Stocks
RINL IPO to kickstart PSU disinvestment process this month

The Rs2,500-crore IPO of the state-run Rashtriya Ispat Nigam or RINL has been deferred twice since the filing of the draft documents with SEBI

New Delhi: Indian government on Monday said it will kickstart its ambitious Rs30,000 crore disinvestment programme with stake sale in Rashtriya Ispat Nigam Ltd (RINL), this month, reports PTI.

 

"We have lined up all the cases for the next six months. The first case (RINL) is coming up sometime this month," Finance Minister P Chidambaram told reporters at the Economic Editors' Conference.

 

The Rs2,500-crore initial public offering (IPO) of the state-run RINL has been deferred twice since the filing of the draft documents with the market regulator Securities and Exchange Board of India (SEBI) on 18th May.

 

An Empowered Group of Ministers (EGoM) is likely to meet on Tuesday to decide on the date and pricing of the IPO, a source said.

 

The Cabinet Committee on Economic Affairs in January had approved disinvestment of 10% of the government's 100% stake in the firm.

 

An official source said that government has identified four more PSUs -- NMDC, NTPC, Power Grid Corporation (PGCIL) and Engineers India (EIL) -- for divesting its minority stake.

 

"We have floated a paper for inter-ministerial consultation for disinvestment of NMDC, NTPC, EIL and PGCIL and the proposals would soon come up before the Cabinet," the source said.

 

The Department of Disinvestment (DoD), the nodal point for conducting PSU stake sale, has already got Cabinet approval for stake sale in seven companies, including RINL, Hindustan Copper, Oil India, MMTC, NALCO.

 

The government plans to raise Rs30,000 crore through disinvestments in 2012-13.

 

On the budgeted target for disinvestment, Chidambaram said, "I will be quite happy if I can meet the target and complete the timetable (for disinvestment) as laid down.

 

Because if we do it in the five-and-a-half months that's indeed fast-tracking".

 

Chidambaram said reforms are required in coal, mining, power, petroleum and natural gas, as well as infrastructure sectors to help create jobs

 

"There should also be no controversy over reforms in the coal, mining, power, petroleum & natural gas, and infrastructure sectors including roads, railway and shipping.

 

It is these sectors that are the drivers of growth," he said.

 

Chidambaram said the first comprehensive Cabinet paper on allowing FDI in retail was prepared by the NDA Government in 2002, in which it acknowledged that FDI in retail was essential to improve the supply chain in agriculture which alone will bring benefits to both producers and consumers.

 

"That paper also endorsed the argument that FDI in retail will generate millions of jobs. The idea was never rejected.

 

So, why should there be a controversy when the Government announced its intention to lay down guidelines in order to enable FDI in retail," he questioned.

 

The Indian government had last month had allowed 51% FDI in multi-brand retail.

 

Saying that the implementation of FDI is left to the discretion of the states, Chidambaram said, "The controversy over FDI in retail is, in my view, unnecessary and unjustified".

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Uptrend may weaken: Weekly Market Report

A close below 5,735 on the Nifty may result in a reversal

 
Continuing economic reforms from the government in the week enabled the Indian market close the truncated week with a gain of almost 1%, making it the fifth positive weekly close. Investors will now focus their attention to the second quarter corporate earnings season and key economic indicators like industrial output and inflation data. 
 
The Sensex closed the week at 18,938, a gain of 176 points (0.94%) and the Nifty rose 44 points (0.77%) to settle at 5,747. The market is likely to continue its uptrend, but a close below 5,735 on the Nifty may result in a reversal.
 
The market closed with modest gains on Monday as it gained momentum in the second half of the day after a sluggish opening. Resuming after a day’s break on Wednesday, the indices managed a green close amid a range-bound session.
 
The government determination to pursue economic reforms to put the economy back on the growth track and support from the Asian markets led the market higher on Thursday. The market snapped its four-day winning steak and closed lower on Friday on pressure from technology, healthcare and banking stocks. A brief halt in trading on the NSE after erroneous orders executed by a trader also weighed on the sentiments.
 
Among the sectoral indices, BSE Realty (up 6%) and BSE Capital Goods (up 3%) were the top gainers while BSE Healthcare (down 1%) was the lone loser in the week.
 
The top Sensex gainers were BHEL (up 7%), Tata Motors , State Bank of India (up 5% each), Hindalco Industries and Hindustan Unilever (up 4% each). The key losers on the index were Bajaj Auto, Cipla, Hero MotoCorp (down 4% each), HDFC and Tata Power (down 3% each).
 
The Nifty was led by Jaiprakash Associates (up 8%), Ambuja Cement, BHEL (up 7% each), Siemens and Tata Motors (up 5%). Lupin (down 5%), Bajaj Auto, Cipla, Hero MotoCorp (down 4% each) and HDFC (down 3%) settled at the bottom of the index.
 
The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—stood at 52.8 in September, same as in August. The September reading points to a significant improvement in health of the manufacturing space as the sector witnessed the weakest growth rate in nine months in August.
 
