Stocks
Nifty, Sensex, Bank Nifty will continue to head higher: Monday closing report
Nifty headed higher as long it closes above 8,460
 
We had mentioned in Friday’s closing report that the gains in the major Indian indices in the face of tough external climate and muted investments by foreign institutional investors (FIIs) were an important indicator of an underlying bullishness. The stock market displayed this bullishness Monday in a spectacular fashion. After being down 98.75 points at the opening following the news of Greek referendum Sunday, the NSE’s CNX Nifty recovered the entire loss and closed higher, even as all global markets were awash in red. The market is set to record further gains.
 
After opening in the negative domain on Monday, Indian equities rallied through the trading session, appearing to ignore the "no" vote in Greece to the bailout proposal with conditions and focusing instead on a likely delay in the US interest rate cuts.
 
The S&P BSE Sensex gained more than 115 points or 0.40% in the day's trade.
 
The wider 50-scrip Nifty of the NSE made marginal gains on Monday, closing 37 points or 0.44 percent up at 8,522.15 points.
 
The 30-scrip S&P BSE Sensex, which opened at 27,857.20 points, closed at 28,208.76 points, up 115.97 points or 0.41% from its previous day's close at 28,092.79 points.
 
The Sensex touched a high of 28,235.31 points and a low of 27,774.80 points in the intra-day trade.
 
The mood was somewhat lifted by a dip in global crude oil prices, ample signs of recovery in the monsoon rains and some disappointing jobs data which suggested that a rate cut by the US Federal Reserve may be pushed further. 
 
According to analysts, the markets are waiting for the June quarter results. First major result to come out will be of Tata Consultancy Services (TCS) on 9th July.
 
During Monday's intra-day trade, healthy buying took place in healthcare, oil and gas, bank, capital goods and automobile sectors. However, consumer durables, metal and technology, entertainment and media (TECK) stocks came under intense selling pressure.
 
The S&P BSE healthcare index augmented by 275.96 points, oil and gas index rose by 109.76 points, bank index gained by 106.87 point, capital goods index was edged-higher by 89.67 points and automobile index increased by 52.55 points.
 
The S&P BSE consumer durables index plunged by 100.17 points, followed by metal index, which receded by 56.83 points and TECK index which by declined by 1.22 points.
 
The major Sensex gainers in Monday's trade were: Dr Reddy's Lab, up 3.64% at Rs3,711.75; Cipla, up 3.35 points at Rs652.55; Hero MotoCorp, up 1.34% at Rs2,612.40; Tata Consultancy Services (TCS), up 1.07% at Rs2,632.80; and Lupin, up 1.05% at Rs1,920.40.
 
The major Sensex losers were: Vedanta, down 4.45% at Rs163.05; Hindalco Inds, down 1.36% at Rs109.05; Tata Steel, down 0.73% at Rs298.75; Infosys, down 0.65% at Rs983.50; and NTPC, down 0.65% at Rs137.95.
 
Among the Asian markets, Japan's Nikkei fell by 2.08%, however, China's Shanghai Composite Index went up by 3.74%, and Hong Kong's Hang Seng receded by 3.18%.
 
In Europe, the London FTSE 100 index was down by 0.64%, the French CAC 40 was lower by 1.68% and Germany's DAX Index receded by 1.37% at the closing bell here.
 
The top gainers and losers among shares of indices were as follows:
 
 
The table below gives the closing values of Asian indices at close:
 
 
Among European indices, DAX was at 10,903.94, down 1.40% and FTSE 100 was at 6,554.97, down 1.14%. Athex Composite Share Price Index was at 797.52, up 2.03%. US Index futures were in the red.
 

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Rupee could be hit by Greek crisis: Government

Over 61% of Greeks voted "no" on Sunday, responding overwhelmingly to Prime Minister Alexis Tsipras' calls to reject a proposal by the country's creditors for more austerity in exchange for a financial bailout

 

The Indian government on Monday said it was closely monitoring the Greek situation and euro market movements after austerity proposals by creditors being rejeted in a referendum posed the possibility of the country's exit from the euro zone, while the rupee may be affected due to the outward flight of investment.
 
"In these situations what mostly happens is there is flight to dollars, to a safe haven. Rupee might also be affected by that. But nothing gets unusual at all so far," Chief Economic Advisor Arvind Subramanian told reporters here.
 
"This is a drama which is going to play out for some time. We are well protected in at least three ways. Our macro-economic situation is much more stable. We have reserves. We are an economy which is still a very attractive investment destination. So I think we are relatively well insulated," he said.
 
"As for the crisis itself, it is going to going to be long and prolonged," he added.
 
Over 61 percent of Greeks voted "no" on Sunday, responding overwhelmingly to Prime Minister Alexis Tsipras' calls to reject a proposal by the country's creditors for more austerity in exchange for a financial bailout.
 
On possible impact of the crisis on Indian economy, Subramanian said that as the crisis plays out, "financial markets are going to be volatile. Both the ECB (European Central Bank) and Fed (US Federal Reserve) will take this into account".
 
"We will have to see how the euro moves now. We are closely monitoring the Greek situation. There could be some reaction on the Fed rate hike," Finance Secretary Rajiv Mehrishi said.
 
He had last week expressed apprehension that if yields on euro bonds go up, it might impact inflows and outflows from India.
 
Indian industry feels that if a crisis developed for Europe due to Greece, India too could feel the tremors like the rest of the world.
 
"What is worrying is that the overall situation with regard to India's merchandise exports does not look promising this year and the troubles in Europe could only deteriorate the prospects," the Associated Chambers of Commerce and Industry of India (Assocham) said in a statement here.
 
