Nifty may see further gains up to 4,950
The market closed with gains of over 2% on encouraging domestic economic news and global support. In our yesterday’s closing report, we had mentioned that the Nifty will move in the range of 4,705 and 4,765 with an upward bias with the next resistance at 4,835. The benchmark broke that resistance on a huge volume of 72.08 crore shares on the National Stock Exchange (NSE), the largest in the past 29 days (including today). The Nifty closed at its 23-day closing high (including today) at 4,850. From here we may see the index going up to the level of 4,950. However, if the benchmark falls below 4,810, we may see a reversal setting in.
Taking support from positive economic news on the domestic front and firm global cues, the local market started the day in the green. The Nifty opened at 4,772, up 29 points, and the Sensex gained 83 point to resume trade at 15,898. While the opening figure of the Sensex was its intraday low, the Nifty dipped marginally to 4,768 at its low. However, all-round buying support, led by PSU, banking and oil & gas stocks kept up the momentum.
Domestic passenger car sales jumped by 8.49% to 1,59,325 units in December 2011, according to the data released by the Society of Indian Automobile Manufacturers. Auto stocks like Mahindra & Mahindra, Ashok Leyland, Tata Motors, Hero MotoCorp, Maruti Suzuki and Bajaj Auto were all in the green following the announcement.
The market continued it northward journey as a positive opening of the key European indices supported investment sentiment in noon trade.
Global rating agency Moody’s upgrade of India’s short-term foreign currency rating from speculative to investment grade will help Indian companies raise funds from abroad at better rates.
The market hit the day’s high in the last half hour with the Nifty touching 4,856 and the Sensex scaling 16,181. Paring a small part of the gains, the market closed near the highs. The Nifty finished 107 points higher at 4,580 and the Sensex ended the day at 16,165, a jump of 350 points.
The advance-decline ratio on the NSE was a handsome 1450:296.
The broader indices were equally participative in today’s rally with the BSE Mid-cap index surged 2.24% and the BSE Small-cap index jumped 2.63%.
The sectoral space was led by BSE Realty (up 4.20%); BSE Capital Goods (up 3.56%); BSE Bankex (up 3.17%); BSE Metal (up 2.96%) and BSE Auto (up 2.91%). There were no losers today.
Mahindra & Mahindra (up 5.63%); Hindalco Industries (up 4.28%); Larsen & Toubro (up 4.24%); Jindal Steel (up 4.12%) and Reliance Industries (up 3.99%) topped the Sensex. TCS (down 0.41%) and GAIL India (down 0.16%) were the only losers.
The major gainers on the Nifty were Reliance Power (up 5.60%); Punjab National Bank (up 5.18%); M&M (up 5.08%); Reliance Infrastructure (up 4.76%) and Hindalco Industries (up 4.41%). The losers were Ranbaxy (down 0.89%); TCS (down 0.29%) and Ambuja Cement (down 0.10%).
Markets in Asia settled higher, taking support from overnight gains in US stocks. News from Europe that French president Nicholas Sarkozy received support from German chancellor Angela Merkel for a tax on financial transactions, also supported the rally. Within Asia, the Chinese stock market regulator said that it would initiate reforms to clean up public offers and delistings and boost bond issuances. This apart, slowing exports gave rise to speculations that the Chinese central bank might ease lending restrictions.
The Shanghai Composite surged 2.69%; the Hang Seng gained 0.73%; the Jakarta Composite climbed 1.28%; the KLSE Composite added 0.02%; the Nikkei 225 rose 0.38%; the Seoul Composite advanced 1.26% and the Taiwan Weighted settled 1.21% higher. At the time of writing, the key European indices were trading with gains of over 1% to 2% and the US stock futures were in the positive.
Back home, foreign institutional investors were net sellers of stocks totalling Rs36.46 crore on Monday while domestic institutional investors were net buyers of shares amounting to Rs29.26 crore.
