Listing of bourses and variable pay for exchange management staff allowed
The Securities and Exchange Board of India (SEBI) today misleadingly claimed that it has "broadly accepted" the Bimal Jalan-headed committee report on market infrastructure institutions (MII) submitted about one-and-half years ago. The following decisions have been taken in the SEBI board meet: The stock exchanges will have minimum net worth of Rs100 crore and the existing stock exchanges will be given three years to achieve it. It said, stock exchanges would have a diversified ownership and no single investor will be allowed to hold more than 5% except the stock exchange, depository, insurance company, banking company or public financial institution, which may hold up to 15%.
Currently, the ownership of the stock exchanges is restricted to 5% of the shares being held by a single entity. Stock exchanges, the depository and clearing corporations are allowed to hold 15% collectively and the holding of existing trading members is restricted to 49%. Persons residing outside India, investing through the foreign direct investment (FDI) and foreign institutional investor (FII) routes are allowed to hold 49% cumulatively, which is further sub-divided into 26% through FDI and 23% through FII routes.
According to the SEBI statement, the minimum net worth for the clearing corporation (CC) and the depository will be Rs300 crore and Rs100 crore, respectively. All existing clearing corporations shall be mandated to build up to the prescribed net worth of Rs300 crore over a period of three years from the date of notification/ circular, it added.
In a statement, a senior official from NSE, who does not wanted to be quoted, said, "It is a welcome and significant development of considerable importance to the MII industry. It should have a significant impact on the way the MII industry is structured."
The exchanges will not be allowed to list on itself and 51% of the stock exchanges will be held by public. No single investor will be allowed to hold more than 5% in exchanges. At least 51% clearing corporation will be held by stock exchanges.
The public interest directors representation on board of stock exchanges will be 50%, and will be two-third of the board strength. The appointment of all directors to the board of exchanges will be subject to approval by SEBI. Stock exchanges will be mandated to transfer 25% of their profits to the Settlement Guarantee Fund (SGF) of the clearing corporation.
The Bimal Jalan Committee was appointed in February 2010 to deliberate on governance, ownership, listing of bourses and other issues. The Committee appointed to "Review of Ownership and Governance of Market Infrastructure Institutions (MIIs)" submitted its report to SEBI in November 2010. However, it was dubbed as damp squib by market participants.
Clearly SEBI has not accepted a large number of suggestions of Bimal Jalan Committee. Mr Jalan, a former RBI (Reserve Bank of India) governor, who quit the central bank rather abruptly and was made a Rajya Sabha member in early 2003, was appointed by former SEBI chief CB Bhave to review the issue of ownership and governance of stock exchanges, among other market infrastructure institutions 2010.
He had suggested some bizarre ideas such as limiting the ownership of stock exchanges, allowing only 24% of capital in depositories to be held by exchanges, key executives will not have any variable component in their remuneration (even though "remuneration should be determined after giving due regard to industry standards"!), no listing of exchanges and that stock exchanges and other institutions should not be making money more than a few percentage points above the RBI bond rate. He came up with the idea of capping profits.
In taking the above decisions, the current SEBI chairman has not exactly trashed Mr Jalan's ideas but has certainly undermined the fundamental basis of Jalan report philosophy.
Jewellers across the country have suffered a business loss of around Rs14,000 crore while the revenue loss for the government comes to about Rs690 crore, due to the ongoing strike against the excise duty hike in Budget 2012-13
The ongoing indefinite nationwide strike by jewellers, demanding roll back in the excise duty announced in the Union Budget, is proving to be a costly affair not for the jewellers, but also for the government. On Monday, the strike entered into its 17th day.
In a statement, the All India Jewellers Association (AIJA), said, “…with continuous nationwide strike of 17 days, there is an estimated loss of business worth Rs14,000 crore resulting into a loss of custom duty revenue of Rs550 crores to the central government and about Rs140 crore loss has been caused to state governments on account of VAT.”
According to the Association, the government has fetched only Rs25 crore as tax from jewellers during the past 17 days. The Association has urged the government to act wisely and accept genuine demand of traders by rolling back the excise duty immediately.
“We do not mind paying taxes, but we will not pay any excise duty. What is the rationale behind (charging) it? The government will soon announce the Goods and Services Tax (GST), so there is no point in levying the excise duty and therefore we demand complete roll back of this (excise duty). Till then the strike will not be called off,” said Manish Jain, of Rajmal Lakhichand, one of the biggest jeweller in Maharashtra.
Sarafa bazaars (jewellery markets) in Delhi, Maharashtra, Gujarat, Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, West Bengal, Chhattisgarh, Tamil Nadu and in other states remained completely closed and no trading activities took place as markets wore deserted look, the AIJA said in the release.
To control the current account deficit (CAD) partly caused by the imports of gold and other precious metals in the first three quarters of this fiscal, the finance minister has proposed additional duties to limit the imports of gold and silver. Finance minister Pranab Mukherjee has proposed to increase import duty on gold to 4%, increase excise duty on branded and non-branded jewellery by 1%, 2% tax on cash sales of over Rs2 lakh, while removing the 1% excise duty on branded silver jewellery.
