Stocks
Nifty, Sensex to give up some gains – Tuesday closing report

Nifty may dip to around 8,850

 

We had mentioned in last week’s closing report that NSE’s CNX Nifty’s sharp up move may slow down and the index may turn volatile around 8,800. On Tuesday, the positive opening on Nifty was followed by a range bound session up to around 2pm. During this period, the 50-share index moved into negative for few minutes while the S&P BSE Sensex managed to stay above Friday’s close during the entire session. After 2pm, both the benchmarks regained strength and hit a new all-time high.
 
The Sensex opened at 29,452 while Nifty opened at 8,871. Sensex moved from the low of 29,286 to the high of 29,619 and closed at 29,571 (up 292 points or 1.00%). Nifty moved from 8,825 to 8,925 before closing at 8,911 (up 75 points or 0.85%). NSE recorded a volume of 90.68 crore shares. India VIX rose 1.12% to close at 18.0850.
 
On Sunday, India and the US broke the 7-year-old logjam in operationalizing their landmark civil nuclear deal besides deciding to jointly produce military hardware including advanced unmanned aerial vehicles during talks between Prime Minister Narendra Modi and US President Barack Obama.
 
Last week, the Reserve Bank of India (RBI) relaxed rules for companies and banks to restructure and reschedule existing overseas borrowings by permitting an increase in the total cost of external commercial borrowing (ECB). The RBI has also allowed changes in the drawdown and repayment schedules of ECB. However, the easing of rules will not be applicable for foreign currency convertible bonds, the RBI said.
 
There are reports that senior officials from India and the US will meet after the forthcoming budget session to identify and prioritise sectors for investments and technology sharing.
 
Finance Minister Arun Jaitley has said fiscal deficit targets for current year are likely to be met and manufacturing sector is showing turnaround signs.
 
Coming back to stock markets, Jet Airways (14.44%) was the top gainer in ‘A’ group on the BSE. The stock hit its 52-week high today. It was in the news recently, as it came out with attractive offers for economy fares on Jet Airways’ domestic network with travel validity from March 1, 2015 to September 30, 2015.
 
Gujarat State Fertilizers & Chemicals (11.78%) was the top loser in ‘A’ group on the BSE.
All the bank stocks in the Sensex 30 pack were among gainers. Axis Bank (4.83%) was the top gainer. Other gainers were ICICI Bank (3.58%), HDFC Bank (2.98%) and SBI (0.75%).
 
Dr Reddy’s Lab (4.01%) was the top loser in Sensex 30 stock. The stock fell ahead of its December 2014 quarter result, when the market is anticipating the company results to lag market expectations.
 
US indices closed Monday in the green. Except for Shanghai Composite (0.89%) and Hang Seng (0.41%) all the other Asian indices closed in the green. Nikkei 225 (1.72%) was the top gainer.
 
There was optimism that the actions of Greece's new government won't force the nation to leave the euro currency bloc.
 
On Tuesday global credit rating agency Moody's Investor Services said Asia will be resilient to global macro-economic challenges in 2015.
 
European indices were trading sharply lower. US Futures too were trading deeply in the red.
 
Standard & Poor's Ratings Services on Monday lowered Russia's long-term foreign currency rating to a junk grade of BB+ from BBB-.
 

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Home sales may not recover in FY2016 says India Ratings

Credit metrics of real estate companies would continue to deteriorate next fiscal year, as demand would remain subdued amid high property prices even as inventory was being built-up using bank funding, the ratings agency says

 

Housing sales are unlikely to recover in the next fiscal as high property prices have made residential units unaffordable for end-users, says a report from India Ratings & Research (Ind-Ra). The ratings agency has maintained a negative to stable outlook on the real estate sector in India.
 
The ratings agency said credit metrics of real estate companies would continue to deteriorate next fiscal year, as demand would remain subdued amid high property prices even as inventory was being built-up using bank funding.
 
“The sales of residential units are not likely to recover during FY2016. Any improvement in property demand will depend on not only a positive change in consumer expectations of economic growth, job and income prospects but also lower property prices."
 
“Property prices have remained high and unaffordable to end-customers. While economic growth is likely to improve in FY2016, property prices might not correct. This could lead to end-customers postponing purchase decisions,” India Ratings & Research said in a statement.
 
However, Ind-Ra said it expects demand for both office and retail spaces to pick up during FY2016. “This is because better economic growth will boost net hiring by IT/ITeS and banking financial services insurance sectors and better customer sentiments will revive the expansion plans of both local and foreign retailers,” it said.
 
The rating agency said interest of investors in the sector remains high, especially in rent-yielding commercial properties.
 
“The relaxation of thresholds for foreign direct investment in real estate projects is likely to improve fund inflow. The announcement of the guidelines for introduction of real estate investment trusts and the clarification of tax pass-through status for such vehicles are also positive for the sector, as they improve fund availability to companies owning rent-yielding assets,” it added.
 

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NITI Aayog's first meeting on 6th February?

The meeting is likely to bring more clarity on role NITI Aayog will play in evolving model for revenue generation and expenditure realisation

 

Prime Minister Narendra Modi will spell out the functional roadmap of the newly created National Institution for Transforming India (NITI) Aayog at its first meeting being scheduled on 6th February.
 
The members of the Aayog would have first-hand experience of Modi's expectation from the new body and also help them in finalising the plan of action of the new body which was formed on 1st January.
 
"The first meeting of the NITI Aayog is being scheduled on 6th February. It is expected to clear the air over the role the new body will play," say a source.
 
"After the meeting it will be clear, whether the Aayog will be recognised as government body or merely play the role of an economic think tank," the source added.
 
It is also expected that the meeting will bring more clarity on role Aayog will play in evolving model for revenue generation and expenditure realisation.
 
The source said that the meeting of the Aayog's governing council comprising all Chief Ministers and Lt. Governors of UTs is being scheduled for 8th February.
 
Modi, who is the Chairman of Aayog, had held a meeting of all chief ministers on 7th December seeking their views on the new body which had to replace the erstwhile Planning Commission, at his residence.
 
The source said the meeting on 6th February will also be a precursor to the governing council meeting as agenda would be set during the deliberations.
 
The NDA government had announced creation of the Aayog to replace the about 65-year old Planning Commission.
 
The first Vice-Chairman of the Aayog, Arvind Panagariya, and full time member Bibek Debroy had joined earlier this month. The other full time member of body, VK Saraswat is expected to join shortly.
 
The ex-officio members of Aayog are Home Minister Rajnath Singh, Finance Minister Arun Jaitley, Railway Minister Suresh Prabhu and Agriculture Minister Radha Mohan Singh.
 
Aayog's special invitees are Road Transport and Highways Minister Nitin Gadkari, Social Justice and Empowerment Minister Thawar Chand Gehlot and Human Resource Development Minister Smriti Irani.
 

 

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