Nifty to move in the range of 5,460 to 5,625
The market, which opened in the red on selling pressure and weak global cues, saw a good recovery in post-noon trade. But the upmove lacked strength, resulting in the benchmarks snapping their three-day rally. Yesterday’s panic buying was followed by short selling today. The Nifty moved in a narrow range with a downward pull. However, the index made a smart recovery ending with a marginal loss of 10 points. The benchmark should cross high of 5,542 made on 15th February to reach the level of 5,625 else we may see it moving sideways and down to the level of 5,460. The National Stock Exchange (NSE) saw a massive volume 120.12 crore shares.
After having notched 2% gain yesterday, profit booking resulted in the market taking a breather today. Fresh worries about Greece pushed the Asian pack lower in morning trade, which hurt investor sentiments here. The Nifty, which closed at 5,532 on Wednesday, opened 18 points down at 5514. Similarly, the Sensex saw a cut of 39 points as it resumed trade at 18,163.
Trading in a narrow range, the market extended its losses and touched its intraday low at around 11.30am. At the lows, the Nifty touched 5,484 and the Sensex fell to 18,043.
The indices witnessed a slow climb in subsequent trade on select buying in realty and power stocks. The gains saw the market touch its intraday high in late trade where the Nifty rose to 5,531 and the Sensex went up to 18,183.
However, benchmarks came off the highs and closed with marginal losses. The Nifty finished 10 points down at 5,522 and the Sensex closed at 18,154, down 48 points from its previous close.
The advance-decline ratio on the NSE was 826:623.
The broader indices underperformed the Sensex today, as the BSE Mid-cap index declined 1.04% and the BSE Small-cap index dropped 0.96%.
The key sectoral gainers were BSE Realty (up 1.53%); BSE Power (up 1.37%); BSE Capital Goods (up 0.65%); BSE IT (up 0.49%) and BSE Auto (up 0.34%). The losers were led by BSE Metal (down 1.63%); BSE Oil & Gas (down 1.53%); BSE Consumer Durables (down 0.92%) and BSE Fast Moving Consumer Goods (down 0.02%).
Jindal Steel (up 4.94%); Hero MotoCorp (up 4.57%) State Bank of India (up 4.38%); Maruti Suzuki (up 4.10%) and Bajaj Auto (up 3.81%) were the main advancers on the Sensex. Coal India (down 5.44%); Hindalco Industries (down 4.71%); Sterlite Industries (down 4.16%); Tata Motors (down 3.67%) and Tata Steel (down 3.23%) were the main trailing stocks.
Hero MotoCorp (up 4.34%); Jindal Steel (up 4.27%); SBI (up 4.10%); Maruti Suzuki (up 4.10%) and Cairn India (up 3.17%) topped the Nifty chart today. The laggards were led by Coal India (down 5.84%); Hindalco Ind (down 5.14%); Tata Motors (down 4.12%); Sterlite Ind (down 3.86%) and Tata Steel (down 3.77%).
Markets in Asia settled in the negative as European policymakers deferred an announcement of a fresh bailout for Greece, as the leaders still doubt the beleaguered nation’s commitment towards spending cuts. Prospects of more ratings downgrades for 17 global and 114 European banks also weighed on the sentiments.
The Shanghai Composite declined 0.42%; the Hang Seng dropped 0.41%; the Jakarta Composite fell by .64%; the KLSE Composite slipped by 0.69%; the Nikkei 225 fell by 0.24%; the Straits Times tanked 1.14%, the Seoul Composite lost 1.38% and the Taiwan Weighted settled 1.69% down. At the time of writing, the key European indices were trading with losses of 0.75% to 1.15% and the US stock futures were lower.
Back home, foreign institutional investors were net buyers of shares totalling Rs1,838.85 crore on Wednesday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs313.47 crore.
Telecom services major Reliance Communications (RCom) today said it has received RBI approval for the refinancing for redemption of its outstanding FCCBs (Foreign Currency Convertible Bonds) worth Rs5,825 crore. The outstanding FCCBs of $1,182 million (approximately Rs5,825 crore at the prevailing dollar exchange rate of Rs 49.30) will be redeemed on the due date of 1 March 2012. The stock fell by 2.39% to close at rs102.05 on the NSE.
Wyeth has claimed $960 million from Sun Pharmaceutical Industries for alleged patent violation in launching a generic version of acid reflux drug Protonix in the US. The original patent relating to Protonix, known chemically as pantoprazole sodium, is held by Swiss drugmaker Nycomed and was licensed to Wyeth, which is now owned by Pfizer. Wyeth lost 0.16% and closed at Rs870 on the NSE today.
Union Bank of India is likely to raise up to Rs955 crore through the preferential route. The bank has received the board’s approval to issue up to 2.6 lakh crore shares to LIC on a preferential allotment basis. This works to 5% of the bank’s equity share capital and is expected to mop-up to Rs600 crore. It will also raise nearly Rs355 crore by issuing shares to the government. The banking stock fell 1.28% to close at Rs255.05 on the NSE.
