While the indices may rally intermittently, they are headed lower over the next few days
We had mentioned in our Friday closing report that the S&P BSE Sensex and S&P CNX Nifty, both the Indian benchmarks, may give up more gains in the coming sessions. On Monday, both the indices moved in a narrow range for an hour and then suddenly weakened. After hitting the day’s low the indices tried recovering, which however could not happen.
The Sensex opened at 26,173 while Nifty opened at 7,793. After hitting the day’s high almost at the opening levels, the indices moved lower to hit the day’s low at 25,900 and 7,723, respectively. Both the Sensex and the Nifty closed at their five day closing lows (including today). Sensex closed at 25,991 (down 136 points or 0.52%) while Nifty closed at 7,749 (down 42 points or 0.54%). The NSE recorded a low volume of 70.72 crore shares. India VIX rose 0.72% to close at 14.3225.
Among the other indices on the NSE, the only four gainers were IT (0.42%), Pharma (0.39%), MNC (0.36%) and FMCG (0.34%). The top five losers were Realty (2.80%), CPSE (1.96%), Metal (1.36%), PSE (1.32%) and Media (1.30%).
Of the 50 stocks on the Nifty, 16 ended in the green. The top five gainers were Hindustan Unilever (3.35%), HCL Technologies (1.84%), PNB (1.76%), Cairn (1.72%) and Sun Pharma (1.28%). The top five losers were DLF (-5.23%), Coal India (-3.18%), UltraTech Cement (-3.17%), BPCL (-2.63%) and Ambuja Cements (-2.62%).
Of the 1,596 companies on the NSE, 519 companies closed in the green, 1,023 companies closed in the red while 54 companies closed flat.
India's stock markets will remains closed tomorrow, 29 July 2014, for Ramzan Eid.
India's measures to raise the investment limit for foreign institutional investors (FIIs) in government bonds is a positive for the country's credit profile, since it will help stabilise domestic interest and currency rates, Moody's Investors Service said on Monday. The Reserve Bank of India last week increased the limit available for foreign institutional investors by $5 billion to $25 billion but kept the overall limit intact by lowering the limits for long-term foreign investors such as sovereign wealth funds. Moody's rates India with a "Baa3" rating, the lowest investment-grade rating, and a "stable" outlook.
At a meeting of the World Trade Organization in Geneva on Friday, India said it wouldn't support a "trade facilitation" agreement without a parallel agreement allowing developing countries more freedom to subsidize and stockpile food.
Hindustan Unilever (3.69%) was among the top two gainers in the ‘A’ group on the BSE, and was the top gainer in the Sensex 30 pack. The company posted a net profit of Rs1,056.85 crore for the quarter ended June 2014, as compared to Rs1,019.25 crore for the quarter ended June 2013. Its sales increased from Rs6,809.04 crore to Rs7,716.34 crore for the relevant period.
Coal India (-3.12%) was the top loser among the Sensex 30 stocks. The Coal Ministry on Monday pushed the state-controlled company Coal India Ltd (CIL), to cut its e-auction volume to 25 MT in FY15 from 58 MT last year, and instead feed the coal-fired power projects that are reeling under severe fuel scarcity. However, the CIL Board is not in a favour of lowering the e-auction quantity. The Coal India Board will be holding a meeting on August 12 to discuss the possibility of lowering the e-auction quantity.
Central Bank of India (7.24%) was the top gainer in the ‘A’ group on the BSE. The Bank posted a net profit of Rs191.60 crore for the quarter ended June 2014 as compared to Rs21.93 crore for the quarter ended June 2013. Its total income increased from Rs6,443.45 crore to Rs6,927.71 crore for the same period.
Wockhardt (7.80%) was the top loser in the ‘A’ group on the BSE. The company was in the news recently because of rumours of a stake sale, which was later denied by Wockhardt. It was also reported that the company was in the final stages of receiving much-awaited regulatory approvals for its Chikalthana unit in Maharashtra.
US indices closed Friday in the red.
Except for NZSE 50 (0.14%) and Taiwan Weighted (0.20%) all the other Asian indices which were trading today closed in the green. Shanghai Composite (2.41%) was the top gainer.
