The uptrend in the last two days was stymied in a yet another choppy trading session today. Nifty is still on an uptrend. The first sign of weakness will be a close below 6150 tomorrow
The markets on Tuesday opened weakly, and nervously stayed in the green through the morning session before falling into the negative territory, albeit marginally, where it remained there through the remainder of the trading session. The choppiness was apparent throughout the day, signifying lack of direction and uncertainty. Nifty managed to hold the crucial psychological level of 6,200.
The S&P BSE Sensex opened at 20,863 and touched an intraday high of 20,948 before correcting downwards to an intra-day low of 20,810 in the afternoon session. It closed at 20,864 (down 28.92 points or 0.14%). Nifty opened at 6,192, hit a high of 6,220 then hit an intra-day low of 6,181 before clawing its way back to at 6,202 (down 2.15 points or 0.03%).
The number of advances outpaced the number of declines. Out of 1,224 stocks, 778 were up, 404 were down and 42 were unchanged. The National Stock Exchange witnessed much higher volumes compared to the two preceding trading sessions with 78.08 lakh shares were traded. High volume of trading without meaningful advancement after a long rally usually signifies that the bulls are running out of ammunition.
Most sectoral indices were in the green with exception of CNX Auto, CNX Finance, CNX FMCG, CNX MNC and CNX Realty, which were down marginally. Small-caps index finished strongly, moving up 1.19%.
Of the 50 stocks in the Nifty, the advanced to decline ratio was split almost equally, which saw 24 stocks advance and 25 decline and one unchanged. The top five gainers were Tata Power (2.75%), HCL Technologies (2.72%), Power Grid (2.46%), Axis Bank (2.05%) and GAIL (2.03%). The top five losers were Hindalco Jindal Steel (-1.82%), Ranbaxy (-1.45%), Hero Motors (-1.42%), Mahinda & Mahindra (-1.42%) and DLF (-1.20%).
Poor governance and regulatory hurdles claimed a major foreign miner: BHP Billiton. BHP Billiton has reportedly forfeited nine oil & gas blocks in the country, citing regulatory delays from the government. At a time when India is desperately seeking foreign capital to close its deficit, this would come as a big blow.
Asian markets ended mixed. Only Indonesia’s Jakarta index finished poorly, down 1.43%. Majority of the European markets too were trading in the green following US jobs data which was interpreted as positive. The US futures were trading in the green too.
Following Jignesh Shah’s willingness (?) to step down, it appears like Multi Commodity Exchange of India Ltd (MCX), the country's largest commodity exchange, will be run by the board of directors. Will the board have much interest in defending its market position and ensuring its growth? In a meeting, MCX board on Tuesday agreed to give Mr Shah more time (to step down) till the Forward Markets Commission (FMC) takes a decision on this matter.
Mr Shah is the non-executive chairman of MCX, while the only other person related with the promoter group is Paras Ajmera. While commodities market regulator FMC has appointed four directors, the National Bank for Agriculture and Rural Development (NABARD) has nominated one director on the MCX board. In short, MCX would be run by all nominated persons who may or may not have any interest in the growth of the company like a promoter. Nominees appointed by government-controlled entities may come and go, but what about the future of MCX itself? It would be interesting to see how the marquee MCX investors view this development.
Among the MCX’s investors are Euronext NV, Merrill Lynch Holdings, BNP Paribas, Blackstone and the Government of Singapore. However, with Mr Shah ready to move out of the picture, it would be hard for investors to expect a secular growth for the exchange.
At present, four independent directors, RM Premkumar, Ravi Kamal Bhargava, Dinesh Kumar Mehrotra and Santosh Kumar Mohanty are nominees of FMC. P Satish is the nominated by NABARD on MCX board as independent director. Paras Ajmera, the nominee of Financial Technologies (India) Ltd—FTIL, the main promoter entity of MCX, is a non-executive director of MCX. Just a few days ago, Shreekant Javalgekar, managing director and chief executive of MCX resigned. This leaves complete control of MCX in the hands of people who are not promoters. NABARD holds 3.06% stake in MCX but is not a promoter or a promoter group entity.
Mr Premkumar is a retired officer from the Indian Administrative Service (IAS) and he has been appointed as interim chairman of MCX. Mr Bhargava, another retired IAS officer was appointed as chairman of audit committee of MCX. Mr Mehrotra, who retired as chairman of Life Insurance Corp of India (LIC) in May was nominated by FMC on MCX board in July 2013. FMC also appointed Santosh Kumar Mohanty as director in place of Prakash Apte.
In a regulatory filing, MCX said its board has appointed five new directors. FMC has nominated G Ananth Raman, a retired officer from Indian Revenue Services (IRS) and Pravir Vohra as independent directors. With the two new appointments, FMC now has six nominee directors on MCX board.
The board also decided to appoint three representatives from banks as shareholder director. This includes KN Raghunathan (general manager for treasury at Union Bank of India), Sanjaya Agarwal (general manager for treasury and investment at Bank of Baroda) and P Paramasivam (general manager at Corporation Bank).
After the new appointments, the MCX board will have over 50% members nominated by FMC alone. Except Mr Shah and Mr Ajmera rest of the directors on MCX board are either nominees or representatives of non-promoter entities.
As per FMC norms, the board must have 50% independent directors. However, with Mr Shah’s willingness to step down, the MCX board will have over 90% nominated directors. This not only raises a big question over the future of MCX but also makes foreign investors to re-consider their decision to stay invested. After all, who would be interested, if there is nobody to grow the company?
NK Proteins' MD Nilesh Patel, also a son-in-law of NSEL's former chairman was arrested today. The EOW of Mumbai police arrested Patel who owed Rs930 crore the NSEL
Nilesh K Patel, managing director of NK Proteins Ltd, one of the biggest defaulters of National Spot Exchange Ltd (NSEL), was arrested by the economic offences wing (EOW) of Mumbai police. NK Proteins owed Rs930 crore to the troubled NSEL.
Patel is son-in-law of politician Shankarlal Guru, who resigned as chairman of NSEL on 19th August. In the same month, NSEL filed complaint against five of its defaulting members before the investigation authorities. This includes Ark Imports Pvt Ltd, Lotus Refineries Pvt Ltd, NK Proteins Ltd, Vimladevi Agrotech Ltd and Yathuri Associates.
However, Guru claimed lack of knowledge regarding his son-in-law's dealing or defaults. In a statement, NSEL Investors Forum (NIF), a representative body of investors in Spot Exchange, had said, "It clearly shows his (Guru's) complicity in the fraud and by resigning from chairmanship his involvement cannot be washed away. Guru should at least give some credit to the intelligence of investors and general public. A chairman cannot be an innocent bystander when a fraud of Rs5,500 crore is being committed and almost 20% has gone to his son-in-law. Investors are confident that the law will catch up with him sooner or later".
Speaking with PTI, Guru, who is also former member of Gujarat assembly, had said, “I understand he is my son-in-law, but if he has done the wrong thing, he should be punished for it. I have nothing to do with this. I am being associated with it as I was the board chairman".
NSEL, promoted by Jignesh Shah-headed Financial Technologies (India) Ltd (FTIL), is has failed to settle Rs5,600 crore due to 148 members/brokers, representing 13,000 investor clients, after it suspended trade on 31st July on government direction.