Govt likely to allow QFIs to invest in equity markets directly

The move is being considered at a time when the stock markets are volatile due to debt problems in several advanced economies and domestic concerns like inflation and high interest rate. Besides, there are concerns over flight of foreign capital in the recent times

New Delhi: With an aim to further liberalise the capital market, the government is contemplating to allow foreign individuals—Qualified Foreign Investors (QFIs—to buy equities directly in stock markets, reports PTI quoting a senior finance ministry official.

Currently, only overseas High Networth Individuals (with a minimum networth of $50 million), which are registered as sub-account of Foreign Institutional Investors (FIIs), are allowed to participate in the stock market.

“We are exploring the options to widen the class of investors in the Indian equity market by allowing QFIs,” the official told PTI.

The decision, he added, would help in projecting India as a global investment centre and attracting equity capital from abroad.

The move is being considered at a time when the stock markets are volatile due to debt problems in several advanced economies and concerns on domestic fronts, like inflation and high rate of interest. Besides, there are concerns over flight of foreign capital in the recent times.

FIIs have pulled out Rs632 crore from Indian equities so far in 2011.

In order to promote the portfolio investment route, the government last month allowed QFIs—individual, group or association—to invest up to $13 billion in equity and debt schemes of mutual funds in the infrastructure sector.

“We are trying to collect and analyse data on QFI investments in mutual funds,” the official said, adding the decision has made it easier for overseas investors to participate in the infrastructure sector projects in India.

While the official did not provide further details regarding QFIs in capital market, he said, if allowed, it would be on the same pattern as in mutual funds.

For mutual funds, the government has allowed two routes—holding mutual fund units in demat account through Securities and Exchange Board of India (SEBI) registered depositary participants and holding MF units via Unit Confirmation Receipts.

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Share prices may continue to remain flat: Wednesday Closing Report

Nifty to move in the range of 5,010 and 4,880

Concerns about a slowdown in domestic corporate earnings for the September quarter due to high costs and rising interest rates and the ongoing global worries led the market lower today. Today the Nifty opened higher and made an intraday high of 5,006 at the beginning of the trading session itself, which surpassed the highs of the past three days. However, it couldn't sustain the momentum and soon went below yesterday's close.

We had mentioned in our yesterday's market closing report that we may see a sideways movement with an upward bias to the level of 5,015. Today the Nifty fell marginally by 25 points to close at 4,946. This fall was on a volume of 52.32 crore shares on the National Stock Exchange (NSE). We may now see the Nifty moving in the range of 5,010 and 4,880.

The Indian market opened in the positive on mixed cues from the Asian region. The Nifty opened above the 5,000-mark at 5,006, up 35 points and the Sensex rose by 139 points to resume trade at 16,663. The opening figures of the two benchmarks were their highs for the day. However, profit-booking soon resulted in the market slipping into the red.

Reports on late Tuesday indicated that seven of the 17-member euro-zone nations had suggested that private creditors take a bigger share of the writedown on their Greek bond holdings. The development has threatened to derail Greece's bailout hopes.

As expected, trade was volatile with the benchmarks staying on both sides of the neutral line till around 10.45am after which intense selling pressure pushed the market to the day's low. At the lows, the Nifty touched 4,922 and the Sensex went down to 16,373.

The market made a feeble recovery attempt but sellers kept a tab on the indices, which continued to remain in the negative terrain in the post-noon session. The market closed in the red on concerns about the September quarter results from corporates and on global worries. The Nifty closed down 25 points at 4,946 and the Sensex settled at 16,446, a loss of 78 points.

The advance-decline ratio on the NSE was 433:996.

The broader indices underperformed the Sensex today with the BSE Mid-cap index falling 0.88% and the BSE Small-cap index declining 0.97%.

BSE Fast Moving Consumer Goods, BSE IT (up 0.93% each), BSE Healthcare (up 0.43%), BSE Realty (up 0.33%) and BSE TECk (up 0.22%) were the top gainers in the sectoral space. The main losers were BSE Capital Goods (down 2.09%), BSE Metal (down 1.77%), BSE Consumer Durables (down 1.75%), BSE Bankex (down 1.25%) and BSE Auto (down 1.18%).

The top performers on the Sensex were DLF (up 3.08%), ITC (up 1.91%), NTPC (up 1.60%), ONGC (up 1.29%) and Infosys (up 1.18%). The main draggers of the index were Jaiprakash Associates (down 4.37%), Larsen & Toubro (down 2.90%), Maruti Suzuki (down 2.83%), Tata Steel (down 2.66%) and Bharti Airtel (down 2.16%).

HCL Technologies (up 3.27%), NTPC (up 2.35%), GAIL India (up 2.33%), DLF (up 2.20%) and Ranbaxy (up 2.13%) were the leaders on the Nifty. Reliance Capital (down 7.22%), JP Associates (down 5.17%), Reliance Infrastructure (down 4.89%), Sesa Goa (down 3.57%) and Siemens (down 3.40%) were the major losers on the index.

