Nifty may stage a rally till 5,600, but this may be short-lived
Domestic markets were severely mauled today by the deepening Euro debt crisis and a couple of negative domestic factors such as poor Infosys results and a decline in the manufacturing index. After opening lower, the indices were knocked down through the day and lost more than 1.5% by the close of trading.
The European sovereign-debt crisis threatened to pass on to Italy and Spain, and prompted a surge in bond yields. Eurogroup finance ministers said late Monday they are ready to adopt further measures to ensure that Greece's sovereign-debt crisis does not spread to other parts of the European Union. However they didn't take any concrete steps.
The yield on 10-year Italian government bonds rose more than 0.2% percentage points to around 5.8% and the cost of insuring the debt against default also hit a record high.
The Sensex opened 187 points down at 18,534, while the Nifty opened at 5,557, lower by 59 points from its previous close.
The drop in the indices was worsened by the first quarter results of Infosys Technologies that were below expectations. The company announced a 15.72% increase in consolidated net profit to Rs1,722 crore for the first quarter ended 30 June 2011 over the Rs1,488 crore recorded in the corresponding period a year ago. However, net profit dipped 5.2% from the Rs1,818 crore in the previous quarter ended 31 March 2011, hurt by wage hikes and intense competition from rivals. The company maintained its full-year dollar revenue forecast of 18%-20%, which too was a disappointment for the market and the stock price slipped over 5% in early trade. The Infosys stock was the worst performer in the pack of Sensex stocks today, closing with a loss of 4.27%.
Slower-than-expected industrial output numbers for May that were announced around noon, dampened sentiments further. Industrial output, measured by the Index of Industrial Production (IIP) rose by just 5.6% from a year earlier. April's industrial output growth was also revised downwards to 5.8% from the earlier 6.3%, the government said. The growth in April-May was just 5.7% compared to 10.8% a year ago.
The weak market appeared to revive briefly on the news of the much-awaited Cabinet reshuffle, a little before noon. While the prime minister was expected to make changes that would address the problem of corruption and remove ministers who have not performed, there weren't any major changes apart from the induction of a few new faces. At about this time, the indices hit their intra day high, the Sensex at 18,589 and the Nifty at 5,580.
The market did not revive after that and as the European markets re-opened weak, the Sensex hit an intra-day low at 18,326 and the Nifty fell back to 5,497. At the close the Sensex had lost 310 points to 18,412 and the Nifty 90 points to 5,526.
Yesterday, we mentioned that the Nifty may find support at 5,525. Today, the Nifty broke this support but ended above it. We could see a pullback rally if the US market ends with minor losses.
Today, among the pack of 30 stocks in the Sensex, ONGC and Hindustan Unilever were the only stocks which were marginally positive. Other major losers besides Infosys were DLF (down by 3.84%), Mahindra & Mahindra (down by 3.02%), Jindal Steel (down by 2.99%) and Reliance Infrastructure (down by 2.89%). Only five stocks were positive in the Nifty.
The advance decline ratio on the National Stock Exchange (NSE) was a poor 427:1295.
Among the top gainers on the NSE were Weizmann Forex (up 20.03%), Savita Oil (up 12.92%), whereas the top losers were Jumbo Bag (down by 10.42%) and Vijay Shanthi Builders (down by 9.68%).
The European crisis had its effect on Asian markets across the board. The Hang Seng dropped the maximum (down by 3.06%), followed by the Seoul Composite (down by 2.20%) and the Taiwan Weighted (down 2.02%). The others dropped between 1.79% and 0.11%.
Narayan Varma addresses fourth Moneylife Foundation seminar on the Right to Information Act, saying people must build pressure so public authorities voluntarily disseminate imformation
Narayan Varma, chartered accountant and a consultant on several official committees for the effective implementation of the Right to Information Act, today said that "talks are going on at the Centre on expanding the scope of Section 4 of the RTI Act and its proper implementation."
Mr Varma was speaking at a seminar organised by Moneylife Foundation. He is a member of various government committees and civil society organisations dealing with the effective implementation of RTI.
He focused on Section 4 of the Act which primarily involves suo moto disclosure of information by public authorities. According to this section all records should be maintained and indexed properly in a way that facilitates easy access to information, gives citizens the right to inspect files physically without filing an application, and it states that public authorities should also voluntarily disseminate as much information as possible to the public through various domains and raise awareness through workshops and seminars.
"Unfortunately, the government has failed to provide guidelines to the public authorities on suo moto dissemination of information, neither do the bureaucrats have the political will to implement Section 4," Mr Varma said. "But we as citizens and activists must prevail upon them to change their attitude."
Replying to participants question about the rules and fees that are applicable to different public authorities for seeking information, Mr Varma said, "Though the RTI Act is the overarching legislation in this matter, there are individual laws formulated by states and public authorities like the courts. The norms and fees are also subject to such rules."
Mr Varma described several success stories of information seekers. He spoke about a man who was entitled to a substantial compensation from the government through estate duty, which was abolished more than 50 years ago. Mr Varma and his associates not only helped the man claim his inheritance, but they also helped the concerned government department to re-construct the lost documents on the basis of the documents that the man had with him.
"The other difficult thing to establish is who is a public authority," he said. "When the definition of public authority says that it has to be 'substantially funded' by the government, it opens the ground to debate. But we have got information in many cases by establishing that the institution concerned is a 'public authority'."
He talked about how activists had compelled some government-aided hospitals to put up information on their websites about the number of free beds reserved for the poor.
"Unfortunately, there are a lot of public authorities who do not favour voluntary dissemination of information," Mr Varma said. "They think it is a nuisance. But that mindset has to change. And we must create pressure to that effect."
Pranab Mukherjee reiterates that Centre will not overshoot its borrowing target of Rs4.17 lakh crore for the current year
New Delhi: Finance Minister Pranab Mukherjee today said the government will not overshoot its market borrowing target for this financial year, leaving enough credit available for the private sector.
"I am not going to expand borrowing and I will plan my borrowing in consultation with the Reserve Bank of India in a manner to ensure that the private sector is not elbowed out of the borrowing market," Mr Mukherjee told journalists after a board meeting of Nabard.
The government plans to borrow Rs4.17 lakh crore from the market this year, compared with Rs4.47 lakh crore last year, reports PTI.
Of this, the government is expected to borrow 60%, or Rs2.5 lakh crore, in the April-September period. With less scheduled government borrowing in the second half of the fiscal, sufficient credit would remain available for the private sector to borrow from market.
The net market borrowings, after making re-payments, would total Rs3.43 lakh crore in the current fiscal.
Mr Mukherjee also appeared confident that the government would be able to meet the revenue collection targets for the current fiscal. "I am not worried on the revenue front because there is revenue buoyancy and it is moving on expected lines," he said.
He said the government faced a "temporary cash flow problem" because of much higher tax refunds. "Instead of deferring the refund for the next two-three months, we made it upfront. But that does not alter the net kitty which will be available to me by the end of the year," he said.
The government expects gross tax revenues of Rs9.32 lakh crore this fiscal. As per the latest data available on the direct tax front, the gross collection in the April-June quarter was up by 23.91% at Rs1,04,136 crore.
Direct tax refunds recorded a 205.01% increase at Rs46,868 crore in the first quarter of 2011-12 as against Rs15,366 crore in the year-ago period.