Nifty, Sensex in a short downturn: Thursday closing report

Nifty has closed below the crucial level of 6,060 for a few days of decline.

The indices on Thursday opened slightly up at the start of the session but immediately went into the red. It then corrected again and stabilised around the previous day’s close for a while. However, post-lunch, the markets dipped and closed in the negative.

The Sensex opened at 20,580 before hitting an intra-day high of 20,630. It corrected and hit an intra-day low of 20,375 before closing at 20,416 (down 132 points or 0.64%). The Nifty opened at 6,099 and moved from the level of 6,111 to 6033 and closed at 6,046 (down 63 points or 0.71%). The National Stock Exchange (NSE) recorded a higher volume of 63.09 crore shares.

Today’s decline may be the downmove in a long time. The bulls are on the back foot. However, we feel that the market will try to rally after a few days of decline. The fall thereafter, may be a bigger one.

Overall, broad market suffered more declines than advances. Out of 1,221 stocks, 626 were in the red, 537 ended up in the green and 58 remained unchanged.

With the exception of auto, information technology and service indices which were down 1.20%, 3.54% and 1.54%, most indices were flat. The CNX Media index was up 1.51%.

Of the 50 stocks in the Nifty, 18 ended in the green. The top five gainers were Jaiprakash Associates (6.11%); Bharti Airtel (2.92%); ONGC (2.27%); ITC (1.76%) and BPCL (1.49%). While the top five losers were HCL Tech (7.09%); TCS (5.25%); IndusInd Bank (4.66%); L&T (4.11%) and Tata Motors (3.82%).

The US government shutdown impasse has been broken and US government services are expected to resume. Both the Republicans (led by John Boehner) and Democrats (led by President Barrack Obama) came to an agreement to raise the debt ceiling. However, this comes with strings attached. The US government would be given borrowing authority only till February 2014. Therefore, it is possible that another US shutdown could be imminent within the next four months, should the present US government breach the debt limit within the timeframe. The shutdown reportedly cost the US economy $24 billion.

Gold went up 1.87% during the initial hours of the trade in COMEX. Many investors also expressed concerns over the strength of the US dollar. In the currency markets the EUR/USD went up 0.69% at 1.36 per USD during early morning trade.

Asian markets were mixed, indicating lack of conviction. With the exception of Shanghai, Hong Kong and India, most Asian indices ended in the green (albeit barely). None of the markets exhibited any strength. Shanghai Composite was down 0.21%, Hang Seng was down 0.57%.

At the time of writing this piece, European indices were mostly in the red. The US Stock Futures were down too.


NSEL MD Anjani Sinha arrested

The managing director of scam-ridden NSEL has been arrested after months since the NSEL scam broke out

Anjani Sinha the managing director of scam-ridden exchange NSEL has been arrested. The arrest comes after months of sordid facts and revelations that NSEL is involved in a Rs5,600 crore scam that shook the very foundation of trust in the Indian capital markets. It also comes after the enforcement directorate (ED) questioned the managing director.

The NSEL scam happens to be the biggest of the multiple scams that have hit the commodities markets, thanks to poor regulation. However, no action had been taken by authorities so far, until now. Even the Financial Technologies managing director, Jignesh Shah, accused Anjani Sinha of defrauding him, though it remains to be seen whether action will be taken against the promoter company Financial Technologies for lapse in corporate governance.

The impact of poor regulatory framework, disempowered regulator, sloppy supervision and the lack of checks & balances was apparent when commodities markets were just coming to the fore.

Soon after suspicions were mounting that NSEL would default on its payments, the managing director went on record to say that NSEL has sufficient stocks in warehouses to cover the entire open exposure and in the event of any default, stocks will be sold to fulfill payment obligations. However, this never happened. It was found out that the warehouses receipts issued by NSEL were found to be bogus, similar to the one Harshad Mehta used for his scam. Nobody seemed to verify whether the goods actually existed or not in the warehouses. Brokers started giving out contract notes to hundreds of investors backed against just one warehouse receipt. This meant a disaster was waiting to happen.

NSEL soon suspended trading in select products. They announced a payment schedule which fell woefully short also. Some of the biggest brokers were staring at huge losses who mis-sold NSEL products to retail clients. Ironically, even NSEL biggest client, Indian Bullion Market Association (IBMA) is owned by Financial Technologies.

More shockingly, according to Economic Times, it was found out that Anjani’s wife punched as much as Rs40,000 crore of MCX trades, mostly leveraged trades and losses were incurred. No margins were collected either despite losses incurred by her.


BGR Energy wins overseas contract of $246 million

BGR Energy has secured its first engineering, procurement and construction (EPC) project worth $246 million for Al Nasiriya gas turbine power plant from Ministry of Electricity, Iraq

BGR Energy Systems Limited, a leading Indian EPC, balance of plant (BoP), power equipment manufacturing and contracting company said it won maiden EPC contract in international power markets worth $246 million for Al-Nasiriya power project having capacity of 500 Megawatts (4 x 125MW) from Ministry of Electricity of Iraq.

In a regulatory filing, BGR Energy said it won $246 million contract includes $240 of EPC and $6 million of piling work. The EPC contract includes American standard design, plant engineering, civil works, electro-mechanical BoP, erection, gas insulated switchyard, installation and maintenance. After signing this EPC contract company’s total order book now stands at Rs13,525 crore.

BGR Energy won this contract on 13 October 2013 in Baghdad, where other international companies from South Korea, like Hyundai and STX, and from Turkey Kineeses, Kayi Lotus and Enka also took part.

On Thursday, BGR Energy Systems closed 0.48% down at Rs112.90 on the BSE, while the benchmark Sensex ended 132 at 20,415


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