Nifty to see upmove to the level of 5,365, and then up to 5,400
The spectre of the government taxing FII investments through P-Notes kept the market low for most of the week, while clarifications on the issue by the finance minister late Thursday and on Friday lifted sentiments. Although the market closed flat with a positive bias, the market logged its first weekly gain in five weeks.
Economic concerns and the rupee hitting a fresh two-month low led the market lower on Monday. Clarification on the government’s proposed GAAR norms led the market higher on Tuesday. However, intense selling pressure in the second half of trade and weak global cues led the market lower on Wednesday.
Weak global cues and concerns over the new taxes proposed by the finance minister in the Budget, which would come into effect shortly, led the market marginally down on Thursday. However, clarifications by the finance minister over the proposed tax on FIIs led to a rally on Friday.
The Sensex gained 42 points to close the week at 17,404 and the Nifty moved 17 points up to 5,296. If the Nifty manages making higher high and stays above 5,290, we may see an upmove to the level of 5,365, and then up to 5,400.
Among the sectoral indices, BSE Healthcare and BSE Fast Moving Consumer Goods were up 2% each while BSE Power declined 2% and BSE Consumer Durables settled 1% lower.
The Sensex toppers in the week were Ranbaxy Laboratories (up 13%), Dr Reddy’s Laboratories (up 6%), Tata Steel (up 5%), Wipro and Kotak Mahindra Bank (up 3% each). Reliance Communications, Cairn India (down 6% each), NTPC (down 5%), Reliance Power (down 4%) and BHEL (down 3%) were the losers on the index.
The top gainers on the Nifty were Ranbaxy (up 13%), Dr Reddy’s (up 6%), Tata Steel (up 5%), Kotak Mahindra Bank (up 4%) and Wipro (up 3%). The major laggards were Reliance Communications, Cairn India (down 6% each), NTPC (down 5%), Reliance Power and BHEL (down 4% each).
Showing signs of recovery, the eight core infrastructure industries grew by 6.8% in February on account of healthy coal and power output, up from a dismal performance of 0.5% a month ago. The eight industries—crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel—have a weight of 37.90% in the overall Index of Industrial Production (IIP). Economists said if this growth rate is maintained for a few more months, it would improve the overall industry output.
Setting at rest the uncertainty about overseas investments, finance minister Pranab Mukherjee on Friday said that persons investing in stock markets through participatory notes (P-Notes) will not have to pay taxes in India, an assurance that pushed up the markets.
P-Notes are instruments that allow FIIs, which are not registered with market regulator Securities and Exchange Board of India (SEBI), to invest in the Indian equity market.
On the international front, Eurozone finance ministers on Friday agreed to raise the combined lending ceiling for their two bailout funds to 700 billion euros from 500 billion. The 700 billion will come from 500 billion euros of the permanent bailout fund, the European Stability Mechanism (ESM), and the 200 billion euros committed under existing bailout programs for Greece, Ireland and Portugal by the temporary European Financial Stability Facility (EFSF) fund.
US Federal Reserve chief Ben Bernanke’s that he would keep stimulating the economy in order to boost jobs led the US markets higher in the week.
Along with non-appointment of information commissioners, activists see the move as a stealthy act to undermine RTI. This is a New Year surprise that RTI activists are discovering only now
The Maharashtra government has apparently amended the Right to Information (RTI) Act in January, and made several crucial changes. A circular dated 16th January is circulating via emails and internet RTI forums which show that now applications must be restricted to 150 words and a single topic.
The circular, signed by Nandkumar Jatre, secretary to the state government, says, “A request in writing for information under Section 6 of the Act shall relate to one subject matter and it shall not ordinarily exceed 150 words. If an applicant wishes to seek information on more than one subject matter, he shall make separate applications. Provided that, in case the request made relates to more than one subject matter, the PIO may respond to the request relating to the first subject matter only and may advice the applicant to make a separate application for each of the subject matters.” Moreover, if any citizen goes for inspection of files, he may carry only a pencil and has to deposit all other writing material with the PIO.
Activists have expressed their ire over key posts in the State Information Commission lying vacant, and the news of amendment has naturally not been a good surprise. They are already collecting signatures for a petition, which will be presented to the chief minister on 2nd April.
Krishnaraj Rao, a social activist, says, “We did not even learn this from any government source such as a public notice in the dailies. Nor was it told to any RTI activist—many of whom are in regular touch with the Mantralaya. There should have a public consultation of stakeholders before changing the rules.
Section 4(1)(c) of the RTI Act says, “Every public authority shall publish all relevant facts while formulating important policies or announcing the decisions which affect public.’”
The activists came to know of the amendment when veteran advocate and RTI Union member Vinod Sampat saw this notification in the March edition of a publication he purchased outside City Civil Court. Mr Sampat said, “This is a death knell to the RTI movement in Maharashtra, and bureaucrats will become more powerful. We have received a suggestion to ask the permission of the police commissioner and burn the RTI Act in Mantralaya as a form of protest.”
Strong resistance is pegged in the 5,372-5,385 points range and unless and until this is decisively taken out the bears continue to hold a slight edge. One should persist with the strategy of selling in rallies especially close to the above mentioned area
S&P Nifty close: 5295.55
1. The Nifty closed above the pivot of last week and has formed a ‘hammering’, raising hopes of the bulls of the recovery gaining further ground.
2. Weekly averages still continue to be negatively phased hence a close below these would result in the selling pressure accentuating.
3. Unless and until the 5,372-5,385 points range is taken out in close the bears will hold the egde and a break of the recent low of 5,171 points (in close) would set the cats amongst the pigeons.
Strong resistance is pegged in the 5,372-5,385 points range and unless and until this is decisively taken out the bears continue to hold a slight edge. One should persist with the strategy of selling in rallies especially close to the above mentioned area. We are likely to witness see-saw trading during the course of this week as the bulls and bears fight to take control. The successful testing of the low of 5,171 points has become paramount importance for the bulls to defend this level at all costs to prevent chaos.
(Vidur Pendharkar works as a consultant technical analyst & chief strategist at www.trend4casting.com)