Nifty has to close above any previous day’s high for the downtrend to reverse
Economic concerns and the rupee hitting a fresh two-month low led the market lower today. We mentioned in our Friday’s market report that the Nifty is expected to remain trapped in a narrow range of 5,200 and 5,400. Today the index fell below the lower range and closed near that level. The index fell on a volume of 68.59 crore shares on the National Stock Exchange (NSE). The market may be seen to weaken further, unless the benchmark is able to close above previous day’s high.
The market, which closed in the positive note on Friday, resumed trade on a flat note this morning. The weakness of the rupee, which traded at a fresh two-month low on demand from oil importers, also pressured stocks. The Nifty opened four points lower at 5,274 while the Sensex started the day at 17,378, up 16 points over its previous close.
While the opening figure on the Sensex was its intraday high, the Nifty inched slightly higher at 5,275 at its high. However, selling pressure in banks, capital goods, fast moving consumer goods and technology stocks send the indices deeper into the red as trade progressed.
The realty sector emerged as the biggest loser in trade after reports indicated that the Maharashtra government is planning to hike stamp duties in Mumbai by as much as 160 times for residential and commercial properties.
The mixed opening of the key European indices, made no difference to the domestic market, as the losses expanded in post-noon trades. The market touched the low point of the day towards the end of the session with the Nifty falling to 5,175 and the Sensex tumbling to 17,022.
The market settled marginally higher than the lows. The Nifty closed 94 points lower at 5,184 and the Sensex dropped 309 points to 17,053.
The advance-decline ratio on the NSE was lower at 417:1329.
Among the broader indices, the BSE Mid-cap index dropped 1.60% and the BSE Small-cap index declined by 1.40%.
All sectoral indices closed lower with the BSE Realty index (down 3.58%) leading the list. It was followed by BSE Power (down 2.56%); BSE Bankex (down 2.44%), BSE Metal (down 2.19%) and BSE PSU (down 2.01%).
All Sensex stocks settled in the red today. The top losers were ICICI Bank (down 4.30%); Sterlite Industries (down 4.16%); Cipla (down 4.10%); Tata Power (down 3.77%) and DLF (down 3.59%).
The top Nifty stocks were Jaiprakash Associates (up 2.83%); Kotak Mahindra Bank (up 0.84%); ITC (up 0.20%) and Dr Reddy’s (up 0.03%). The key losers were IDFC (down 4.99%); Sesa Goa (down 4.61%); Axis Bank (down 4.52%); Tata Power (down 4.37%) and Punjab National Bank (down 4.36%).
Markets in Asia closed mixed on worries that the Chinese banking sector could be exposed to more bad local government debt than previously expected. Nervousness over Spain’s election results also weighed on investor sentiments. An analyst opined that in the absence of positive triggers, investors are indulging in profit booking.
The Jakarta Composite shed 0.24%; the KLSE Composite fell by 0.18%; the Straits Times declined 0.52%; the Seoul Composite dropped 0.38% and the Taiwan Weighted tanked 1.35%. On the other hand, the Shanghai Composite added 0.05%; the Hang Seng settled unchanged at 20,669 and the Nikkei 225 rose 0.07%. At the time of writing, the key European indices were trading with gains between 0.11% and 0.68% and the US stocks futures were in the positive.
Back home, foreign institutional investors were net buyers of shares totalling Rs9.46 crore and domestic institutional investors pumped in a net of Rs186.81 crore into equities on Friday. The US futures markets were trading flat.
Rolta India has tied-up funding of $135 million via external commercial borrowings (ECB) to buy back and/or redeem its zero coupon Foreign Currency Convertible Bonds (FCCBs), which falls due on 29 June 2012. With this funding, the company has launched an offer to buy back all outstanding FCCB, having a face value of $96.69 million and redemption value of $134.78 million. The stock fell 3.787% to close at Rs90.55 on the NSE.
Videocon Industries has drawn up plans to increase its multi-brand electronic retail chain Digiworld stores to nearly 1,200 by next year. Currently, the group operates 400 Digiworld stores, including franchisee ones, and plans to add at least 100 outlets by the end of this calendar year. Videocon closed 0.55% down at Rs172.10 on the NSE.
Wrist watches and fashion accessories major Titan Industries is expanding its accessories foray via its youth centric brand Fastrack, where it will double the number of stores. In fiscal 2012-2013, Titan plans to open around 250-300 stores, of which 100 will be Fastrack stores, which will sell watches as well as accessories. The stock closed 1.23% lower at Rs229.40 on the NSE.
“India's trade deficit could rise from $130.5 billion in 2010-11 to $428.3 billion by 2015-16 and become unsustainable with merchandise imports rising from $380.9 billion to $858.6 billion,” Assocham said.
Rising gold and crude oil imports are expected to push up India's trade deficit to $428.3 billion by 2015-16, industry body Assocham said.
Oil and gold imports may increase to $243.7 billion and $83.3 billion respectively by 2015-16, it said.
During the first 11 months this fiscal, oil imports have increased 41% to $132.6 billion. Gold imports were worth about $55 billion.
“India's trade deficit could rise from $130.5 billion in 2010-11 to $428.3 billion by 2015-16 and become unsustainable with merchandise imports rising from $380.9 billion to $858.6 billion,” it said.
The deficit is likely to be above $180 billion in 2011-12, it said.
