Market on a downtrend: Weekly Market Report

The Nifty has to breach the 5,800 mark for an upmove

The market closed the week with a loss of 2%, in contrast to the gains in the previous week. Overall for April, the Sensex was down 2% and the Nifty 1% compared to gains of 9% in March. A revival of inflation and concerns over lower revenue forecasts by corporates weighed on investors.

The Sensex closed the week down 466 points at 19,136 and the Nifty was 135 points lower at 5,750. The market will see an upward movement only if the Nifty is able to cross 5,800.

The market is finding it difficult to maintain the upward momentum and is expected to find further direction after the Reserve Bank of India’s policy meeting on Tuesday.

ONGC (up 2%), Sterlite Industries, Maruti Suzuki, ITC, and Bharti Airtel (up 1% each) were the top gainers in the Sensex space, whereas DLF (down 10%), Jaiprakash Associates (down 9%), Larsen & Toubro, Reliance Communications and Jindal Steel & Power (down 6% each) were the main losers on the benchmark.

Among the sectoral indices, BSE Healthcare and BSE Fast Moving Consumer Goods, up 1% each were the gainers, whereas BSE Realty (down 8%) and BSE Capital Goods (down 4%) were laggards.

The indices closed in the red through the week, with the losses expanding in the latter half. While results of banking companies were mostly in line with expectations, IT companies disappointed. Among auto companies, Maruti Suzuki reported a marginal rise in Q4 net, and two-wheeler maker TVS Motors reported a two-fold jump in profit. Other auto firms are yet to announce their numbers.

Food inflation inched up marginally to 8.76% for the week ended 16th April from 8.74% in the previous week. This is the second consecutive week that the rate of price rise of food items has gone up, after a period of moderation in February and March. Earlier this month, prime minister Manmohan Singh expressed concern about rising prices, especially of food items, and said the country needs to do more to ensure food security of its citizens.

The RBI, which will announce its monetary policy for 2011-12 next week, is expected to hike key policy rates by at least 25 basis points. The central bank has already increased the short-term lending (repo) and borrowing (reverse repo) rates eight times since March last year to suck out excess liquidity from the system and tame demand to fight inflation.

But headline inflation has stubbornly stayed above 8% since January 2010. It was 8.98% in March this year, way above the government’s target level of 7%.

In other news in the past week, the Central Bureau of Investigation filed its second charge-sheet in the second generation (2G) spectrum allocation case, naming Tamil Nadu chief minister M Karunanidhi’s daughter and MP Kanimozhi and four others—Sharad Kumar, managing director, Kalaignar TV, Asif Balwa, cousin of Shahid Usman Balwa, promoter of Swan Telecom, Rajeev Agarwal, director of Kusegaon Fruits and Vegetables, and Karim Murani of Cineyug Films.

The Supreme Court quashed the levy of Airport Development Fee (ADF) by private airport developers in Delhi and Mumbai, on international and domestic travellers. The court passed the order on a petition filed by an NGO, Consumer Online Foundation, which contended that the fee was illegal, as it was not approved by the Airports Economic Regulatory Authority of India (AERA).

In international news, South Korea’s economy expanded at a faster pace in the first quarter of 2011 compared to the previous quarter. GDP expanded by 1.4% during the January-March quarter, up from the previous quarter, when it advanced 0.5%.

Industrial output in Japan fell by 15.3% in March, higher than analysts’ forecasts of an 11% fall and exceeding the previous record decline during the 2009 Lehman crisis. Household spending fell to a record 8.5% in March, from that a year earlier, indicating the worsening sentiment since the earthquake.

HSBC’s China Purchasing Managers’ Index (PMI) stood at 51.8 in April, unchanged from the previous month, even as the government hiked interest rates, pointing to a steady growth in the country’s manufacturing sector.

The US Federal Reserve left its benchmark interest rate in a range of zero to 0.25% and reiterated to keep it “exceptionally low” for an “extended period.” Fed chairman Ben Bernanke said that the central bank will maintain its record monetary stimulus, even after ending large-scale bond purchases in June.

