Nifty needs some strongly positive news to rally higher and sustain it
Out of the past three trading session, the NSE’s CNX Nifty managed to reach two new life time highs but the moves were weak. We had been mentioning for the past week that the index is struggling to move higher and is most likely to give up gains. Today the index closed in the red.
The S&P BSE Sensex opened at 28,049 and was followed by a range bound session for little while when it hit its intra-day high at 28,099. Nifty opened at 8,405 and hit its high almost at the same level. Immediately, the indices plunged in to the negative.
Efforts to revive did not succeed. Sensex hit a low at 27,823 and closed at 27,941 (down 68 points or 0.24%), while Nifty hit a low at 8,320 and closed at 8,358 (down 25 points or 0.30%). The NSE recorded a volume of 97.76 crore shares. India VIX fell 4.40% to 13.8000.
The government will unveil WPI inflation data for October 2014 on Friday.
The government has raised the excise duty on petrol and diesel by Rs1.50 a litre to mop up additional revenue of about Rs13,000 crore.
Reports, quoting Minister of State for Commerce and Industry, Nirmala Sitharaman said that India and the US have resolved their differences on public stockholding of food and this opens the way for implementation of the WTO trade facilitation deal.
Coming back to markets, Amtek Auto (8.67%) was the top two gainers in ‘A’ group on the BSE. It has been reported that it has plans to diversify into new areas such as aerospace, railways and oil and gas by utilising its core forging and casting business.
Bajaj Electricals (11.53%) was the top loser in ‘A’ group on the BSE. It posted weak September 2014 quarter result which pulled it lower today.
Infosys (1.77%) was the top gainer in Sensex 30 pack. the stock hit its 52-week high today. Infosys is apparently in the race to acquire CIMPA, the engineering services unit of Airbus. However, the company clarified on BSE that such news is a speculative one.
Sesa Sterlite (2.50%) was the top loser in Sensex-30 stock. It announced that it would invest $782 million over a three-year period in southern Africa to tap the region's large undeveloped deposits of the metal. The amount will be used to develop an open pit zinc mine in Gamsberg, South Africa, as well as the conversion of the Skorpion Zinc refinery in neighbouring Namibia.
US indices closed Wednesday flat.
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said on Wednesday financial markets could face less than placid waters in coming years. In his formal remarks, Mr Kocherlakota repeated his belief that a US central bank rate increase next year would be a mistake. Inflation is unlikely to reach the Fed’s 2% target until 2018, and because of this outlook, “it would be inappropriate for the [Federal Open Market Committee] to raise the target range for the fed funds rate at any such meeting” occurring in 2015, he said.
Asian indices showed mixed performance. Nikkei 225 (1.14%) was the top gainer while NZSE 50 (0.46%) was the top loser.
China's industrial output growth in October unexpectedly dropped, reflecting the continued headwinds faced by the Chinese economy, official data showed today.
Value-added industrial output in China rose 7.7% in October from a year earlier, slowing from an 8% on-year increase in September, the National Bureau of Statistics said.
Industrial production increased 0.52% in October from September. In September, it had climbed 0.91% from the preceding month.
China's retail sales rose 11.5% in October from a year earlier, slowing slightly from an 11.6% on-year increase in September. Retail sales increased 0.98% in October from September. In September, retail sales had risen 0.86% from the preceding month.
European indices were trading in the green. US Futures too were trading higher.
Germany's inflation rate was confirmed flat at 0.7% in October.
Both Mumbai Metro Transport, a unit of R-Infra and Maharashtra government agreed to terminate concession agreement for Charkop-Bandra-Mankhurd Metro at no cost or claim to either party
Reliance Infrastructure on Thursday announced the cancellation of Mumbai's Metro Line 2 project citing non-fulfilment of certain obligations by the Maharashtra government.
In a statement, the company part of Reliance-Anil Dhirubhai Ambani (ADA) group, said, "Mumbai Metro Transport Pvt Ltd wherein Reliance Infrastructure holds 48% of the equity and government of Maharashtra have terminated the concession agreement for the Mumbai Metro Line 2 Project (Charkop -Bandra-Mankhurd corridor)".
In 2009, the state government awarded the project to Reliance Infrastructure-led consortium through international competitive bidding. The estimated cost of the project was about Rs12,000 crore.
"Due to non-fulfilment of various critical obligations, by GOM/ Mumbai Metropolitan Region Development Authority (MMRDA), the project could not take off. Even after four years, despite the best efforts of the Maharashtra government, various project impediments could not be resolved," Reliance Infrastructure said.
Both parties agreed to terminate the concession agreement at no cost or claim to either party. The government of Maharashtra will return the bank guarantee (of Rs160 crore) to Mumbai Metro Transport Pvt Ltd.
With the termination of the agreement, all commitments or liabilities of Reliance Infrastructure towards the project including the commitments towards funding the project have been annulled with immediate effect.
According to Care Ratings, the recent RBI measures to regulate NBFCs more will impact profitability and asset quality in the short term, though they will bring in more transparency and improve NBFCs ability to withstand asset quality shocks in the long run
Earlier this week, the Reserve Bank of India (RBI) released the ‘Revised Regulatory Framework for NBFC’ in line with its desire to strengthen financial system and reduce the regulatory arbitrage between banks and non-banking finance companies (NBFCs).
"In the short term, these measures will impact the profitability and asset quality of the NBFCs; however, these measures will bring in more transparency and improve NBFCs ability to withstand asset quality shocks in the long run," says Care Ratings in a research report.
It said, "The new regulatory framework will lead to strengthening of NBFCs balance sheet, with increase in loss absorbing Tier I capital requirement for systemically important NBFCs and deposit accepting NBFCs and restricting leverage for smaller NBFCs in line with higher core Tier I requirement for banks under Basel III guidelines. On NPA recognition norms and provisioning on standard assets also, banks and NBFC will be at par. The increase in disclosure requirement and corporate governance norms will improve the transparency and increase the accountability of management and the board and improve the investor awareness."
Here are the key changes and its likely impact on NBFCs...
Over the years, the NBFC sector has become systemically important with rise in assets under management from around 11% of bank assets in 2009 to 13% of bank assets in 2013. The rising importance of NBFCs and their growing interconnectedness with banks as well as issues like risk management framework for the sector, regulatory gaps and arbitrages, compliance and governance issues have led to the RBI making certain regulatory changes.
RBI had set up various Working Groups to study these dimensions of the sector and the important recommendations of the Usha Thorat Committee (August 2011) and Nachiket Mor Committee (January 2014) have been drawn upon in the revised regulatory framework.