Nifty, Sensex on an upward trend – Friday closing report

Until Nifty closes below 8,425, the trend is positive


In Thursday closing report, we had mentioned that the NSE’s CNX Nifty may resume downtrend and only a close above 8,450 may negate the downward bias. On Friday, although the index opened marginally higher and moved in the negative for a few minutes, when it hit the intra-day low, the Indian benchmark made a sharp up move.


S&P BSE Sensex opened at 28,100 and hit a low of 28,038 while Nifty opened at 8,408 and hit a low of 8,399. Sensex moved up to the level of 28,361 and closed at 28,335 (up 267 points or 0.95%), while Nifty reached up to 8,490 and closed at 8,477 (up 75 points or 0.90%). NSE recorded a volume of 82.28 crore shares. India VIX fell 2.21% to close at 13.8525.
The government will be infusing Rs11,200 crore in public sector banks (PSBs) shortly, the finance ministry said in a statement after a review of the quarterly performance of PSBs on Thursday.
The Union Cabinet on Thursday gave its approval to launch "Integrated Power Development Scheme" (IPDS) with the objective of strengthening of sub-transmission and distribution network in the urban areas.
Coming back to stock markets, Sanofi (6.26%) was among the top two gainers in ‘A’ group on the BSE. The stock hit its 52-week high today. After Kotak Mahindra Bank announced that it was acquiring ING Vysya Bank, bank stocks were in demand today on the bourse. South Indian Bank (5.48%), Karnataka Bank (5.07%), Yes Bank (4.01%), Federal Bank (3.95%) and Kotak Mahindra Bank (3.95%) were among the top 13 gainers in the group. Kotak Mahindra Bank again hit a new 52-week high today.
Essar Oil (7.48%) was among the top two losers in ‘A’ group on the BSE. The company is in the process of delisting its shares. The Securities and Exchange Board of India on Wednesday announced changes to delisting regulations.
BHEL (3.00%) was the top gainer in Sensex 30 pack.  The company was recently in the news that it plans to set up two power plants of Rs3,000 crore in Russia. The exchange has sought clarification on it.
Infosys (1.79%) was the top loser in the Sensex 30 stock. The stock hit its 52-week high on Thursday. The company was in the news, as its back-office services unit was overcharging Apple Inc, which led to the exit of top executives.
On Thursday, US indices closed in the green. Factory activity in the US mid-Atlantic region grew at its fastest pace in two decades, US home resale jumped to their highest in more than a year in October and weekly jobless claims remaining below 300,000 for the 10th straight week.
Except KLSE Composite (0.72%) and NZSE 50 (0.56%) all the other Asian indices closed in the green. Shanghai Composite (1.39%) was the top gainer.
As per reports, China's central bank -- the People's Bank of China -- offered 50 billion yuan ($8.17 billion) of short-term funds to ease a shortage of cash in the financial system.
On Friday, China, unexpectedly cut interest rates. The People's Bank of China cut one-year benchmark lending rates by 40 basis points to 5.6%. It lowered one-year benchmark deposit rates by less—just 25 basis points. The changes take effect from Saturday. The Chinese central bank also took a step to free up deposit rates, allowing banks to pay depositors 1.2 times the benchmark level, up from 1.1 times previously.
European indices were trading in the green. US Futures too were trading higher.
European Central Bank (ECB) President Mario Draghi has said that the central bank is ready to step up the pressure and expand its asset-purchase programs, if inflation fails to show signs of quickly returning to the ECB's target.


Insider trading in ING Vysya stock?

There have been massive volumes and a hefty price rise in ING Vysya scrip over the past one month, before the Kotak Mahindra Bank merger deal. Will SEBI stir itself to enquire? Ironically, this comes at a time when SEBI has just announced new insider trading norms


Kotak Mahindra Bank, India's fifth-biggest lender by market value has just announced its acquisition of ING Vysya Bank. ING Vysya shareholders will get 725 shares of Kotak for every 1,000 they own. This exchange ratio indicates an implied price of Rs790 for each ING Vysya share based on the average closing price of Kotak shares during the one month to 19th November, which is a 16% premium to a like measure of ING Vysya market price. Sadly, somebody knew about this deal at the ING Vysya end. Just see how the stock price of ING Vysya shot up over the past month, despite the announcement of the merger just on Thursday.