Markets in Asia settled mixed as the European debt crisis weighed on investor sentiments. With stiff opposition to policy-tightening in Greece and Italy, and a split among euro-zone leaders about the terms of the Greek bailout terms, investors across Asia preferred to wait for some positive signals before making any big moves.

The Shanghai Composite declined 0.95%; the Hang Seng fell 0.66%; the Straits Times lost 0.91% and the Seoul Composite tanked 0.73%. On the other hand, the Jakarta Composite surged 1.13%; the KLSE Composite rose 0.54%; the Nikkei 225 added 0.07% and the Taiwan Weighted gained 0.80%.

Back home, institutional investors-both foreign and domestic-were net buyers in the equities segment on Tuesday. While foreign institutional investors pooled in Rs34.08 crore, domestic institutional investors pumped in Rs270.05 crore.

 State-run NTPC has tied up a syndicated loan worth Rs2,341 crore from a consortium of Indian banks for its 390-MW Muzaffarpur thermal power project in Bihar. The loan would be utilised for financing capital expenditure on the Muzaffarpur thermal power project. NTPC gained 2.35% to close at Rs169.55 on the NSE.

Mumbai-based Ipca Laboratories plans to acquire a pharmaceutical company in Indonesia with a view to enter the largest South-East Asian market. The company has put together a $20 million war-chest for the acquisition, to be made within the next few months, said Kuala Lumpur-based Sugumaran, adding that a number of companies have been shortlisted, though he kept the names confidential. The stock fell 1.75% to close at Rs264 on the NSE.

Unichem Laboratories has earmarked Rs120 crore for capital expenditure plans in the current financial year, including the establishment of a new SEZ formulations plant and an R&D centre. Of this, Rs40 crore would be spent for the formulations plant at the SEZ, Pithampur, Rs48 crore for an R&D centre and the balance for normal capex activities. The scrip fell 3.25% to Rs138.35 on the NSE.

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Cos ignore volatile trend to tap capital markets

A total of 34 companies raised Rs34,150 crore through initial and follow-on public offers in the January-June 2010 period, while 22 companies collectively raised Rs11,421 crore in the corresponding period this year

New Delhi: A number of companies are hitting the stock market with public offers despite the volatile investor sentiment, with three companies slated to launch their initial public offers (IPO)s in the next two days, taking the total number to 12 this month, reports PTI.

The companies that plan to come out with IPOs this week include Flexituff International, a manufacturer of flexible intermediate bulk containers, information technology firm Taksheel Solutions and stock broking firm Indo Thai Securities.

In addition, transformer manufacturer M&B Switchgears' Rs90 crore IPO and financial service company Onelife Capital Advisors' Rs37 crore public offer opened for subscription today.

According to market experts, these are small-size IPOs and the amount involved is also not huge, so it will be interesting to see investors' response.

"These are small-size issues and the amount is also not massive and it will be interesting to see their response. I think these companies must have got some comfort from institutional investors," Destimoney Securities MD and CEO Sudip Bandyopadhyay said.

Geojit Financial Services research head Alex Mathew said, "Any company with sound fundamentals will get a good response from investors, even in bad market conditions."

Another leading expert, CNI Research CMD Kishor P Ostwal, said, "Market condition is very bad and I don't advise investors to subscribe to any issue and subscribe only when a state-owned firm comes out with a public offer."

Flexituff International's Rs100 crore initial public offer and Taksheel Solutions' Rs 80 crore IPO will open tomorrow, while Indo Thai Securities' Rs 32 crore stake sale will begin on Friday (30th September).

Notably, air charter company Swajas Air Charters' Rs37 crore initial share sale, which closed today, has failed to generate interest among investors.

In contrast, the stake sales of six entities-RDB Rasayans, Prakash Constrowell, PG Electroplast, TD Power Systems, SRS and Brooks Laboratories-earlier this month were oversubscribed by 2-3 times, which analysts termed a decent response amid the prevailing market conditions.

As many as 15 companies launched initial share offers in the month of September last year. This year, nine firms have already opened their IPOs for subscription in the current month and another three are in the pipeline.

The 30-share Sensex has declined by 1.76% in the month of September so far, closing at 16,524.03 yesterday.

It seems that the public's appetite for the stakes offered by Indian companies through share sale programmes is on the wane. IPOs and FPOs in the first six months of 2011 mopped up over Rs11,000 crore, just one-third of the year-ago levels.

A total of 34 companies raised Rs34,150 crore through initial and follow-on public offers in the January-June 2010 period, while 22 companies collectively raised Rs11,421 crore in the corresponding period this year.

Interestingly, 15 companies-including Anil Ambani Group firms Reliance Infratel and Jindal Power-have refrained from bringing out their IPOs so far this year despite obtaining the go-ahead from the Securities and Exchange Board of India (SEBI).

In 2010, Indian public and private sector companies raked in about Rs59,523 crore from the primary market. The total mop-up from IPOs and FPOs this year is expected to touch Rs90,000 crore. In 2009, there were a total of 20 IPOs, which raised close to Rs20,000 crore.

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