To protest against the hike, jewellers from across the country are on a strike since 17th March.
AIJA, in an earlier release said, “…the trade does not hesitate to collect and pay taxes in any other form like surcharge or cess but certainly not interested in becoming subject to one another department of excise. Already the trade is subject to numerous other taxes like custom duty, VAT, directly and several other taxes indirectly. Further, the traders are required to comply with other state and local self-government laws, rules and Acts.”
Measures announced in Budget 2012-13:
Nifty may rally to 5,365 and thereafter to 5,400. Watch previous day’s lows for signs of a reversal
The market closed higher for the second day in a row amid highly volatile trade. The Indian market will see a truncated week with the bourses remaining closed on Thursday and Friday for local holidays. On the lowest volume of 58.35 crore shares in the past 20 trading session (including today) on the National Stock Exchange (NSE), the Nifty made a positive move and hit a seven-day intraday high of 5,332 today. We had mentioned in our Friday's closing report that if the benchmark manages making a higher high and stays above 5,290, we may see an upmove to the level of 5,365, and then up to 5,400. We continue to maintain this.
The market opened flat despite positive global cues and institutional buying support. The Nifty opened unchanged at 5,296 and the Sensex started the day at 17,430, up 26 points above its previous close.
Select buying soon lifted the indices higher but choppiness saw the market fluctuate in the positive terrain. But profit booking soon saw the benchmarks drift lower and touch the day's low just after 10.30am. At the lows, the Nifty touched 5,279 and the Sensex went back to 17,382.
However, buying in capital goods, banks, realty and power stocks helped the market see a staggered upmove to hit its intraday high in noon trade. At that point, the Nifty rose to 5,332 and the Sensex touched 17,530.
Selling pressure at higher levels resulted in the indices paring their gains in subsequent trade. The market closed higher for the second day with the Nifty gaining 22 points to 5,318 and the Sensex finishing trade at 17,478, up 74 points.
The advance-decline ratio on the NSE was positive at 1065:389.
The broader indices outperformed the Sensex today as the BSE Mid-cap index gained 1.08% and the BSE Small Cap index climbed 1.68%.
BSE Consumer Durables (up 3.89%); BSE Power (up 1.89%), BSE Capital Goods (up 1.74%); BSE Realty (up 1.59%) and BSE Bankex (up 1.02%) were the top gainers in the sectoral space. BSE Oil & Gas (down 0.28%); BSE Metal (down 0.27%); BSE Healthcare (down 0.13%) and BSE Auto (down 0.06%) settled lower.
The Sensex was led by DLF (up 2.88%); NTPC (up 2.74%); TCS (up 2.01%); Larsen & Toubro (up 1.96%) and Mahindra & Mahindra (up 1.66%). The key losers were Bajaj Auto (down 1.45%); Hindalco Industries (down 1.39%); Sterlite Industries (down 1.26%); Reliance Industries (down 1%) and Hindustan Unilever (down 0.98%).
The key performers on the Nifty were Jaiprakash Associates (up 4.65%); Reliance Infrastructure (up 4.60%); Reliance Power 4.23%); HCL Technologies (up 3.86%) and NTPC (up 3.23%). The laggards were Ranbaxy Laboratories (down 2.64%); BPCL (down 1.66%); Bajaj Auto (down 1.47%); Sterlite Ind (down 1.31%) and Dr Reddy’s Laboratories (down 1.29%).
Better-than-expected manufacturing output data from China helped markets in Asia settle higher. China's official PMI (Purchasing Managers' Index) jumped to an 11-month high of 53.1 in March, up from February's 51.
The Jakarta Composite climbed 1.08%; the KLSE Composite gained 0.47%; the Nikkei 225 rose 0.26%; the Straits Times added 0.19% and the Seoul Composite surged 0.76%. On the other hand, the Hang Seng fell by 0.16% and the Taiwan Weighted dropped 0.88%. Shanghai Composite, the Chinese benchmark was closed for trade today. At the time of writing, the key European indices were mixed while the US stocks futures were marginally higher.
Back home, foreign institutional investors were net buyers of shares totalling Rs962.65 crore while domestic institutional investors were net sellers of shares amounting to Rs167.32 crore on Friday.
Tile manufacturer Kajaria Ceramics today said its board has approved acquisition of 51% stake in Andhra-Pradesh based Vennar Ceramics for up to Rs13.65 crore. The acquisition will help Kajaria to cater to the southern markets from Veenar’s new plant enabling the company to reduce the transit time for delivery of goods and savings in transportation costs. Kajaria closed 0.94% lower at Rs168.50 on the NSE.
Pharma major Strides Arcolab today said it has received approval from the Canadian health regulator for antibiotic tobramycin injection used for treating bacterial infections. The approval was granted under the expedited review process being adopted by Health Canada to address the severe drug shortage situation in the country. The stock surged 2.45% to close at Rs601.20 on the NSE today.
In a first instance of the government allowing an actual user from private sector to import gold directly, Tata Group firm Titan Industries has been given nod to bring the yellow metal from overseas market. This will open the doors to other actual users from the private sector to import gold directly under approval route, a commerce ministry official said. The stock jumped 6.50% on the NSE.