Under the scheme, brokers and other market intermediaries will be given incentives for a specified period of time to bring in liquidity and generate investor interest in those securities which have limited trading activity
MCX Stock Exchange (MCX-SX) on Tuesday said it will launch incentive schemes for brokers and intermediaries to enhance liquidity in illiquid securities in the equity and derivatives segments from March 2013.
“MCX-SX will introduce liquidity enhancement scheme (LES) in equity and equity derivatives segments with effect from 6 March, 2013,” the stock exchange said in a statement.
This is the first national exchange in the country to offer incentives for liquidity enhancement in the equity cash market, it added.
Under the scheme, brokers and other market intermediaries will be given incentives for a specified period of time to bring in liquidity and generate investor interest in those securities which have limited trading activity.
There are more than 2,000 illiquid stocks on leading exchanges. The exchange said the scheme would benefit all participants across various segments of the market.
MCX-SX said the market maker performing up to 90% of its obligation during the month in 25 securities would be entitled to receive an additional incentive of Rs21 lakh per month. In case of 40 securities, the member would be entitled to receive an additional incentive of Rs50 lakh per month.
“All passive orders will entitle the member/investor to receive about 50% of the transaction cost received by the exchange from the active order,” it added.
The schemes would offer incentives for contributing to liquidity in all equity and equity derivative instruments at MCX-SX with a special focus on Futures contracts of 50 securities as notified by the exchange.
“Market makers will be obligated to contribute to genuine participation and will be incentivised at a higher rate compared to other participants. Payments to members would be made on a fortnightly basis,” MCX-SX said.
Additionally, incentives would be provided for retail clients, dealers and proprietary traders to create a liquid order book based on genuine end users' participation. These incentives are available for a period of four months, from March to June.
MCX-SX said all retail investors/clients would be entitled to Rs100 per day for trading in equity cash and equity derivatives, while top 10 registered dealers from each region (North, South, East and West) would receive a monthly incentive of Rs1 lakh, with the best performer receiving an additional Rs1 lakh in each region.
Last week, MCX-SX, the third full-fledged equity bourse after BSE and NSE, had begun trading in equities and equity derivatives.
Market regulator Securities and Exchange Board of India (SEBI) earlier this month had allowed stock exchanges to introduce incentive schemes for brokers and intermediaries to enhance liquidity in illiquid securities in the equity cash segment.
As per the revised Bill, the proposes to give legal right to over 5 kg of foodgrain at Rs1-Rs3 per kg per month to about 70% of the population
The government has revised the Food Bill and now proposes to give legal right to over 5 kg of foodgrain at Rs1-Rs3 per kg per month to about 70% of the population, as suggested by the Parliamentary panel, food minister KV Thomas said.
A revised bill has been sent to the law ministry for approval, after which it will be moved to the Cabinet, he added.
In the original bill which was introduced in December 2011 in the Lok Sabha, the government had proposed giving 7 kg of wheat (Rs2/kg) and rice (Rs3/kg) per month per person to “priority households”, while at least 3 kg of foodgrain at half of the government fixed support price was proposed for the ‘general’ households.
“We have accepted most of the recommendations of the Parliamentary panel. The revised bill has been sent to the law ministry for vetting. After we receive its comments, we will place the Bill before the Cabinet,” Mr Thomas said.
The minister said the government would not withdraw the existing bill and rather move amendments to incorporate changes as suggested by the panel and some states.
“We have accepted panel’s recommendation to do away with priority and general classifications of beneficiaries and provide uniform allocation of 5 kg foodgrain (per person) at fixed rates to 67%-70% of the country’s population,” Mr Thomas said.
The minister said that 2.43 crore poorest of poor families under the Antyodaya Anna Yojana (AAY) would continue to get supply of 35 kg foodgrain per month per family.
According to sources, the food ministry has revised the bill after consultation with UPA chairperson Sonia Gandhi, who has strongly favoured higher allocation for AAY people.
The food ministry is working closely with the Planning Commission to finalise the criteria for excluding 30%-33% of population from the benefits of the Bill, he added.
“The Planning Commission’s formula for exclusion of population will be given to the states. On that basis, states will be allowed to include or exclude beneficiaries,” the minister said, adding the Centre has taken into account the state governments' views in the revised Bill.
According to Credit Suisse, earnings estimates are coming down again. Its January consensus estimate for FY14 EPS ticked upwards but this seems like a head fake and there would be another 8%-10% downside in coming quarters.
During the third quarter (Q3) that ended in December 2012, sales growth of Nifty companies slowed to 10%, a new post-crisis low, which also affected the stock markets. Most stocks are now trading close to where they were in September 2012 and there is no turnaround from here, says Credit Suisse in a research report.
According to the financial services provider, the Indian stock market was very discerning during the third quarter as companies that beat estimates did exceptionally well after results while companies reporting in-line or weak results were beaten down. However, many of the bad results seemed to have been well flagged.
Of the 113 stocks that Credit Suisse India covers, formal quarterly previews were published for 78. For these 78 companies, combined reported net profit was 3% below estimates. Only oil & gas companies like Reliance Industries, GAIL and ONGC and IT services and financials, mainly private banks, and some public sector banks (PSBs) that had dropped non-performing loans (NPL) coverage had results better than estimates. There were large disappointments in most other sectors, it said.
The minor recovery in the year-on-year (YoY) growth trend of operating profit was short-lived. It turned downward again, as the number of companies seeing outright operating profit decline increased sharply. “With Nifty operating margins still below March 2009 levels, we note that although consumer discretionary, healthcare and consumer staples are much above March 2009 levels, industrials, energy and telecom are much below,” the research note said.
Credit Suisse said that the stock markets have reacted accordingly to the December quarter earnings. Gains from the sharp rally in investment-driven stocks that started on 6 September 2012—around the time that the government action on economic reforms grabbed headlines—have already disappeared. Metal stocks had also rallied, in line with a global rally in risk, but have now given up most of those gains, it added.
While the slowdown in investment activity has been prolonged and well-flagged, Credit Suisse said, commentary from companies did not suggest any bottoming out or inflection. It said, “In fact, results showed that construction activity, steel and cement demand, and even order books slowed during the quarter. BHEL, the bellwether power equipment manufacturing company saw its first YoY revenues declined in a decade. Even Larsen & Toubro (L&T), which surprised positively on the growth in its order book, had to rely on gaining market share in the middle-east and in real-estate construction orders and its own assessment of the investment environment was not positive,” the note said.
Credit Suisse said, below the operating profit line, the pressure from interest costs continued to rise (up 40% YoY in the December quarter), because projects are now starting to get commissioned, and capitalised interest is now appearing on the profit and loss (P&L). Worryingly, interest coverage continues to get worse.
Overall, FY14 earnings fell 2.3% during the earnings season. Credit Suisse said its analysts cut estimates across the board for FY14, though continuing with past trends the cuts in FY15 were more muted except for a few sectors. Earnings for Technology, Utilities and Private sector banks were upgraded. Interestingly, earnings estimates for consumer staples as well as consumer discretionary stocks were downgraded quite meaningfully: in case of the former, it was primarily the royalty impact on HUL, it added.