Inflation in the 17-nation euro region rose to 2.8% in April from 2.7%, the European Union’s statistics office in Luxembourg said. Analysts expect the European Central Bank would go in for another round of rate hikes soon.


ASBA mandatory for non-retail investors from 2nd May: SEBI

SEBI had introduced the ASBA facility for public offers first in September 2008, when retail investors were allowed to use it. The facility eliminates any delays related to refunds for the unallotted shares

Mumbai: All non-retail investors will have to use the Application Supported by Blocked Amount (ASBA) facility—where money is debited from investor’s account only after share allotment—from 2nd May to apply for share sale offers in the capital market, the Securities and Exchange Board of India (SEBI) said on Friday, reports PTI.

Under the ASBA facility, the application money of investors remains blocked in his bank account until the process of allotment of shares is completed.
“It has been decided that non-retail investors i.e. qualified institutional buyers (QIBs) and non-institutional investors, making application in public or rights issue shall mandatorily make use of the ASBA facility,” SEBI said.

SEBI had introduced the ASBA facility for public offers first in September 2008, when retail investors were allowed to use it. The facility eliminates any delays related to refunds for the unallotted shares. Initially, it was offered to retail investors only and was given to other investors in 2009.

“The circular shall be applicable for Red herring Prospectus/Letter of Offer filed with Registrar of Companies or stock exchanges on or after 2 May 2011,” SEBI added.

The market regulator, however, did not make it mandatory for retail investors to use the ASBA facility.


AI strike enters 4th day, airline to operate just 39 flights

The AI management ordered the pilots to report for duty failing which it said the airline "is at liberty to take any action as deemed fit including termination of services"

New Delhi: Air India (AI) today further reduced its operations to 39 domestic flights out of its regular 320 as the strike by its pilots entered the fourth day inconveniencing passengers, reports PTI.

"We have curtailed more than 52% of our domestic flights and operating on only trunk routes that is too metro cities," an AI spokesperson said.

"Under the contingency plan, we have reduced the number of flights as we don't have any pilots," he said.

While 21 flights will be operated from the national capital, Air India's Mumbai operations have almost come to a standstill as the airline may operate just five flights between 9 and 11.30am, an AI spokeswoman said in Mumbai. The national carrier did not undertake any operations from Mumbai before 9am.

Sources sad the AI will be operating the Delhi-Patna-Varanasi flight AI 409 and Delhi-Mumbai-Delhi AI 805 on an aircraft which has been taken on wet lease to operate the two flights. Under a wet lease, an aircraft comes along with crew members.

AI has so far withdrawn or cancelled 120 domestic flights.

Yesterday, AI had operated just 12 flights from the financial capital. Normally, the state-owned carrier operates over 40 flights a day on the domestic sector from Mumbai using narrow-bodied aircraft.

Nearly 850 AI pilots are continuing their strike ignoring stern warning of sacking by the management and the Delhi High Court's decision to initiate contempt proceedings against them.

Striking Air India pilots yesterday said they were willing to go to jail and refused to call off their agitation.

The Delhi High Court yesterday initiated contempt of court proceedings against the pilots for their "utter defiance" of its order on Wednesday to call off the agitation calling it as "brazen and smacking of sheer arrogance".

A lockout of the airline and invoking of Essential Services Maintenance Act (ESMA) were also being mulled to crack down on the pilots.

The AI management ordered the pilots to report for duty failing which it said the airline "is at liberty to take any action as deemed fit including termination of services".

The management sacked two more pilots yesterday taking to nine the number of pilots terminated. Six pilots have been already suspended.

Indian Commercial Pilots Association (ICPA), which is spearheading the stir, is demanding a higher fixed component in the salary package, a Central Bureau of Investigation (CBI) probe into alleged mismanagement which has led to losses of over Rs16,000 crore and removal of Air India CMD Arvind Jadhav holding him responsible for the "financial mess".


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