PSL has received an order valuing over Rs280 crore from infrastructure major Pratibha Industries for supply of coated pipes for Gujarat Water Industries’ NC 30 project. The order envisages manufacture and supply of coated steel pipes as required for the project. PSL soared 11.46% to close at Rs60.30 on the NSE today.
Drug major Wockhardt today said it has received final approval from the US health regulator to market generic Fluticasone nasal spray, used for treating allergic nasal inflammation, in the American market. Fluticasone nasal spray is the generic name for GlaxoSmithKline's Flonase. According to IMS Health, the total market for the product in the US is about $580 million and there are only three other generic versions of the product in the United States. Wockhardt gained 2.61% to close at Rs304.30 on the NSE.
Chennai-based two-wheeler maker TVS Motor Company on Tuesday announced to re-launch its one of the best selling motorcycles ‘Victor’ in India in December, besides introducing three more products in 2012. The company that has earmarked a capex of Rs 125 crore for 2012-13 is also mulling to increase its overall production capacity to about 32 lakh units annually by 2013-14. The stock settled at Rs48.15 on the NSE, a gain of 2.88% over its previous close.
Here is a real-life story of legal heirs of a deceased, who successfully managed to claim a matured fixed deposit along with compound interest after 15 years
What happens when someone, in absence of a nominee, dies before the fixed deposit is matured? Most of the times, the legal heirs are clueless as to what assets the deceased held and the process to deal with claiming the same from financial institutions. One of our readers brought to us an interesting case.
A family had found out about the deceased assets, in this case—a fixed deposit (FD) with Syndicate Bank, only after 15 years, while combing through the last remnants of a trunk left in their attic. This situation is quite common not just in India but all over the world.
So what happens to the fixed deposit in such a case?
The simple case would be that the assets would be transferred to the nominee. However, we learn that, in the 1970s, nomination facilities weren’t readily available. In fact, one had to ask for it. Thus the deceased was probably not aware of such a facility. Moreover, the family wasn’t aware that the deceased held a FD.
Usually, Syndicate Bank would have to notify the depositor, whether alive or dead, on the maturity of the FD. In some cases, these letters go unnoticed as there may not be anyone residing after death and the relatives might be living elsewhere.
We found out that according to RBI: “If the letters are returned undelivered, they may immediately be put on enquiry to find out the whereabouts of customers or their legal heirs in case they are deceased.”
Therefore, if the bank does not hear from the depositor for a period of time, it must use whatever methods at disposal to track down its legal heirs.
When this family found out about the existence of the FD, they approached Syndicate Bank in order to claim the FD, along with stipulated interests. However, the family was “bullied” by the Bank for not taking measures to claim the FD at time of death of the depositor. What was surprising was that the deceased lived one floor below Syndicate Bank’s office! The Bank might have been aware of the death of the depositor, but had not bothered to track and inform the legal heirs of the same. Instead, they had virtually used the depositor’s FD for “free”.
This isn’t the only peculiarity with FDs and death before its maturity. We learn that there’s another issue—the question of how much the legal heirs are entitled to the interests and FDs.
According to Syndicate Bank: “....In the case of death of the depositor after the date of maturity of the deposit, the bank shall pay interest at savings deposit rate obtaining on the date of maturity from the date of maturity till the date of payment.”
The logic in this case is that the fixed deposits had matured when depositor died, and thus Time Deposit had become Demand Deposit (i.e. savings bank). Therefore, if the FD is not claimed within due time, it will be converted to a savings bank account and only the savings rate would apply henceforth.
However, it is different in case the depositor dies before maturity, as in this case, “In the event of death of the depositor before the date of maturity of deposit and amount of the deposit is claimed after the date of maturity, the Bank shall pay interest at the contracted rate till the date of maturity. From the date of maturity to the date of payment, the Bank shall pay simple interest at the applicable rate obtaining on the date of maturity, for the period for which the deposit remained with the Bank beyond the date of maturity; as per the Bank's policy in this regard.”
The key word here is “simple interest at the applicable rate”. What does the simple interest means? Is it savings rate? Or a rate decided by the bank without the knowledge of the depositor’s legal heirs? The wording used here gives the bank the freedom to choose whatever rate it prefers, which will be usually less than the contracted rate.
