Stocks
Nifty, Sensex, Bank Nifty weak – Weekly closing report

If Nifty remains weak, the decline may halt at around 8,300

 

The S&P BSE Sensex closed the week that ended on 20th March at 28,261 (down 242 points or 0.85%), while the NSE’s CNX Nifty closed at 8,571 (down 77 points or 0.89%). In the week before that we had mentioned that NSE’s CNX Nifty may remain weak and the short-term support for the index maybe around 8,550.
 
Monday turned out to be a volatile session on the Nifty, with the index trading mostly in the red, and it finally ended closing lower.  Nifty closed at 8,633 (down 15 points or 0.17%). While the wholesale price index (WPI) remained in negative zone in February 2015, Christine Lagarde, Managing Director of International Monetary Fund (IMF) reportedly said that India's economy is a bright spot in a cloudy global economy and that recent policy reforms and improved business confidence are set to boost the country's growth. 
 
Data released by the Indian government previous week showed the trade deficit narrowing to the 17-month low of $6.85 billion in February 2015. As we anticipated on Monday, Nifty managed to close in the green on Tuesday, in spite of giving up all the intra-day gains mid-way. Nifty closed near the day’s high at 8,723 (up 90 points or 1.04%).
 
Foreign direct investment (FDI) in India more than doubled to $4.48 billion in January, the highest inflow in last 29 months. The head of the IMF said that emerging markets must prepare for the impact of a rise in US interest rates, which could surprise in both its timing and pace.
 
On Wednesday, although Nifty managed staying above Tuesday’s low, it closed lower 8,686 (down 37 points or 0.43%). Among the various happenings back home, Minister of State for Civil Aviation Dr Mahesh Sharma in a written reply in Rajya Sabha stated said that the Ministry of Finance was requested to include aviation turbine fuel (ATF) under declared goods. India's exports grew marginally by 0.88% to $286.58 billion during the April- February period of the current fiscal. There was also the news of SEBI planning to change the rule that will make it easier for home-grown start-ups to list their shares. The government has decided to divest its stake in BHEL next fiscal.
 
US housing finance companies Fannie Mae and Freddie Mac could require more bailouts from US taxpayers as risks are rising due to shrinking reserves, an internal watchdog for the firms' regulator said on Wednesday. These two firms had been bailed out in 2008 financial crisis.
 
On Thursday, Nifty closed at 8,635 (down 51 points or 0.59%), despite a sharp rally on Wednesday in the US. We had anticipated that Nifty would move sideways. After a gap up opening, the benchmark hit a higher high. However, it then started moving lower. The OECD, in its latest Interim Economic Assessment of the world economy, said that India is expected to be the fastest-growing major economy in the world over the next two years.
 
PricewaterhouseCoopers (PwC) said that according to PwC's 18th Annual Global CEO Survey (India report), CEOs in India continue to be more confident about the growth prospects of their business than their global peers. On Friday Nifty continued to head lower. Nifty closed at 8,571 (down 64 points or 0.74%).
 
Rajya Sabha passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2015. Fitch India has forecast gross domestic product to grow at 8.0% in 2015-16 and 8.3% in the next fiscal, based on the new data series. The Cabinet Committee on Economic Affairs has approved the sale of equity in four state-owned companies including ONGC and NMDC, which may fetch the exchequer Rs22,574 crore.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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Coal Mines Bill passed by Rajya Sabha
With the coal ordinance permitting auction of cancelled blocks due to lapse early April, the Rajya Sabha on Friday passed the Coal Mines (Special Provisions) Bill, 2014, in the nick of time before parliament goes into its scheduled month-long recess.
 
Failure to pass the bill, already cleared by the Lok Sabha, would have put into jeopardy the status of mines already auctioned, which has yielded revenue of more than Rs.200,000 crore from winning bids. 
 
The Coal Mines (Special Provisions) Bill, 2015, provides for allocation of coal mines and vests the right, title and interest over mine infrastructure together with mining leases to successful bidders through a transparent bidding process.
 
The bill will now replace the ordinance which outlines the procedure for auction of coal blocks that were cancelled by the Supreme Court in September.
 
The Bill also provides for allotment of blocks to public sector undertakings. As per rules the auctions are being conducted under tariff based reverse bidding where the
end-use is power generation, and forward bidding for production of steel, cement and generation of power for captive use.
 
While the criteria for calculating the floor price for bidding is based on state miner Coal India's (CIL) price of coal of the same grade, the auction would also have a ceiling price for power sector bidders to keep the lid on power tariffs.
 
The floor price would not be less than Rs.150 per tonne, while potential bidders would have to pay upfront as floor price is 10 percent of the intrinsic value of the mine. The bidder with the highest floor price would be the preferred bidder.
 

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Post data analysis, SBI would even put ships on e-auction
India's largest mortgage lender, State Bank of India (SBI) would even offer ships online in the future after studying the analytical data on its recent e-auction of around 300 properties, said a senior official on Friday.
 
"We have a small coastal transport ship in our inventory of seized recovered properties. Putting it on e-auction is also a good idea. We have earlier sold couple of ships in the traditional manner," Parveen Kumar Malhotra, deputy managing director and group executive (Stressed Assets Management) told IANS.
 
On March 14, SBI auctioned around 300 properties (mix of residential/offices/shops/factory buildings) valued around Rs.1,200 crore online.
 
"We are studying the data to see the efficiency in price discovery for properties sold online. The study is to see whether the online sale price is better or the offline price is better," Malhotra said.
 
He said the around 130 properties got sold for a sum of Rs.80-90 crore.
 
The auction got good response for the residential properties put on sale.
 
"The experience gained is good and we are also studying how we can share more information about the properties (mainly about industrial properties) so as to conclude the sale," Malhotra said.
 
He said the bank had received many queries about the water supply to the factories and the approach roads.
 
"If it is a local bidder, he would have done the survey before the auction. Our legal department has to see whether what additional information could be shared about the property without compromising on client confidentiality," Malhotra said.
 
One of the views regarding the industrial properties is that the bidders need additional time and the bank is also looking at the possibility of giving a longer pre-bid period.
 
Another banker told IANS that SBI could also do an efficiency/economic analysis of various modes of recovering dues.
 
Malhotra said on the whole the e-auction was satisfactory and it was a good experience to take it forward.
 
Other bankers too enquired in a friendly manner as to the e-auction modalities, he added.

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