MCX and FT have financial obligation claim the brokers and threaten to move court if Forward Markets Commission does not guarantee payment
Following the payment crisis in the National Spot Exchange Ltd (NSEL), brokers of the exchange have united and demanded the government should take over the spot exchange. They insist that the commodity exchange has the financial obligation on payments. They have also threatened that they will move court if FMC (Forward Market Commission) cannot give guarantee on repayment. Nirmal Jain (chairman, India Infoline) said that not one rupee has been received in the last 12 days. NSEL can pay only Rs500 crore out of Rs5,500 crore, which means a big hit for brokers, investors and farmers of Rs5,000 crore.
Commodity Participants Association of India along with Association of National Exchanges Members of India and BSE Brokers Forum said some clients have expressed concern on quantity and quality of commodities lying in warehouses controlled by National Spot Exchange. The organisations have formed a joint forum. It is NSEL’s responsibility to verify stocks.
The Investors’ Grievances Forum (IGF, headed by Kirit Somaiya) has filed a complaint with the economic offences wing of the Mumbai Police against embattled National Spot Exchange Ltd. Somaiya asked the police to register a first information report (FIR) that accuses NSEL of cheating, fraud, forgery with the victims being 17,000 small farmers/investors.
Brokers have even demanded that the government should take over Financial Technologies (FT) as well until the NSEL mess is cleaned up, as the promoters are the same.
The Nifty may rise higher as long as it manages to keep itself above 5,635
The weak industrial production data for June 2013 made the indices to open lower. At the beginning of the session both Sensex and Nifty indices hit their lows for the day but soon managed to gain strength and moved higher. It continued to rise throughout the day. At the end of the session, both the benchmarks hit a five day high (including today).
Sensex opened at 18,895 and after hitting a low of 18,865, progressed upward to touch a intra-day high of 19,248 and closed in the positive at 19,230 (up 283 points or 1.49%). Nifty-50 opened at 5,600 and reached 5,705 after hitting a low of 5,579 and closed in the positive at 5,699 (up 87 points or 1.55%). Both the benchmarks made the highest percentage closing gain since 11 Jul 2013. The National Stock Exchange (NSE) recorded a volume of 65.37 crore shares, higher than yesterday.
All the major indices on the NSE except for India VIX (fell 9.49%) closed in the positive. Nifty Dividend was the top gainer, up 5.80%.
Among the other indices, Realty (rose 5.04%); Finance (rose 2.87%); Bank Nifty (rose 2.82%); Service (rose 2.49%) and Media (rose 2.31%) were the top five gainers. The lone loser was Metal (fell 0.12%).
Of the 50 stocks on the Nifty, 42 ended in the green. The major gainers were DLF (up 9.34%); Ranbaxy (up 8.86%); Axis Bank (up 7.77%); Jaiprakash Associates (up 5.25%) and IDFC (up 4.48%). The main losers were Hindalco (down 3.24%); Coal India (down 2.15%); Ambuja Cements (down 1.99%); Cairn (down 1.08%) and ONGC (down 0.95%).
Industrial production registered a contraction of 2.2% in June 2013, data released by the government on Monday showed. Mining production registered a decline of 4.1% and manufacturing production fell 2.2%. Electricity generation remained stagnant in June 2013. As per use-based classification, production of basic goods declined 1.9% in June 2013. Capital goods production fell 6.6%. Production of intermediate goods rose 1.1%. Consumer goods production declined 2.3%. Production of consumer durables declined 10.5%. Production of consumer non-durables rose 5%.
On a cumulative basis, industrial production registered a contraction of 1.1% during April-June 2013.
Inflation based on the consumer price index (CPI) eased in July 2013, data released by the government showed. The combined consumer price index (CPI) for urban and rural India eased to 9.64% in July 2013, from 9.87% in June 2013. The data showed that inflation under the category ‘food and beverages' stood at 11.24% in July 2013.
Reserve Bank of India (RBI) governor D Subbarao said that "perhaps" there was a need to reduce the reserves. Banks have to set aside via the cash reserve or the statutory liquidity ratios (SLR).
Curbs are planned on imports of gold, silver and some non-essential items, while rules governing overseas commercial borrowings and certain deposit programs for non-residents will be eased, finance minister P Chidambaram said yesterday.
The duties on gold and platinum imports were increased to 10% from 8%, while the levy on silver was boosted to 10% from 6%, the Ministry of Finance said in a notification tabled in parliament today. Taxes on shipments of gold and silver ores and dore bars have also been increased, it said, without specifying the rates.
US indices closed flat on Monday. The US ran a budget deficit in July, although government revenues increased from a year earlier due to tax hikes and a strengthening economy, a report from the Treasury showed on Monday. The US government spent $98 billion more than it took in last month, with the deficit driven by spending on healthcare programs, pensions for the elderly and the military.
All the Asian indices closed in the positive. Nikkei 225 was the top gainer, up 2.57%. Japan prime minister Shinzo Abe is considering a corporate tax cut as a way to offset the impact of a planned two-stage increase in the sales tax.
European indices were trading in the green and the US Futures were also trading in the positive. The German ZEW investor sentiment index showed economic conditions improved in August from July. Market awaits latest report on German business confidence and US retail sales later in the day.
Bosch, a supplier of automotive components to original equipment manufacturers (OEMs), is set to launch ABS (anti-lock braking system) for two-wheelers and three-wheelers early next year through OEMs in Indian market. According to the company, the new product is under the test stage and will be commercially launched early next year. ABS for two-wheelers and three-wheelers will be manufactured at Bosch’s unit in Chakan in Maharashtra and supplied to OEMs. The stock rose 1.60% to close at Rs8645 on the NSE.
For monetary policy to be effective and financial markets to remain stable, banks, NBFCs and other deposit-taking entities should be regulated by the RBI, Subbaro said
Reserve Bank of India (RBI) governor Duvuuri Subbarao on Tuesday cautioned against taking away regulatory oversight on non-bank financial companies (NBFCs) from RBI and placing them under a Unified Financial Authority (UFA). He said such a move will go against financial stability and whittle down the impact of monetary policy.
Speaking at the FIBAC, the two-day annual banking summit organised by the industry body FICCI, the outgoing governor said, “A unified regulation by the same regulator (RBI) is essential for financial stability as there are strong inter—linkages between banks and deposit-taking non-banking financial companies. (Moreover), for monetary policy to be effective, credit creation by banks and credit institutions like NBFCs should be regulated by the central bank”.
Stating that there are strong inter-linkages between banks, NBFCs and other deposit-taking entities, he said for monetary policy to be effective and financial markets to remain stable, they should be regulated by the central bank.
Explaining the reasons for his reservations against the move and why the RBI should regulate both banks, non-banking entities and all other deposit-taking bodies, Subbarao said, “One of the major causes for the 2008 financial crisis was that credit intermediation activities were conducted by non—banks or the so—called shadow banks, which were primarily outside the regulatory purview.
“This raised serious concerns of regulatory arbitrage, requirements for similar regulation of entities performing similar activities and issues of commonality of risks and synergies of unified regulation for such entities,” Subbarao, who completes his five—year term on September 4, said.
He further said the country is going against the global trend wherein after the 2008 crisis, most of the leading governments have been entrusting more, and not less, regulatory powers to the central banks.
Following the 2008 global credit crisis, the government constituted the Financial Sector Legislative Reforms Commission (FSLRC) “with a view to rewriting and cleaning up the financial sector laws and to bring them in tune with the current requirements”, and the commission chairman retired justice BN Srikrishan had submitted report in March 2013.