Nifty, Sensex will give up more gains: Monday closing report

A new short downtrend has started. Watch for a close above any previous day's high, for the first sign of a reversal of the downtrend

We had mentioned in Friday’s closing report that a close below 6,215 on the Nifty may reverse the rising trend. Today the market had a weak opening following troubles in Ukraine. Although Sensex managed to barely cross Friday closing for a little while, the Nifty couldn’t even reach up to the Friday’s close. The indices after hitting the intra day high witnessed sideways move for a little while but soon moved down.
Market sentiments were not only affected by geopolitical tension over Ukraine but also because of an official gauge of Chinese manufacturing dropped to an eight-month low.


The BSE-30 share Sensex opened at 21,079 while NSE Nifty opened at 6,264. Sensex moved to the level of 20,921 after hitting a high of 21,140 while Nifty moved down to the level 6,212 before which it hit a high of 6,278. Sensex closed at 20,947 (down 173 points or 0.82%) while Nifty closed at 6,221 (down 56 points or 0.88%). The NSE recorded a lower volume of 55.34 crore shares.


As per the data released by the Central Statistics Office, Ministry of Statistics and Programme Implementation, the quarterly GDP at factor cost at constant (2004-05) prices for Q3 of 2013-14 is estimated at Rs14.8 lakh crore, as against Rs14.1 lakh crore in Q3 of 2012-13, showing a growth rate of 4.7% over the corresponding quarter of previous year.


The Eight Core Industries having a combined weight of 37.90% in the Index of Industrial Production (IIP) increased by 1.6% in January 2014 compared with a growth of 8.3% growth in January 2013 and 2.1% growth in December 2013.


The Indian manufacturing economy showed signs of strengthening in February, with faster increases in output and new orders bolstering the PMI to reach a one-year peak. New export business also rose at a quicker clip, Markit Economics said. Up from 51.4 in the previous month to 52.5 in February, the headline HSBC India Purchasing Managers' Index (PMI) signalled a solid and stronger improvement in business conditions across the country's goods-producing sector, Markit Economics said.


Consumer goods came out again to be the best performing sub-sector of the manufacturing economy in February, leading the rises in both output and new orders. Input cost inflation quickened to its highest in four months during February. New orders increased for the fourth month running and at the most pronounced rate, since February 2013.


US indices had a flat ending with a negative bias on Friday.


The Chicago Purchasing Managers Index rose to 59.8 in February, topping expectations, while the final February reading on consumer sentiment from the Thomson Reuters/University of Michigan Surveys of Consumers also rose more than expected.


US gross domestic product (GDP) grew at an annualised rate of 2.4% in the fourth quarter of 2013, down from an initial estimate of 3.2%. The revision is down to weaker than expected consumer spending.


Except for Shanghai Composite (up 0.92%) and NZSE 50 (up 0.35%) all the other Asian indices closed in the red. Hang Seng (1.47%) was the top loser.


China's Purchasing Managers' Index fell to 50.2 in February compared with January's 50.5 reading, the lowest since June, the National Bureau of Statistics and China Federation of Logistics & Purchasing said March 1 in Beijing. A private gauge released today showed manufacturing contracting for a second month in February.


Russia's central bank unexpectedly raised its policy interest rate sharply to 7% from 5.5% previously, effective Monday morning. "The decision is meant to avoid emerging risks to inflation and financial stability associated with the recently seen increased volatility on the financial markets," the central bank said in a statement. The central bank described the move as "temporary".


European indices were trading lower while US Futures were deeply in the red.


Ketan Parekh gets two year imprisonment, Rs50,000 fine in 14-year old case

Ketan Parekh, namesake of the former tainted stockbroker, was convicted and sentenced to two years in jail in a case of debenture fraud, committed more than two decades ago

Ketan Manharlal Parekh (namesake of tainted stock broker Ketan Parekh or KP), an accused in several cases of stock market manipulation, has been convicted by a special Central Bureau of Investigation (CBI) court in Mumbai for cheating Bank of Baroda and sentenced him to two years rigorous imprisonment.

"The Special Judge for CBI cases Mumbai has convicted Ketan Manharlal Parekh and sentenced him to undergo two years rigorous imprisonment with total fine of Rs50,000," a CBI spokesperson told the media.

The court, however, acquitted a bank manager and other public officials in the case.

The case relates to cheating committed by Parekh in alleged criminal conspiracy with the then senior manager of non-resident Indian (NRI) cell and in charge of safe custody department, Bank of Baroda, Mumbai, and others.

"It was alleged that the accused had abused their official position while functioning as such during 1989-1991 and conspired with Parekh," CBI said.

The spokesperson said CBI had charged the accused with cheating Bank of Baroda, Sir PM Road Branch, Mumbai, by obtaining the duplicate debentures in lieu of originals and by pledging the original debentures of a leading private company in the name of two NRIs which were purportedly lost from Safe Custody Department, Bank of Baroda, Mumbai Main office.

Loans facilities were then availed in the name of four associate firms of Parekh from Bank of Baroda, thereby causing loss to Bank of Baroda, the spokesperson said.

CBI filed the charge sheet 14 years ago in the Special CBI Court for criminal conspiracy, criminal breach of trust by public servant and cheating besides provisions of Prevention of Corruption Act against the four accused persons.

The court acquitted three other accused public servants while Parekh was convicted.


Letter from the Editor

Yield Matters

There are many ways to screen, and pick, stocks. One such way is through analysing their dividend yield. However, merely picking stocks based on high dividend yield could be risky. This strategy would work only when companies are filtered using other valuation parameters and their management history. This is where Moneylife’s analysis comes in. We have not only considered a company’s dividend yield, but since dividends are paid out of earnings, we have considered sales growth, earnings growth, the size of operations and so on. After factoring in all these, we provide you with a list of 11 stocks that may not only offer good income in the form of dividends but capital appreciation as well.

Mutual funds come in many forms. Many of them are designed only to garner funds from investors. Dynamic equity funds belong to this category. These are pitched at investors as products that can time the markets. However, evidence from the US (from where these strategies are borrowed) shows that such schemes have grossly underperformed. Are their Indian counterparts headed in the same direction? If so, is there a better way? Turn to our Fund Pointer section to find out.

In her Crosshairs section Sucheta writes on Subrata Roy of Sahara who has run his peculiar empire for years without any regulator asking any question—until his defiance of Supreme Court became bizarre. She also writes on Arvind Kejriwal’s strange tactic of targeting only some businessmen, leaving out people like Vijay Mallya.

In her Different Strokes section, she questions SEBI’s corporate governance norms which will not apply to the entire swathe of listed public sector undertakings that have inflicted big losses on investors. The fact that neither SEBI nor the stock exchanges, who administer the corporate governance code, have uttered a word about the goings on at United Bank of India that have mauled its share prices, shows that the norms would be nothing but a sham.
Moneylife Foundation launched yet another helpline for its members; this time for those seeking legal advice. To know more about, or to avail the facilities of, the Legal Resource Centre, please visit— We have lined up another helpline; expect to hear about it soon.


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