Stocks
Nifty, Sensex trendless – Weekly closing report
We had mentioned in last week’s closing report that Nifty Sensex might head higher. The major indices were marginally up during the week. Investors were on a wait-and-watch mode regarding the US Federal Reserve’s decision on the interest rates. Once the Fed decided to leave the interest rates unchanged, the major indices rallied on Thursday. The trends of the major indices in the course of the week’s trading are given in the table below:
 
 
Positive global sentiments buoyed the Indian stock markets during the late-afternoon trade session on Monday. However, upcoming global events such as monetary policy announcements from major economies and profit booking at higher levels, capped gains. Buying was witnessed in metal, banking and IT stocks. The BSE market breadth was tilted in favour of the bulls -- with 1,494 advances and 1,244 declines. On the NSE, there were 786 advances, 673 declines and 85 unchanged. Initially, the benchmark indices opened on a firm note in sync with their Asian peers. However, investors were seen cautious ahead of the US Fed's FOMC (Federal Open Market Committee) meeting, which was scheduled for September 20-21. Investors felt that a hike in US interest rates could potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India. It was also expected to dent business margins as access to capital from the US would become expensive.
 
The benchmarks opened down, on Tuesday, following negative global cues and caution ahead of major global financial events. Selling pressure was witnessed in automobile, capital goods and banking stocks. The BSE market breadth was tilted in favour of the bears -- with 1,513 declines and 1,197 advances. On the NSE, on Tuesday, 548 advances, 922 declines and 85 unchanged. Besides, investors were cautious ahead of the US Fed's Federal Open Market Committee (FOMC) meet and the Bank of Japan (BoJ) monetary policy review announcements. Most IT stocks traded down. Banking stocks were traded with mixed sentiments, while auto stocks traded down.
 
Indian equity markets succumbed to profit booking to close the day's trade on a flat note on Wednesday. Selling pressure was witnessed in FMCG and banking stocks. The markets were largely positive as hopes of a rate-hike turned down in the US Fed meet enhanced the risk-taking appetite, according to market analysts. However, investors were not willing to push prices higher as caution still prevails ahead of the FOMC's final decision. The Bank of Japan (BoJ) decision (to keep its policy balance rates unchanged) did not have much impact on the domestic markets. Initially on Wednesday, the benchmark indices opened on a flat-to-positive note on the back of positive Asian markets. The CNX Nifty traded with firm sentiments on buying support from traders. Most IT stocks traded firm on recovery in USD/INR futures. Auto and oil-gas stocks also traded higher. On the NSE, there were 731 advances, 725 declines and 67 unchanged. The BSE market breadth was tilted in favour of the bulls -- with 1,413 advances and 1,314 declines.
 
The Bank of Japan (BOJ) unveiled its new policy framework on Wednesday, saying it will keep its negative policy rate at minus 0.1% while modifying the framework of its bond-buying programme to guide long-term rate at around 0%. The BOJ said it will continue to expand the monetary base until it achieves a 2% inflation goal.
 
Coal India Ltd (CIL), which produces 84% of country's coal output, "needs to step up to a double digit growth rate from that of around 9% achieved during 2015-16" to meet its production targets, company Chairman Sutirtha Bhattacharya said on Wednesday. "Coal India needs to step up to a double digit growth rate from that of around 9% achieved during FY 2016...during the first four months of FY 2017, Coal India's production growth was more than 6 million tonnes (mt) over the same period last year," he said while addressing shareholders at the company's 42nd Annual General Meeting. Coal India closed at Rs330.10, up 1.15% on the BSE over the week.
 
Indian equity markets soared on the back of positive global cues on Thursday. The key indices gained around a percentage each during the mid-afternoon trade session, as healthy buying was witnessed in stocks of banking, automobile, and capital goods. Besides, domestic cues such as the proposal to merge the general and railway budget, along with consultations to advance the budget presentation date, gave a positive momentum to the equity markets. The BSE market breadth was tilted in favour of the bulls -- with 1,695 advances and 1,044 declines. On the NSE, there were 993 advances, 471 declines and 74 unchanged.
 
On Friday, the major indices were range-bound and shed some of the gains of Thursday. Selling pressure was witnessed in banking and FMCG stocks. Axis Bank fell as much as 5.8%. The major indices closed on Friday with minor losses of 0.36%-0.40% over Thursday’s close. 

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India signs deal with France to buy 36 Rafale jets
India on Friday signed a deal with France to buy 36 Rafale fighter jets to meet critical operational requirement for a multi-role combat aircraft for the Indian Air Force (IAF).
 
Defence Minister Manohar Parrikar and his French counterpart Jean-Yves Le Drian signed the agreement in this regard here.
 
The deal was preceded by tough negotiations over the price and is expected to cost India some 7.87 billion euros. The deal also has a provision for transfer of technology through offsets. 
 
Soon after the deal was signed, Parrikar said in a tweet: "Will significantly improve India's strike and defence capabilities." 
 
