Nifty is drifting sideways with low volumes
Yesterday we had mentioned that the benchmark may move sideways. Weak trading on the bourses up to around 1.40pm was followed by a surge which continued up to around 2.45 pm when the indices hit their intra-day high. After this the indices gave up some of the gains but closed near the intra-day highs.
Sensex opened at 26,789 while Nifty opened at 8,002. The indices hit a low at 26,764 and 7,995 and managed staying above yesterday’s low. Sensex hit a high at 26,907 and closed at 26,881 (up 128 points or 0.48%), while Nifty hit a high at 8,038 and closed at 8,028 (up 36 points or 0.45%). NSE recorded a volume of 65.20 crore shares. India VIX fell 1.42% to close at 13.3225.
Manappuram Finance (9.98%) was among the top three gainers in the A group. It hit its 52-week high today. PMC Fincorp (10.15%) was the top loser today, it gave up some gains today after hitting its 52-week high on Monday.
Sun Pharma (4.31%) was the top gainer in the Sensex 30 pack. Sun Pharma is in the process of acquiring Ranbaxy, it gained after Ranbaxy's consolidated numbers showed improved performance over the year ago period.
Today again Hindustan Unilever (0.83%) was at the losing end among the Sensex 30 stocks. Its board declared an interim dividend of Rs 6 per equity share of face value of Re 1 each for the FY14-15.
US indices closed flat on Monday. Yesterday's data indicated uneven economic growth in the US. Contracts to purchase previously owned homes rose less than forecast in September, showing housing will take time to gain momentum. Another release showed growth in services activity slowed this month, while the Dallas Fed's gauge of regional manufacturing fell.
Asian indices showed mixed performance. Shanghai Composite (2.07%) was the top gainer while Jakarta Composite (0.46%) was the top loser.
Data from China's statistics bureau showed profit as China's industrial companies grew 0.4% last month, compared with a 0.6% drop in August.
European indices were trading in the green. US Futures too were trading higher.
Will RBI insist on one credit report free annually?
Dr Kirit Somaiya, Member of Parliament (MP), who inaugurated Moneylife Foundation’s Credit Helpline, narrated the story of how former Union minister Suresh Prabhu found himself marked a defaulter for no fault of his. Apparently, a telephone company had failed to disconnect a mobile number and was piling on the minimum charges with interest that made him a ‘defaulter’.
This story is repeated all over the country with multiple variations; none of them has the same quick resolution that Mr Prabhu probably had. Some multinational banks have sold off their defaulter portfolios to recovery agencies without any attempt to clean them up. Consequently, thousands of people have been served legal notices with exaggerated demands. This is forcing victims to seek help from ‘debt doctors’ or ‘credit repair’ agencies who, along with credit recovery agencies, are indulging in extortion!
A third set of people are completely innocent victims of an identity mix-up within credit information companies (CICs) whose data algorithms match up multiple borrowings of people from different lenders to create a credit profile. Sometimes, this goes horribly wrong and people who have no borrowing or good credit record are shown as defaulters. Moneylife Foundation has helped resolve a couple of such cases.
The biggest issue, though, is the absence of information. The Credit Information Bureau of India Limited (CIBIL) is currently running an advertising campaign that grossly exaggerates the advantages of a high credit score. CIBIL enjoys the first-mover advantage and has become the generic name for credit scores. This also adds considerably to its bottom-line because it is allowed to charge for its credit reports and collects a hefty Rs450 to give you your credit score!
This historical and extortive practice needs to be changed. In the US, every person with a credit history is entitled to get one free credit report from every credit rating agency. Typically, an American will get an annual credit report from at least four credit bureaus operating there. The same big global names operate in India—TransUnion with CIBIL, Experian and Equifax (with CRISIL) and a fourth which is called Crif.
One of the first issues that Moneylife Foundation would like to take up with the Reserve Bank of India, and through Dr Kirit Somaiya’s promise of help, is that Indians too should get their credit report free every year at least by email (to keep costs low). This will ensure that a Suresh Prabhu is not shocked at finding himself a defaulter when his son is going abroad. And innocent victims of identity mix-ups will know of problems long before they apply for a loan.
But, as Dr Somaiya said, this is only the beginning. A lot more needs to be done, including on the issue of deliberate mis-selling of insurance and wealth management products by banks. But this will happen only when regulators are forced to have an open dialogue with financial consumers and are made accountable to people. Unfortunately, that is still a far cry.