Chinese industrial-company profits jumped the most last month, since September, yesterday's data showed. Profits at industrial companies in Asia's largest economy increased by 17.9% in June compared to a year earlier after gaining 8.9% in May, data from China's statistics bureau showed. It was the biggest gain since an 18.4% climb in the September of last year and came after a private gauge of Chinese manufacturing advanced to an 18-month high, data last week showed.
European indices were trading flat, as were the US premarket futures.
Minister of state for civil aviation answers MP Rajeev Chandrasekhar but evades the question on fixing of responsibility for the downgrade
The Indian Government is working towards regaining the country's top aviation safety rating from the Federal Aviation Administration (FAA). FAA, the American aviation regulator has cut India's safety rating to Category II from Category I causing embarassment for the country as well as for the Directorate General of Civil Aviation (DGCA). India had enjoyed the Category I rating since 1997 and the downgrade to Category II, the first for the country, places it in same category as Zimbabwe and Indonesia.
Replying to a question asked by independent member of Parliament (MP) Rajeev Chandrasekhar in Rajya Sabha, GM Siddeshwara, minister of state for civil aviation, said, the FAA downgraded India's aviation safety to Category II in January this year and his ministry is working hard to regain the earlier rating.
The FAA conducts audits of safety standards and processes in the aviation sector for different countries that fly airlines into the US. In other words, carriers from countries downgraded to Category II are barred from expanding operations in the US.
“The FAA on 31 January 2014 informed DGCA that India has been assigned Category II from Category I, which India had been holding since 1997. The Category II was assigned primarily due to the finding related to lack of sufficient number of regular Flight Operations Inspectors (FOIs) resulting in DGCA's inability to have effective safety oversight,” the Minister said, pointing to the reason for the downgrade.
The minister, however, evaded the question on fixing of responsibility for the downgrade and did not specify who had been held responsible for the same.
Mr Chandrasekhar had asked the Government to detail the steps it had taken to address this downgrade and mitigate the security risk that this downgrade implies. In response the minister said, “The DGCA has taken immediate steps to address the open findings of Federal Aviation Administration audit and post December 2013 visit of FAA, the DGCA has completed actions on six out of seven open findings. To address the remaining one open finding, 75 posts of Chief Flight Operations Inspector, Dy. Chief Flight Operations Inspector, Senior Flight Operations Inspector and Flight Operations Inspector have been created, against which, 35 FOIs have already been appointed.”
In January, when the downgrade was first announced, Ajit Singh, the then Aviation Minister had also given a similar answer, pointing to 29 out of 31of the FAA's findings having been rectified. The question is, why couldn't the 7th open finding as noted by incumbent minister Siddeshwara, be rectified on an urgent basis too, the MP asked.
Meanwhile, according to media reports, the DGCA has sought a meeting with the FAA next month to appraise the US aviation regulator on steps taken by India and also to seek another audit about the grading.
The Category downgrade could severly affect any expansion plans of Indian airlines into new US routes or even on existing routes. Often, the FAA upgrade or downgrade acts as a cue for other air safety organistions to follow suit, even though this has not happened yet. With all but the issue of Flight Safety Inspectors sorted out, the DGCA is looking to seek a fresh audit from the FAA, to restore its Category I rating as before. This will not be possible before the recruitment of the required safety personnel is completed, and which has been pending since Februray.
RBI cancelled registration of GE Strategic Investments India, Profound Exports, Two Brothers Holding, Swank Services, Praxis Consulting and Information Services and Credible Microfinance, all based in Delhi
The Reserve Bank of India on Monday cancelled certificate of registration (CoR) of six non-banking financial companies (NBFCs) from the national capital.
According to an RBI statement, these Delhi-based NBFCs, whose CoR has been cancelled, are GE Strategic Investments India, Profound Exports Pvt Ltd, Two Brothers Holding Ltd, Swank Services Pvt Ltd, Praxis Consulting and Information Services Pvt Ltd, and Credible Microfinance Ltd, formerly known as Credible Securities & Finance Pvt Ltd.
Following cancellation of registration certificate, these companies cannot transact the business of a non-banking financial institution, the central bank said in the statement.