Stocks
Nifty, Sensex in a sideways churn: Weekly Market Report
The Indian indices will move in a narrow weekly range of 7,200-7,400
 
The BSE 30-share Sensex closed the week that ended on 30th May, at 24,217 (down 476 points or 1.93%), while the NSE’s 50-share Nifty closed at 7,230 (down 137 points or 1.86%) for the week. We had mentioned in our previous week’s report that the further move on the Sensex, Nifty may be affected by the reforms that may be brought by the new incoming government.
 
In spite of a higher opening gap Monday the Nifty lost its strength by the end of the session and closed sharply lower from the day's high. Nifty closed at 7,359 (down 8 points or 0.11%). On Monday, market looked ahead for the BJP leader Narendra Modi taking oath as the Prime Minister and the reports making round that the Modi-led government will have smaller cabinet, with one cabinet member heading a cluster of merged ministries. The focus is to increase coordination between different government departments and facilitate rapid decision-making.
 
On Tuesday, Nifty headed further lower and closed at 7,318 (down 41 points or 0.56%). RBI announced its next monetary policy review on 3 June 2014. Reserve Bank of India Governor Raghuram Rajan said that fighting inflation would continue to be a top priority, although the central bank will aim to strike a balance between promoting economic growth and containing inflation.
 
India's current account deficit narrowed sharply to $1.2 billion (0.2% of GDP) in Q4 March 2014, from $18.1 billion (3.6% of GDP) in Q4 March 2013, which was also lower than $4.2 billion (0.9% of GDP) in Q3 December 2013.
 
Ahead of May 2014 futures & options expiry on Thursday, Nifty closed at 7,330 (up 12 points or 0.16%) on Wednesday.
 
The Reserve Bank of India doubled the amount of forward contracts, importers can book, to 50% of their average three years import turnover, or previous year's actual import turnover, whichever is higher. The earlier limit for such contracts was 25%.
 
Nifty recorded the highest daily percentage loss since 13th February on Thursday. Nifty closed at 7,236 (down 94 points or 1.28%). The prime minister Narendra Modi unveiled top 10 policy priorities of the government on Thursday which included infrastructure and investment reforms. He has also asked his ministers to set 100-day agenda and ensure time-bound delivery.
 
On Friday, the market closed in the negative again. For most of the trading session the indices traded in the positive. Nifty closed at 7,230 (down 6 points or 0.08%). Reserve Bank of India governor Raghuram Rajan said on Friday he is planning to make a joint effort with the new government to bring down high inflation.
 
According to media reports, the department of industrial policy & promotion (DIPP) has prepared a draft Cabinet note that proposes to allow up to 100% foreign direct investment (FDI) in defence as part of its plan to boost domestic manufacturing. DIPP has proposed three different caps for FDI in defence - 49%, 75% and 100% - which propose to incentivise technology transfer. Currently, only 26% FDI is allowed in defence manufacturing, though the government can clear more foreign investments on a case-to-case basis.
 
For the week, among the other indices on the NSE, the top two performers were Pharma (3%) and Media (2%) while the worst two performers were PSU Bank (8%) and CPSE  (7%).
 
Among the Nifty stocks, the top five stocks for the week were Tech Mahindra (8%); Hindustan Unilever (7%); Dr. Reddy's Lab (7%); Mahindra & Mahindra (7%) and Grasim Industries (6%), while the top five losers were IDFC (12%); Bank of Baroda (12%); Gail (11%); BHEL (11%) and Punjab National Bank (9%).
 
Of the 1,466 companies on the NSE, 544 companies closed in the green, 902 companies closed in the red while 20 companies closed flat.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 
Top ML sectors   Worst ML sectors  
Cement 2% Oil & Gas -8%
Software & IT Services 1% Real Estate -7%
Shipping 0% Energy -5%
Auto Components 0% Non-Ferrous Metals -5%
Pharma -1% Refineries -4%

 

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J&K Bank shares hit by rumours of NPAs worth Rs2,500 crore
Total amount of bad loans or NPAs of J&K Bank could be five times more of what the lender has shown, says the newspaper Greater Kashmir. The stock hit lower circuit 
 
Jammu & Kashmir Bank (J&K Bank) shares tumbled 20% on Friday following reports of the lender's alleged concealment of stressed assets worth Rs2,500 crore. During the morning trading J&K Bank hit its lower circuit at Rs1,472.25 but later recovered to close the day 18.4% down at Rs1,501 on the BSE.
 
