Stocks
Likely onset of fall on the Sensex, Nifty: Monday Closing Report

As mentioned, the previous day’s low has been breached, which may be an indicator of the beginning of the fall

 
Across-the-board selling in fast moving consumer goods, metal and capital goods sectors saw the market declining over 2% in trade today. As mentioned, the previous day’s low has been breached, which may be an indicator of the beginning of the fall. The National Stock Exchange (NSE) reported a turnover of 48.75 crore shares and advance-decline ratio of 381:035.
 
The market started the week in the negative tracking the Asian markets which were down in early trade. On the other hand, US markets closed higher on Friday on support from technology stocks. Local investors are focussed on the consumer price index (CPI) based inflation, which would be released later in the day.
 
The Nifty opened nine points lower at 6,098 and the Sensex resumed trade at 20,073, a cut of 49 points from its previous close, both below their psychological levels of 6,100 and 20,100, respectively. The benchmarks hit their highs in initial trade with the Nifty rising to 6,106 and the Sensex going up to 20,109.
 
However, selling pressure in fast moving consumer goods, capital goods, IT and auto stocks pulled the market lower as trade progressed. Easing of CPI inflation to single digits in April offered no comfort as the indices continued their southward journey.
 
Falling for the second straight month, retail inflation declined to 9.39% in April due to easing of prices of vegetables, edible oil and protein-based items. The CPI based inflation stood at 10.39% in the previous month.
 
A lower opening of the key European markets added to the investors’ woes in the noon session. The free fall due to selling by foreign investors led all 30 Sensex stocks lower in late trade.
 
The market touched its intraday low towards the close of the trading session with the Nifty declining to 5,973 and the Sensex dropping to 19,667. The benchmarks closed near their lows on broad-based selling. 
 
The Nifty closed 127 points (2.08%) down at 5,980 and the Sensex tumbled 431 points (2.14%) to finish the trading session at 19,692. Both the Nifty and the Sensex witnessed their biggest percentage falls since 8 May 2012.
 
Among the broader indices, the BSE Mid-cap index settled flat with a positive bias and the BSE Small-cap index gained 0.04%.
 
BSE IT (up 0.02%); BSE TECk, BSE Auto and BSE FMCG (up 0.01%) were the sectoral gainers. The top losers were Healthcare (down 0.09%); BSE Power (down 0.03%); BSE Bankex, BSE Realty (down 0.02% each) and BSE Metal (down 0.01%).
 
All 30 stocks in the Sensex list ended in the negative. The key losers were ITC (down 5.31%); Tata Steel (down 4.2%); Bharti Airtel (down 4.14%); Tata Motors (down 3.275) and Larsen & Toubro (down 2.96%).
 
The top two A Group gainers on the BSE were—Berger Paints (up 5.87%) and Bajaj Holdings (up 3.02%).
 
The top two A Group losers on the BSE were—TV18 Broadcast (down 10.20%) and United Phosphorus (down 5.50%). 
 
The top two B Group gainers on the BSE were—K Sera Sera (up 19.96%) and Kerala Ayurveda (up 18.68%).
 
The top two B Group losers on the BSE were—Elder Healthcare (down 19.94%) and Damodar Threads (down 19.91%).
 
Of the 50 stocks on the Nifty, 47 ended in the in the red and three remained unchanged. The main losers were ITC (down 5.12%); Reliance Infrastructure (down 4.97%); Bharti Airtel (down 4.27%); Tata Motors (down 3.67%) and Sesa Goa (down 3.44%).
 
Markets across Asia settled mostly lower as data from China revealed that industrial output in April rose 9.3% from a year earlier while fixed-asset investment grew 20.6% from a year ago, both slightly below expectations. On the hand, the Japan’s Nikkei 225 Stock Average gained 1.2% to its highest close since December 2007, as the yen fell to as low as 102.15 against the dollar, before trading at 101.73 in Tokyo.
 