If you look at the chart ‘Worth of 1,000 ING Vysya shares’, you would find that at the beginning of October 2014, the 1,000 ING Vysya shares were worth just 586 shares of Kotak Mahindra. This value went up marginally, but soon dropped to 573 shares of Kotak Mahindra for 1,000 shares of ING Vysya. From then on, it started gaining momentum, and reached up to 704 shares of Kotak Mahindra, as per the closing price on 20 November 2014, the date of the announcement. And what was the merger ratio? 725!



What caused this sudden increase? Did the price of Kotak Mahindra scrip fall drastically?


Or did the price of ING Vysya increased substantially during this period?


Over the past year, Kotak Mahindra Bank has more or less matched the sector performance denoted by the CNX Bank Index. On the other hand, ING Vysya Bank, which has a market-cap of one-sixth that of Kotak Mahindra Bank, struggled to gain momentum. As you can see in the below chart-


However, over the past month, while the Bank Nifty gained around 9% and Kotak Mahindra gained 15%, ING Vysya Bank has surprisingly shot up by 29%. Most of these gains came from the beginning of November 2014. ING Vysya shot up by 25% to Rs814 as on 19th November from Rs649 as on 5th November. Over the same period, Kotak Mahindra and the Bank Nifty gained a mere 2%.


Trading volumes in ING Vysya too, shot up drastically. With an average of 17,000 shares traded per day in October 2014, the number of shares traded per day in ING Vysya scrip shot up to 52,821, for November 2014 (up to 19 November 2014). On the other hand, the number of shares traded per day in Kotak Mahindra Bank fell to an average of 46,407 shares from 65,215 shares traded per day in October 2014.


This clearly shows that there was a group of shareholders privy to some kind of insider information which took the stock price of ING Vysya up.


Will the regulator, SEBI, investigate? Or turn a blind eye?


Last year, we had published a similar case of insider trading in Infosys when they announced that NR Narayana Murthy would come back as the executive chairman.


(Read: Someone knew Narayana Murthy is coming back and traded on it) We have not heard of any investigation yet and most likely, we may not see an investigation in this case too.



Parul Aggarwal

2 years ago

Falling Moral character
in turn economic disaster for
minority shareholders !!!

SEBI RBI - All compromised


2 years ago

Insider trading will be there whatever the SEBI does. The degree may come down but it cannot be eliminated.

Davidson D

2 years ago

Insider Trading can never be curbed. There would be lots of benami transactions taking for which it would be difficult to follow the trail.



In Reply to Davidson D 2 years ago


Babubhai Vaghela

2 years ago

Let Narendra Modi IB tell factual position on Insider Trading.

Saradha Scam: Trinamool Congress MP Srinjoy Bose arrested

Srinjoy Bose, who owns a Bengali daily, had entered into a business transaction with Saradha group chief Sudipto Sen


The Special Crime Branch of Central Bureau of Investigation (CBI) on Friday arrested Trinamool Congress's Rajya Sabha MP Srinjoy Bose in connection with the Saradha ponzi scam, say media reports. Bose and West Bengal's Textiles Minister Shyamapada Mukherjee were summoned by the CBI.


Bose, who owns a Bengali daily, had entered into a business transaction with Saradha group chief Sudipto Sen.


"I have been asked to depose as a witness. I will co-operate with the agency as a responsible citizen and no wrong has been committed on my part," he had told reporters while entering CBI office.


CBI had also summoned former Trinamool MP Somen Mitra to appear before the sleuths for questioning. Mitra has now rejoined Congress.


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