In a letter to heads of public sector banks, the finance ministry said “instances of over-reporting of profit have been continuing year after year and no corrective action seems to have been taken to stop the recurrence”
New Delhi: The finance ministry has written to all public sector banks asking them to ensure profits are not overstated and to make appropriate provisions for bad loans, reports PTI.
In a letter to heads of public sector banks, the finance ministry said “instances of over-reporting of profit have been continuing year after year and no corrective action seems to have been taken to stop the recurrence”.
The letter assumes significance in the light of rising bad debts in the banking sector.
According to a senior official of a public sector bank, the letter has been issued recently by the finance ministry.
Sometimes there could be a difference of opinion about the classification of NPA (non-performing assets) which gets sorted out at the time of external audit or Annual Financial Inspection (AFI) by the Reserve Bank of India (RBI), the official said.
If the bank is unable to convince the RBI for not classifying some loans as NPA and subsequently not making provisions, then the bank has to make provision after AFI, the official said.
To that extent the profit is depressed later, the official said.
Banks have been trying to follow prudential guidelines of RBI on NPA in letter and spirit but there could be differences of opinion which gets resolved after AFI and reconciliation of accounts takes place, the official added.
During the third quarter of the current fiscal, banks profitability was hit due to jump in bad loans and restructured loans. There has been about 19% rise in restructured loan against the previous quarter as textiles, steel and infrastructure companies have suffered due to lower output and higher cost of funds.
Besides, there is NPA pressure for banks from the aviation and power sectors. They are struggling to recover Rs19,000 crore from the ailing national carrier Air India.
Worried over rising bad loans in certain sectors, the RBI is expected to meet banks to take stock of the NPA situation soon.
“Stress sectors are well known, the issues which are there. But we don’t think there is a great concern as of now,” RBI deputy governor KC Chakrabarty had said earlier this week.
“But any how we are going to discuss it (NPA issue) with the banks in the coming days. We are going to meet banks during this month or first week of March,” he had said.
Brian Clancey of STAT, which also tracks global pulses prices and forecasts global production levels, said that India’s pulses production apparently is up this year. But whether India will be able to sustain the high level of production is a question
Pulses production in India is likely to decline this year, resulting in higher imports, confirmed a government official at an international pulses conclave being held in Mumbai. Experts present at the meet highlighted the need for increasing pulses production to meet the demand from rising population.
“Pulses import is expected to touch 2.8 million tonnes (MT) till March and is slightly higher than last year, which was at 2.6 MT,” said Rajiv Agarwal, secretary, Department of Consumer Affairs-Foods and Public Distribution on the sidelines of the ‘Global Pulses Conclave 2012’ organized by India Pulses and Grain Association (IPGA).
Presenting the global perspectives on pulses, Brian Clancey, publisher and editor, STAT Publishing said, “The net field crop needs to rise at the rate of 1% per year by 2050 to meet the demand of rising population. If the output is even low by 0.5% then we have to face the issue of food shortage and higher prices”
Another panellist G Chandrashekhar of the Hindu Business Line, speaking on the global agricultural markets and outlook, elaborated on the factors such as weather conditions, inflation, slowing economy, prices of crude oil and speculative capital- impacting the agricultural commodities. “In the first half of 2012, the prices should be firm. It would be moderate because of the expectation of a rebound. There will be built up stock in the next 3-4 months. However, there is an upside risk of weather aberration.”
He adds, “Positive macro-economic data should give boost to the demand.”
Mr Clancey of STAT, which also tracks global pulses prices and forecasts global production levels, says that, “In India production apparently is up this year. It is less compared to last year, but both these years, production was way above for India. We calculated that the demand for pulses here is between 20-12 million tonnes. Prior to 2010, the production was hardly 15 million tonnes and the country imported around 3.5 million tonnes. That was way below what the country needed. Now the production has rebounded with a record crop last year. But still there is a gap which will be covered by imports.”
According to IPGA, around 1 lakh metric tonnes of chana have been already imported from Australia. India is the largest producer of pulses. Despite this, it is also the biggest importer of pulses, from countries like Australia, Canada and Myanmar, consuming about 15% of the world pulses trade. Of the total import basket, 50% is yellow peas, which is imported from Canada, Ukraine, Russia and France.
Mr Clancey says that, “Whether India will be able to sustain the high level of production is a question. Last year the record production was due to the Minimum Support Price (MSP) that the farmers got. Now, if the MSP falters, the farmers have to rely on the market. Indian pulses market is a diversified and sophisticated market.”The three-day conclave, which began yesterday, is an attempt to bring together all the stakeholders, from India and abroad, of the pulses industry. It is supported by the food and public distribution department of the consumer affairs ministry.
According to Mr Clancey, competition over acres for production, consumer demand, US Biofuel Policy and rising population of India and China will be the key drivers for the prices of pulses.