mail or personal mail/blog, or in any other manner, should be forwarded only after the same has been seen and approved by the concerned intermediary's compliance officer. If an employee fails to do so, he/she shall be deemed to have violated the various provisions contained in SEBI Act/Rules/Regulations, etc, and shall be liable for action, and the compliance officer shall also be held liable for breach of duty in this regard, the market regulator said.



Narendra Doshi

6 years ago

Good step. Hope it will be put into practice with a severe punishment / penalty , on a regular basis and in public domain.

Maharashtra Budget: Ajit Pawar presents Rs58 crore surplus

Maharashtra deputy chief minister Ajit Pawar today presented a Rs58 crore surplus budget, hiking taxes on soft drinks and liquor while exempting foodgrains and essential commodities. The presentation of his maiden budget was marked by slogan-shouting by opposition members

Mumbai: Maharashtra deputy chief minister Ajit Pawar today presented a Rs58 crore surplus budget, hiking taxes on soft drinks and liquor while exempting foodgrains and essential commodities, reports PTI.

Presenting his maiden budget in the Legislative Assembly, which was marked by slogan-shouting by opposition members, the finance minister said that in 2010-11, revenue receipts were Rs1,07,159 crore as against Rs86,910 crore in 2009-10, showing an increase of 23.3%.

Mr Pawar said there was 26% increase in sales tax mop up in 2010-11 and 31% rise in stamp duty collections.

"We have not increased sales tax rates like some other states have done, yet sales tax receipts registered an increase," he said.

During the year 2011-12, revenue receipts are expected at Rs1,21,503 crore and revenue expenditure at Rs1,21,445 crore.

Mr Pawar said revenue deficit is proposed to be eliminated for coming fiscal and a marginal revenue surplus of Rs58 crore expected during the period.

Last year, revenue receipts had been estimated at Rs97,043 crore, Mr Pawar said. Considering the trend of revenue collection during the year, revised estimates of revenue receipts were fixed at Rs1,07,159 crore.

Revenue expenditure at the beginning of the year was expected to be around Rs1,04,698 crore. In the revised estimates, this expenditure has been fixed at Rs1,12,846 crore.

Mr Pawar also said that tax on declared goods under the Central Sales Tax Act in the state is proposed to be raised from 4% to 5%. The government also proposes to levy tax on production or import of liquor at 50% of the actual sale price, which shall not exceed 25% of the MRP, he said.

Tax at 20% rate shall be charged on actual sales in hotels-4-star and above. In the case of bars, restaurants and clubs, the rate of tax would be 5%. Set-offs on liquor purchases will not be available to them.

Mr Pawar also proposed to increase the tax on carbonated soft drinks from 12.5% to 20%. Similarly, tax on goggles is proposed to be raised to 12.5% since they are not used as normal corrective spectacles.

Mr Pawar proposed 5% tax on sale of telecast rights of entertainment and sports events.

VAT is levied at concessional rate of 4% on sales made under section 8(5) to electricity generating, transmission, distribution units; telecom industry and to defence and railways. The rate under this provision has been proposed to be increased to 5%.

The minimum rate of excise duty will be increased to Rs 95% litre for country liquor, Rs240 per proof litre for foreign liquor, Rs33 per bulk litre for mild beer and Rs42 per bulk litre for fermented beer.

Mr Pawar also proposed amendments to the Bombay Stamp Act 1958 where uniform stamp duty of 0.005% will be charged on transactions of securities, futures, delivery and non-delivery based transactions for clients as well as own account.

Presently, different transactions are being charged at different rates; uniform stamp duty will simplify it, Mr Pawar said.

Transactions of transfer of long-held tenancy rights of house properties at prime locations in Mumbai will be liable for stamp duty at their market value, he said.

In the Legislative Council, the budget was presented by minister of state for finance Rajendra Mulak.


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