"There is a need for RBI and the finance ministry to keep a close eye on the muddy global situation and its possible effect on India's capital flows and the currency movement," it added.
 
India's merchandise exports continued to decline for the second month this fiscal, down by over 20 percent at $22.35 billion in May from $27.99 billion in the same month of the previous year, official data showed last month.
 
The Federation of Indian Export Organisations (FIEO) has warned that the continuing decline in exports would result in layoffs, besides putting pressure on the current account deficit (CAD).
 
FIEO president S.C. Ralhan also agreed with RBI Governor Raghuram Rajan's recent remarks that the central banks globally were at risk of slipping into the kind of beggar-thy-neighbour strategies, leading to the Great Depression of the 1930s again.

 

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Reforms & technology hold key to urban revamp
The government needs to surmount a number of tough challenges to successfully implement these schemes and realize their full potential
 
The three-pronged initiative of the NDA government through big ticket urban-focused investment schemes of Atal Mission for Rejuvenation & Urban Transformation (AMRUT), Smart Cities Mission & Housing for All with central funding of Rs.4 lakh crore ($63 billion), holds the promise of providing the much- needed fillip to real estate, housing and infrastructure and raise the living standard of people by creating world class cities and spaces.
 
But the government needs to surmount a number of tough challenges to successfully implement these schemes and realize their full potential.
 
As per the plan, under the Smart Cities Scheme, 100 cities will be developed, with each getting an annual central funding of Rs.100 crore each over the next five years. Under AMRUT, 500 cities and towns would be rejuvenated over next 10 years. And under Housing for All, two crore affordable houses will be built through slum rehabilitation with the help of private developers, housing for poor with credit- linked subsidy, housing projects with public and private sector and subsidy for individual house construction.
 
The enormity and challenge of urban revamp can be gauged from the urban population explosion. Every decade, we add one Brazil (181 million people). By 2020, about 123 million of additional urban population will be added. An estimated 600 million Indians will be living in cities by 2030, up from 290 million, as reported in the 2001 census. By 2025, 78 percent of India's urban population will be concentrated in 69 metros, putting severe pressure on already crumbling physical and social infrastructure.
 
Inefficient and faulty urban planning is resulting in massive consumption and wastage of precious water and energy resources and causing major sanitation and health problems due to increasing slums and poor waste disposal.
 
In this backdrop, Prime Minister Narendra Modi's initiatives assume significance, especially as the contribution of the built environment to the economy accounts for about 17.5 percent of GDP, as per 2010 statistics, and in view of industry and services growing faster than agriculture, people are moving from farms to urban areas.
 
That technology holds the key to government's initiatives aimed at urban rejuvenation, is amply demonstrated by a recent survey of 2,000 buildings in India done by Honeywell that emphasize on the need to invest more in smart building technologies as such smart building solutions can make facilities more connected and adaptive, reduce energy and operating costs and improve the safety and quality of life for occupants and users. 
 
Information & Communication Technologies (ICT) help make smart city's critical infra, components and utilities interactive and efficient. Through Intelligent Building Management Solutions, energy saving and lower maintenance costs can be achieved, at the same time prolonging the life of assets and reducing the carbon footprint. 
 
Last year, the government introduced draft Internet of Things(IOT) to create IOT- enabled smart cities eco system to ensure faster implementation to improve overall efficiency. CISCO has established IOT hub in Bangalore to help companies develop software application for deployment in upcoming 100 smart cities. IBM has prepared the Integrated Communication Technology (ICT) Master Plan for Dighi Port Industrial Area under DMIC.
 
Along with technology, crucial real estate reforms are necessary for the success of programmes aimed at urban revamp. Considering that in future, power will be increasingly generated from renewable resources, it is necessary that we move from a consumer- oriented generation model to one based on principles of smart power generation, smart power grids, smart storage and smart consumption. Keeping this in view, the government has converted the Solar Energy Corporation of India into a growth-oriented commercial company to generate and sell power and develop other sources of renewable energy. It has also revised the solar power generation target for 2022 from 20,000 mw to 100,000 ME.
 
In another progressive policy initiative, the government has approved 6.5 percent interest subsidy on housing loans with tenure up to 15 years for economically weaker sections and lower income groups. It is, however, questionable as to why real estate has been kept out of GST when fees and taxes account for as high as 35 percent of what the home buyer pays for a house. 
 
Similarly, with direct institutional support to the real estate sector from banks, HFCs, private equity and the like accounting for only 22 percent of total investment flow in the sector, reforms to increase capital flows are required.
 
There are other key challenges which need to be met before government's initiatives for urban revamp could be successfully implemented. There is funding challenge. Though the centre has earmarked liberal funding for the three initiatives , it will not be easy for the states and local urban bodies to arrange for additional large investment, considering their poor financial health.
 
It is also a big challenge to meet the huge gap in services under AMRUT scheme. Against the desired water supply of 135 litres per person per day, the urban population gets only about 69 litres. Besides, cities and towns are able to treat only five percent of total waste while sewerage treatment is merely threepercent. 
 
The situation on the power front is equally bad. Also, considering the scope and scale of urban development initiatives, there is a severe shortage of skilled professionals, with a demand-supply gap of 82-86 percent in the core professional group of civil engineers, architects and planners, not to talk of skilled labourers.
 
There is a huge challenge to make land available for massive urbanisation programme. On the technological front, the challenge will be to achieve economy of scale and their viability on mass scale.
 
And last but not the least, there is a challenge of smart governance at the local urban bodies level as there is a tremendous shortage of professionals. The challenge is to provide transparent and efficient governance at the municipalities' level.

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