The tough price negotiations led to a delay in the finalisation of the deal, which covers delivery of 36 planes, spares and weapons. 
 
The fighter plane will be equipped with Meteor, a beyond-visual range air-to-air missile expected to considerably advance IAF's capability in aerial combat. 
 
The Rafale aircraft would have advanced features like advanced electronically scanned array radar, mid-air refuelling and advanced electronic warfare equipment. 
 
Informed sources said the jets would arrive in India in batches, with the first two coming in the next few months.
 
A team from France was camping in New Delhi for some weeks for negotiating the deal. 
 
India had decided to ink the deal for 126 Rafale jets in 2012 during the previous United Progressive Alliance government. The deal was estimated to cost $10.2 billion and the plan was to acquire 18 aircraft in fly-away condition and manufacturing the rest in India. 
 
However, during Prime Minister Narendra Modi's visit to France in April last year, India conveyed that it would like to acquire 36 Rafale jets in fly-away condition as quickly as possible in view of the IAF's critical operational necessity for the multi-role combat aircraft.
 
A Memorandum of Understanding was signed with France in January this year for the purchase of 36 Rafale aircraft. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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What is the Indus Waters Treaty and can India abrogate it?
With India saying that there have been differences over the implementation of the 1960 Indus Waters Treaty, a dispute that was referred to an international tribunal under the aegis of the World Bank, the issue has come back into focus because of the current tension with Pakistan following the September 18 cross-border terror attack on an army base at Uri in Jammu and Kashmir that claimed the lives of 18 Indian soldiers. On Thursday, India raised the issue saying a treaty could not be a "one-sided affair".
 
So, what is the treaty all about? Here is a primer:
 
What is the Indus Waters Treaty?
 
The Indus Waters Treaty is a water-sharing arrangement signed by then Indian Prime Minister Jawaharlal Nehru and then President of Pakistan Ayub Khan on September 19, 1960, in Karachi. It covers the water distribution and sharing rights of six rivers -- Beas, Ravi, Sutlej, Indus, Chenab and Jhelum. The agreement was brokered by the World Bank.
 
Why was the agreement signed?
 
The agreement was signed because the source of all the rivers of the Indus basin were in India (Indus and Sutlej, though, originate in China). It allowed India to use them for irrigation, transport and power generation, while laying down precise do's and don'ts for India on building projects along the way. Pakistan feared that India could potentially create droughts in case of a war between the two countries. A Permanent Indus Commission set up in this connection has gone through three wars between the two countries without disruption and provides a bilateral mechanism for consultation and conflict-resolution through inspections, exchange of data and visits.
 
What does the agreement entail?
 
The treaty gave the three "eastern rivers" of Beas, Ravi and Sutlej to India for use of water without restriction. The three "western rivers" of Indus, Chenab and Jhelum were allocated to Pakistan. India can construct storage facilities on "western rivers" of up to 3.6 million acre feet, which it has not done so far. India is also allowed agriculture use of 7 lakh acres above the irrigated cropped area as on April 1, 1960.
 
Is there a dispute?
 
Although the two countries have been managing to share the waters without major dispute, experts say that the agreement is one of the most lop-sided with India being allowed to use only 20 percent of the six-river Indus water system. Pakistan itself in July this year sought an international arbitration if India sought to build hydro power projects on the Jhelum and Chenab rivers. Though the agreement has been seen as one of the most successful water-sharing pacts, the current tension between the two South Asian neighbours might well lead to a flashpoint. Strategic affairs and security experts say that future wars could well be fought over water. 
 
Could India abrogate the agreement?
 
This is unlikely since the treaty has survived three wars between the two countries. Although on Thursday India raised the issue, saying that for a treaty to work there had to be "mutual cooperation and trust" between the two sides, this seems to be more pressure tactics than any real threat to review the bilateral agreement. And the idea that India can intimidate Pakistan by threatening to cut of river waters is nothing new. It has arisen before every major conflict. A unilateral abrogation would also attract criticism from world powers, as this is one arrangement which has stood the test of time.
 
Short of abrogation, can India do something?
 
Some experts have said that if India starts making provision for storage facility involving the "western rivers", which it is allowed under the treaty of up to 3.6 million acre feet, this may send a strong message to its neighbour. Pakistan has often sought arbitration proceedings just on mere impression that India may do so, seeking to dissuade its larger neighbour from tinkering with the status quo.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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COMMENTS

Sadasivan Neelakantan

5 months ago

Yes, since the Treaty allows India to build storage facilities we must do so,provided the farmers in the region have any use for the water stored.Yes I too foree water wars occurring globally but erecting check dams to sore water is OK--and of course a strong message indeed to our tooth-gnashing neighbor nation!

REPLY

Sadasivan Neelakantan

In Reply to Sadasivan Neelakantan 5 months ago

Sorry for the typo errors.I meant " to store" water and "foresee" in lieu of the typo there.Typed in a hurry.Bye!

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