We bring you an analysis of the major sectoral leaders and laggards for the March quarter
The Sensex has only marginally risen from its December quarter closing (17,465) to end up at 17,528 for the March quarter. However, for the past few weeks, the index has been chugging ahead at a fast pace. Some sectors were at the forefront of this rally while others have missed it altogether.
19 out of the 29 Moneylife sectoral indices have ended the March quarter in positive territory. Leading the pack is the cement sector, which has surged 17% over the December quarter closing. The acceleration in construction and infrastructure-related activity has resulted in strong demand for cement products.
Cement prices have shot up, giving a fillip to the top-lines of cement companies.
The consumer durables sector has also witnessed a sharp rally, rising 14% over this period. Higher disposable incomes through payment of arrears of the Sixth Pay Commission and NREGA payouts have boosted demand for consumer durables even in the rural sector.
Farm & farm inputs and non-ferrous metals indices have risen 12% each. In order to improve farmers’ conditions, agricultural inputs were relieved of the tax burden in the recent Budget.
Rounding up the top five is the auto components sector index, which rose 9% during this period. Automobile companies witnessed a spike in sales of passenger cars and two-wheelers that hugely benefited component manufacturers.
Among the laggards, the sugar index has witnessed a dramatic turnaround from last year’s rally, falling 24% over the past three months. A crash in sugar prices has spelt trouble for sugar companies. Many investors who bought sugar stocks near the peak of its record surge may be left licking their wounds.
The real-estate sector index has lost 13% of its value while the steel index has also tanked 8%. While property prices have slowly inched upwards, demand has not yet shown strength. With interest rates set to rise, the situation may turn worse. Steel manufacturers have had to contend with margin pressures following a surge in prices of iron ore, the main raw material in steel production.
Energy and oil & gas sector indices have also taken a beating, falling 6% and 4% respectively over this period.
Consumer forum orders bank to compensate customer, says it did not follow RBI guidelines on online fund transfers
In a significant ruling, the District Consumer Complaints Redressal Forum has held HDFC Bank responsible for unauthorised fund transfer in an Internet banking transaction, reports PTI.
In an order dated 25th March, the Forum directed the Bank to pay a customer the whole amount which had been transferred from his HDFC Bank account without his authorisation. The Forum, headed by MG Rahatgaokar, held that the Bank had failed to implement the guidelines issued by the Reserve Bank of India (RBI), for Net banking facility.
Nikhil Phutane, the complainant, has an account with HDFC's Santa Cruz (a Mumbai suburb) branch. Qatar National Bank, where he works, transferred Rs4,60,000 to his account in October 2008. However, Mr Phutane found out in November that his bank balance was zero.
The entire amount had been transferred—through net banking—to the account of a person called Dinesh Shukla, at Lucknow. According to Mr Phutane, he never authorised HDFC Bank to add Mr Shukla's name to the list of "third party beneficiaries" on his online account.
A police complaint was lodged, and Mr Shukla and four others, including two Nigerian nationals, were arrested, and Rs70,500 was recovered from them.
Mr Phutane demanded that the Bank return him the rest of the amount, as he was not at fault.
Since HDFC Bank refused to pay him the balance amount, he filed a complaint before the Forum. The Bank argued before the Forum that either Mr Phutane had inadvertently revealed his transaction password to someone, or the computer used by him had a virus.
It also argued that after the request for fund transfer was received from his online account, an SMS was transmitted and an email was sent to Mr Phutane, for confirming the request. Since no reply came (from Mr Phutane), the funds were transferred.
But the Forum held that Bank failed to prove that such an alert had been sent. Further, it held that simply because Mr Phutane failed to respond to the mail, the Bank should not have proceeded with the transfer.
The Bank had failed to implement the "National Electronic Fund Transfer (NEFT) guidelines, issued by the RBI," the Forum held, asking it to pay Mr Phutane the balance amount. In addition, the Forum also asked the Bank to pay Rs35,000 to him, on account of "mental agony" faced by Mr Phutane, and legal expenses.
Although a demat account has nothing to do with the derivatives segment, some brokers like MF Global are insisting on this requirement
A derivatives trading account has nothing to with a demat account. A demat account is needed to transact in shares in the cash segment where deliveries of shares have to be received and given. A derivatives account allows one to trade in the futures and options segment where no deliveries are possible. An investor dealing in derivatives can pay the margin by cheque and transact to the extent his account balance allows him to. The only time demat and derivatives can get linked is when an investor prefers to offer his stocks as margin for derivatives trading.
Even then, it would not be mandatory to open a demat account with the same broker where derivatives trading is done. However, some brokerage firms are insisting on a demat account even for opening an account in the derivatives segment.
Recently, MF Global India Private Ltd, a leading brokerage house providing exchange and over-the-counter derivatives services, refused to open a client’s account because he only wanted to trade in the derivatives segment. The client’s application was refused on the grounds that it is mandatory to open a demat account with MF Global even when the client has no intention to buy and sell shares.
“It is not mandatory to open a demat account to trade only in the derivatives segment. It is not our internal policy to compulsorily open demat accounts for our trading clients,” said Sandeep Gupta, compliance officer, MF Global, in an email sent to Moneylife. On the specific issue cited above, Mr Gupta could not be reached for his comments today.
“They ask you to open the demat account in advance in case if you trade in the cash segment in the future. If a client only wants to deal in derivatives, then it is not mandatory,” said Ketan Malkan, senior vice president, India Infoline Ltd.
“One can open as many demat accounts as one wants. We insist on having a demat account because the derivatives segment is a big game compared to the cash segment. If the market crashes or client loses we can use the stocks as collateral,” said a top official of a Mumbai-based brokerage house.
“Currently, it’s not necessary, but it may become mandatory in the future if investors have an option of physical settlement of derivatives trade,” said Alok Churiwala of Churiwala Securities Ltd.