The ongoing slowdown in the western economies pulled down India exports for the fourth month in a row in August to 9.74% to $22 billion. Imports too dipped by 5.08% to $37.95 billion, from $40 billion in August 2011, resulting in a trade deficit of $15.7 billion for the month. The development is expected to make the task of achieving $360 billion target in the current fiscal difficult.
 
Unfazed by the uproar over decision on foreign direct investment (FDI) in retail, the Union Cabinet on Thursday cleared FDI in pension sector while hiking the FDI limit in insurance to 49%. 
 
In global news, the US unemployment rate unexpectedly fell to 7.8% in September, falling below 8% for the first time in nearly four years, as employers added 114,000 jobs in the month, according to the Labor Department.
 
German Chancellor Angela Merkel is expected to visit to Greece next week for the first time, in a show of support for Athens after the debt-ridden nation said it will run out of money at the end of November without fresh international aid.
 

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Nifty Market View: Trade worth Rs6.5 billion brings the NSE on its knees!

Volatility is likely to remain high as a move on either side is likely

 

S&P Nifty close: 5,746.95

Market Trend

Short Term: Up                 Medium Term: Up                        Long Term: Down     

After a flat opening the Nifty rose for four consecutive trading sessions during which it briefly crossed the R2 level of the week before a weird sell-off (worth Rs6.5 billion or $125.3 million and 59 erroneous orders) saw the Nifty hit a low of 4,880 points. If the 2G and Colgate were not enough, Friday’s NSE fiasco has added another blot on this government’s functioning as the National Stock Exchange (NSE) is its brainchild. The much-touted systems of the NSE were floored in no time and one hopes that stringent action will be taken against the exchanges too as they flouted the Securities and Exchange Board of India (SEBI) norms laid down after circuit filters are hit. Anyway, there have been these stray incidences of prices hitting vague levels in individual stocks for the past few years but this time it was blown up because most of the heavyweights were hit at the same time. How can 59 erroneous orders be placed? It’s high time the exchanges look at solving this problem seriously and mischievous elements are kept at bay. Despite this ridiculous event the Nifty closed 43 points (+0.77%) in the green this week. Volumes were significantly lower as compared to the previous week. The histogram MACD, which is above the median level, moved higher indicating that the bulls remain in control even though the short-term oscillators have ventured into overbought territory.
 

The sectoral indices which outperformed were CNX Realty (+6.21%), CNX FMCG (+4.13%), CNX MNC (+2.34%), CNX Media (+2.24%), CNX PSE (+2.14%) and CNX Infra (+2.05%) and while the underperformers were CNX Pharma (-1.62%), CNX IT (-0.34%), CNX Service (-0.08%) and CNX Finance (-0.07%).

 

Here are some key levels to watch out for this week

 As long as the S&P Nifty stays above 5,752 points (pivot) the bulls will be in control.

 Resistance levels on the upside are pegged at 5,810 and 5,873 points.

 Support levels in declines are pegged at 5,688 and 5,630 points.

 

Some Observations

1.      The Nifty has completed the 61.8% retracement level of the decline from 6,338-4,770 points pegged at 5,740.

2.      The 78.6% retracement level of the fall from 6,338-4,770 points is pegged at 5,951 points, which also coincides with the top of the channel (in brown).

3.      The Nifty is now moving within a sharp up sloping channel (in blue), support from which is pegged around 5,453 points and resistance is pegged around 5,860 points, this week.

4.      We have closed above the previous weekly top of 5,629 points (24 February 2012) which is a sign of strength as long as it stays above it.

5.      The weekly chart above also shows a channel (in brown) the resistance line of which is pegged around 5,965 points. This should be closely watched in the week ahead.

6.      We have completed 89 weeks (Fibonacci number) from the top of 6,338 points (05 November 2010) hence one has to keep a close watch whether the market starts correcting from around current or slightly higher levels.

7.      The volumes were significantly higher as compared to the previous week which was also the case a week prior to the previous significant top of 5,629 points (24 February 2012). Hence one needs to be alert for the slightest sign of a break of support.

 

Strategy

We expected volatility to increase (as mentioned last week) but no stretch of imagination 4,880 points being hit could be dreamt of. The trend continues to be up and we might finish this rise with a spurt close to the 78.6% retracement levels as well as the resistance line of the channel in brown. If the bears have to turn things around they have to ensure a daily close below 5,694 points. Till then the bulls are very much in control even though the oscillators have reached overbought territory. We are at an inflection point so keep the seat-belts on as the volatility is likely to remain high as a move on either side is likely.


(Vidur Pendharkar works as a consultant technical analyst & chief strategist at www.trend4casting.com.)

 

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COMMENTS

Dipesh Dagha

5 years ago

We have completed 89 weeks (Fibonacci number) from the top of 6,338 points (05 November 2010) hence one has to keep a close watch whether the market starts correcting from around current or slightly higher levels.

This statement is being carried since last four weeks!! I dont understand the point of repeating it again and again even after the index has already surpassed that Fibo number of week. No significance to that now and its irrelevant!!!

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