According to a report from Greater Kashmir, in its latest balance sheet, three loans amounting to Rs1,100 crore—which by regulatory and prudential norms are non-performing assets (NPAs)—have not been classified and declared so by the Bank. 
 
The report mentions three big loans, Rs650 crore given to a Kolkata-based company engaged in agro and ancillary business, second of Rs400 crore given to a Mumbai-based real estate company and third, Rs100 crore given to a Hyderabad-based company by J&K Bank.
 
Quoting sources, who do not want to be named, Greater Kashmir, said, "The Auditors while scrutinising the loan accounts of borrowers outside J&K have found ‘shocking’ transactions in scores of such accounts, revealing the “clandestine” intent of the loan sanctioning and disbursing authorities." The sources told the newspaper that such ‘technically unsecured and non-performing’ loans total to around Rs2,500 crore.
 
“The stressed assets of around Rs2,500 crore are over and above Rs783 crore of Gross NPA that the bank has declared in its balance sheet. In addition, the bank has restructured loans of Rs1,575 crore. Even with an industry mortality of 33%, this means NPAs of another Rs500 crore, taking the Gross NPA to around Rs4,000 crore. In reality the total amount of NPA of the bank could be five times more of what the bank has shown. This takes the NPA ratio to nearly 5%, which will be among the highest in the industry,” the sources told the newspaper.

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Sensex, Nifty continues to trade in the range: Friday closing report
Nifty is unlike to break out soon
 
The Indian market witnessed a directionless session Friday wherein the indices moved in a range. The benchmark indices opened in the positive and immediately rose to the day’s high. The BSE 30-share Sensex opened at 24,301 and hit a high at 24,354 while the NSE 50-share Nifty opened at 7,255 and rose to the level of 7,273. The benchmarks immediately plunged lower and entered in the negative zone. At around 2.25pm, Sensex and Nifty hit the day’s low at 24,164 and 7,218, respectively. Sensex closed at 24,217 (down 17 points or 0.07%) while Nifty closed at 7,230 (down 6 points or 0.08%). The NSE recorded a volume of 133.60 crore shares. India VIX fell 2.13% to close at 16.3350.
 
Reserve Bank of India (RBI) governor Raghuram Rajan said on Friday he is planning to join hands with the country's new government to bring down high inflation.
 
 Indian economy grew 4.7% in 2013-14, lower than the advance estimate of 4.9 percent growth put out earlier this year by the Central Statistics Office (CSO). The latest GDP growth estimate of 4.7% is however higher than the 4.5% GDP growth recorded in 2012-13.
 
According to media reports, the department of industrial policy & promotion (DIPP) has prepared a draft Cabinet note that proposes to allow up to 100% foreign direct investment (FDI) in defence as part of its plan to boost domestic manufacturing. DIPP has proposed three different caps for FDI in defence - 49%, 75% and 100% - which propose to incentivise technology transfer. Currently, only 26% FDI is allowed in defence manufacturing, though the government can clear more foreign investments on a case-to-case basis.
 
NTPC (4.99%), among the top two gainers in the Sensex 30 pack, is in news as the deadline is nearing for BSES entities to pay their dues to the company. SBI (2.24%) was the top loser in Sensex 30 stocks as banking stocks were down today. Max India posted weak March 2014 quarter result. The board of directors of the company at its meeting has recommended a final dividend of 90%, i.e., Rs. 1.80 for every equity share of Rs2/- each for the financial year 2013-14. But the stock was the top gainer (8.94%) in the ‘A’ group on the BSE.
 
Jammu & Kashmir Bank was alleged to be hiding stressed assets worth Rs2,500 crore by a local media. However in an interview and chief executive officer, Mushtaq Ahmad has clarified that this is factually incorrect and an exaggerated figure and a mischief being played by someone. He mentioned that the actual stressed assets usually remains in the between Rs500-700 crore. The stock was the top loser (18.42%) in the ‘A’ group of the BSE.
 
The US economy suffered its first contraction since 2011 last quarter. Gross domestic product fell at a 1% annualized rate revised Commerce Department figures showed in Washington. However, US indices closed in the positive on Thursday. 
 
Except for Hang Seng (0.31%) all the other Asian indices closed in the negative. Jakarta Composite (1.84%) was the top loser.
 
European indices showed a mixed performance while US Futures were trading marginally lower.

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