Syndicate Bank had offered the legal heirs savings rate instead of the contracted rate, thus trying to fleece its customers.
What do we learn from this episode?
Simple, customers are taken for granted by the banks. Most of the times, the customers are short-changed without their knowledge, even in the simplest of cases. In this case, the Bank failed to take cognizance the fact that the FD was taken in the 1970s, where rules and banking practices were different then. It is the bank’s duty and responsibility to ensure that common sense be applied to cases such as these and adapt it accordingly within the framework today in such a manner that is fair to the legal heirs.
Also, there ought to be a solution to communicate better to the legal heirs of the deceased, which would not only make the bank’s job of tracking down legal heirs much easier, but also serve customers better. While the employees of Syndicate Bank in the 1970s and 1980s may have failed in their duties, the bank had no right to bully the legal heirs because of some lapse of its own employees many years ago.
Fortunately, despite all this, we learn that the legal heirs have managed to obtain a succession certificate as well as a court order stating that Syndicate Bank must pay compound interest at the contracted rate, but only after a lot of hard work done by them.
Although the hallmarking for yellow metal is been made mandatory by the Indian government, it will take at least a year for it to be implemented across the country
The Indian ministry of consumer affairs recently approved a proposal making hallmarking of gold, mandatory. The industry has welcomed the decision however sources within the ministry say that it will be at least 12 months before it can be implemented across the county.
Consumer activists have also expressed their reservations on the process of hallmarking of gold in India. AR Shenoy, a Mumbai-based consumer activist, said, “The concept of hallmarking is good. But the implementation is a big issue. The Bureau of Indian Standards (BIS) does not have required infrastructure for gold testing. At times it is outsourced to the third party.”
“There are cases in the market where gold which is not 916 gold or 22 carat, is being Hallmarked as pure or 24 carat. I knew an agent who shut down his business of Hallmarking gold because he was pressurised by jewellers and pertinently asked to give 916 gold certifications to the yellow metal which was of lesser purity,” Mr Shenoy added.
The union cabinet cleared the proposal by approving amendments to the BIS Act, 1986, that aims to expand the ambit of mandatory Hallmarking to include more products, including gold. Currently, Hallmarking of gold, giving it a purity certificate, is not mandatory. The BIS, under the ministry is the administrative authority of Hallmarking.
According to reliable sources from the ministry, though the hallmarking for yellow metal is been made mandatory, it will take at least a year to see the results on the ground.
Players from the gold jewellery industry have welcomed this move. Karan Vasa, associate vice president, RiddiSiddhi Bullions Ltd, says, “Given the prices of gold, which are skyrocketing, Hallmarking would provide a cushion of assurance to the customers. From the re-selling point of view, Hallmarking is a great move. In future, if customers want to re-sell their Hallamarked gold jewellery, it will become easier.”
When asked about the implementation among the widely spread gold jewellery stores and makers in the local market, Mr Vasa explained, “Given the size of our country, it will take time for proper implementation. For this, there should be awareness among the consumers who would then demand hallmarked gold from their jewellers.”
Rajesh Export Ltd, a leading gold jewellery manufacturer while welcoming the move said, “The major challenge would be for the government to implement the law and enforce strict punishment and deterrents for jewellers violating the law by selling jewellery without Hallmark or with spurious Hallmark.”
Muthoot Finance Ltd, country’s largest gold company says this move will bring in more transparency. “We as a gold loan company would benefit out of the increased demand for gold in this country post BIS mark made it compulsory since the quality of gold ornaments being pledged by customer for their loans would be much better,” says George Alexander Muthoot, managing director, Muthoot Finance, in a release.
At present, about 77 items, including cement, mineral water and milk products, are certified through mandatory Hallmarking under the BIS Act for conformity with expected quality levels. The BIS Hallmark, a mark of conformity widely accepted by the consumer, bestows the additional confidence to the consumer on the quality of products like gold jewellery.