The KLSE Composite advanced 0.88%; the Nikkei 225 surged 1.20% and the Seoul Composite rose 0.20%. On the other hand, the Shanghai Composite fell 0.22%; the Hang Seng dropped 1.42%; the Jakarta Composite declined 1% and the Taiwan Weighted lost 0.39%%.
 
At the time of writing, the key European indices were down between 0.28% and 0.62% and the US stock futures were trading in the red, indicating a lower opening for US stocks later in the day.
 
Back home, foreign institutional investors were net sellers of shares totalling Rs1.77 crore in the special trading session held on Saturday. On the contrary, domestic institutional investors were net buyers of equities amounting to Rs4.10 crore.
 
Indian FMCG major Dabur is set to broaden its current product portfolio in the Middle East region with a strategic launch of a new face care range, natural hair colour crème and an innovative deodorant range for teenagers, a media report said. The stock gained 0.89% to Rs164 on the NSE.
 
Oil and gas exploration major Cairn India plans to drill 48 wells at a cost of less than $100 million on the Mangala oilfield in the prolific Rajasthan block to extend the current production plateau. The new wells would be within the approved Field Development Programme (FDP) cost of $2.367 billion. The stock declined 2.66% to close at Rs296 on the NSE.
 
Turnkey engineering major Punj Lloyd on Monday said it has bagged ONGC’s Rs 730 crore B-127 cluster pipeline project in Mumbai. The B-127 cluster comprises three marginal fields: B-127, B-157 and B-59, which are located North of Mukta and additional development of B-55 Field and satellite asset in Bombay offshore basin. Punj Lloyd fell 0.83% to close at Rs53.80 on the NSE.

 

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RBI puts brakes on gold imports by banks

RBI has asked banks to restrict gold imports and allow consignments only to meet genuine needs of exporters of jewellery

 
The Reserve Bank of India (RBI) has imposed restrictions on imports of gold by banks in order to put brakes on the widening current account deficit (CAD). 
 
In a statement, the banking regulator said, “To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery”.
 
As per the data released on Monday, during April 2013, India's gold and silver imports jumped 138% to $7.5 billion from $3.1 billion in the year-ago period. Due to high gold imports, the country’s trade deficit in April has widened to $17.8 billion year-on-year.
 
Higher trade deficit in turn puts pressure on CAD, which has been described as the biggest risk to the Indian economy by the RBI.

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Competition Commission probing IATA for unfair practices

Self-acquired regulatory power for registering, accrediting and regulating the engagement of air cargo agents in India is alleged to have enabled IATA to indulge in anti-competitive activities, the CCI said

 
Competition Commission of India (CCI) is probing allegations of anti-competitive practices in air cargo transportation services against the International Air Transport Association (IATA) and its domestic unit IATA (India).
 
The Commission has ordered its director-general (DG) to investigate the complaint filed by the Air Cargo Agents Association of India.
 
The allegation pertains to cargo agents being required to seek accreditation from IATA to carry out international air cargo transportation services for the latter’s member carriers. A trade association of airlines, IATA accounts for about 84% of total air traffic worldwide.
 
“ ...the Commission is of the opinion that the decisions/resolution prescribing the rate of commission to be paid to the intermediaries or similar other decisions pertaining to prices/charges were prima facie in contravention of Section 3(3) of the (Competition) Act,” it said.
 
As per Section 3(3), an agreement entered into between enterprises, which determines purchase or sale price, directly or indirectly, is presumed to have an appreciable adverse effect on competition.
 
Going by the air cargo agents’ complaint, the practice of accreditation “was without any authority of law“.
 
“This self-acquired regulatory power for registering, accrediting and regulating the engagement of air cargo agents in India is alleged to have enabled Opposition Party 1 (IATA) to indulge in anti-competitive activities,” it had alleged.
 
The CCI said even though IATA is not based in the country, Section 32 of the Act provides extra-territorial jurisdiction to investigate matters having appreciable adverse effect on competition in India.
 

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