“There is need to curtail oil imports, or else there will be a severe burden on external payments position. The gold imports must also decrease by educating domestic investors and encouraging substitution of gold purchases with alternatives from formal financial sector which will help in increasing the productive capacity of economy,” Assocham said.
The industry body said that there is a need to enhance manufacturing capabilities in the country to boost exports.
Growing uncertainties in the euro-zone and slowdown in advanced economies had adversely impacted India's external sector outlook.
The country's merchandise exports may touch $430.3 billion by 2015-16, it added.
“However, if capacity building of the industry takes place and competitiveness of Indian exports improves, then merchandise exports can touch $549 billion in 2015-16 and the trade deficit will be $309.6 billion,” Assocham said
Like cigarettes, the West increasingly sees colas as terribly bad for health and shielding their children from it because obesity, diabetes and now cancer are directly linked to these sweet, coloured liquids. For Coke and Pepsi, India, a large market with low awareness, is ripe for exploitation—aided by Bollywood and cricket superstars
There is a term used in racing at sea—sail close to the wind—which implies doing something which is dangerous, just about legal, or acceptable. It comes from real life out there on the waters, when you try to move forward almost right into the direction the wind is coming from, using all your skills to not only stay upright, but also to make some headway while others have given up. It also implies using illegal methods, when nobody is watching, to reach your destination.
Of late, that’s what seems to be happening in the world of soft drinks and those who would use every method possible to try and make us drink more and more of the sweetened, coloured, carbonated water—never mind the larger impact on health, society and now in the latest revelations, causing cancer. The two largest players in this, PepsiCo and Coca Cola, are globally in a race to try and tackle dropping sales of “soda pop” in developed countries and take a lead in what they would like to call nutritive health drinks and foods as well as water, but here in India, it appears to be more and more pressure on making these same “soft drinks” some sort of aspirational destination, if one may use that turn of phrase.
Here is a small fact, as per the latest Economist: “The consumption of carbonated soft drinks in America fell to a 16-year low in 2011, according to Beverage Digest. The average American drank 714 eight-ounce servings of fizzy drinks over the year, with the three most popular being Coke, Diet Coke and Pepsi-Cola. Since 2005 health conscious Americans have been slurping fewer high-calorie drinks and more bottled water.”
The reason for this is not difficult to discern—increasingly, it is politically incorrect, like smoking, to guzzle “soda pop” in front of impressionable youngsters. In addition, role models in American society will think more than twice now, before they even dream of endorsing all sorts of junk food, cancer colas and other packaged or processed edibles of any sort. Obesity, diabetes and now cancer are directly linked to these sweet coloured sugary liquids.
In addition, actual sale of soft drinks is frowned upon in and around schools, either by way of legislation or by way of local social pressure. Michelle Obama, wife of the American president, leads a nationwide programme called “Let’s Move” (http://www.letsmove.gov/) with complete government support and participation, tag-lined “America’s Move to Raise a Healthier Generation of Kids”, which has in it’s second year already made it clear what is good food (fruits, vegetables, whole grains, lean proteins and low fat dairy, mainly) and what is not.
On the other hand, here in India, the authorities appear to be going out of their way to help the same processed food industry, especially the soft drink industry, with all sorts of help to take sales further. One not so subtle step is the way in which role models in India are actively encouraged to endorse soft drinks—whether by way of providing tax exemptions (example: Sachin Tendulkar’s Ferrari, which was sought to be brought in duty-free, was supposed to be a ‘gift’ from Michael Schumacher) or providing them with honorary ranks in India’s Armed Forces (MS Dhoni and Sachin Tendulkar again) or by not levying taxes pertaining to advertising on blatant product placements for branded soft drinks in Indian movies (almost by every movie star).
Put it this way, when you see Sachin Tendulkar or Shah Rukh Khan’s fancy new cars and homes in Bandra, Mumbai, what do you see? I don’t know about you, but many of us who have friends and relatives undergoing treatment for cancer at the nearby Leelavati Hospital, also in Bandra, Mumbai, see bottles and bottles of the cancer-causing Coke and Pepsi. Endorsed by these worthies and their friends in the cricket and film industry, these cancer colas and their champions, need to be removed from our advertising horizon, and soon. Or, like tobacco products, they need to carry health and safety warnings. Not endorsements by our stars and heroes.
So the question that comes up next, automatically, is this—what is the liability that those who endorse these soft drinks have? Should the people who reaped huge personal benefits by advertising, inducing, tempting and otherwise persuaded millions of others to buy and consume something that they knew was dangerous as well as unhealthy, be held financially responsible for this?
The answer is there, to be seen in the Companies Act, in the Food Safety & Standards Act and from there onwards in the Indian Penal Code. And the answer is also there as an extension of the question—did the people who were part of the larger structures which produced these endorsements not know that the ingredients in their products, as well as the products itself, caused cancer? Or were simply bad for a nation’s future generations?
The problem is with the laws in India and the way global MNCs as well as now even Indian MNCs keep to the right of it or on the border, in a manner which would never be permitted or acceptable in developed countries. There is, however, hope.
Government policy of retrospective liability under laws brought out subsequently, as with the Finance Bill this year for Income Tax issues, brings some hope. “I didn’t know” is not going to be an admissible defence. Because, fact remains, high sugar content sweet coloured carbonated waters are not good for us, or our children.
(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love—writing.)