Monday’s move may decide future short-term direction, which may be up
Although the market snapped its two-day losing steak, it pared off all the morning’s gains on dismal global cues and as investors pondered over S&P’s downgrade. At present the Nifty is indecisive and Monday’s move may decide the future trend. The National Stock Exchange (NSE) saw a volume of 56.87 crore shares.
The market opened unchanged as the markets in Asia were mixed in morning trade following a Standard & Poor’s downgrade of Spain’s credit rating. The Nifty opened unchanged at 5,189 and the Sensex rose 17 points to resume trade at 17,145.
Brushing the global weakness, the domestic benchmarks soon hit their day’s high on across-the-board buying, which also helped the sectoral indices trade higher. At the highs, the Nifty touched 5,223 and the Sensex climbed to 17,242.
The indices managed to hold to the gains till late morning trade, after which profit booking resulted in the market wiping its gains and venturing into the negative. The market fell to its intraday low in the noon session following a lacklustre opening by the key European indices. At this point, the Nifty fell to 5,154 and the Sensex went back to 17,022.
However, the market managed to recover from its lows and close flat with a positive bias, ending its two-day losing streak. The Nifty added two points at 5,191 and the Sensex while the rose by three points to finish at 17,134.
The advance-decline ratio on the NSE was negative at 644:1006.
The broader indices settled in the negative with the BSE Mid-cap index losing 0.11% and the BSE Small-cap index declining 0.42%.
BSE Consumer Durables (up 1.44%); BSE IT (up 1.20%); BSE TECk (up 0.67%); BSE Bankex (up 0.16%) and BSE Auto (up 0.13%) were the key sectoral gainers. The top losers were BSE PSU, Fast Moving Consumer Goods (down 0.84% each); BSE Metal, BSE Realty (down 0.83% each) and BSE Capital Goods (down 0.34%).
ICICI Bank (up 2.28%), which posted better-than-expected results was the top gainer on the Sensex. It was followed by Hindalco Industries (up 2.15%); GAIL India (up 1.53%); Infosys (up 1.36%) and Mahindra & Mahindra (up 1.21%). The main losers on the index were Coal India (down 2.24%); State Bank of India (down 1.55%); BHEL (down 1.47%); Bajaj Auto (down 1.43%) and Jindal Steel (down 1.41%).
The Nifty was led by Hindalco Ind (up 2.54%); ICICI Bank (up 2.25%); HCL Technologies (up 1.72%); Infosys (up 1.63%) and GAIL India (up 1.61%). SAIL (down 3.02%); Coal India (down 2.35%); IDFC (down 2.34%); ACC (down 2.06%) and SBI (down 2%) were the main losers.
Markets in Asia, which were mixed in morning trade, settled mostly lower as European concerns overshadowed the Bank of Japan’s announcement that it would increase its asset purchase programme by 10 trillion yen ($124 billion).
The Shanghai Composite fell by 0.35%; the Hang Seng declined 0.33%; the Jakarta Composite dropped 0.39%; the KLSE Composite tanked 0.75%; the Nikkei 225 fell by 0.43% and the Taiwan Weighted was down by 0.54%. Bucking the trend, the Straits Times settled flat at 2,982 and the Seoul Composite gained 0.58%. At the time of writing, two of the three the key European benchmarks were in the green and the US stock futures were mixed.
Back home, foreign institutional investors were net sellers of shares totalling Rs376.08 crore on Thursday. On the other hand, domestic institutional investors were net buyers of shares amounting to Rs63.49 crore.
Two-wheeler manufacturer TVS Motor Company has signed a memorandum of understanding (MoU) with Central Bank of India to offer loans for its three wheeler TVS King at all 4,000 branches. As per the agreement, the bank will offer 90% funding to TVS King customers, TVS Motor Company said in a statement. The stock declined 1.66% to close at Rs38.55 on the NSE.
Kolkata-based NBFC Magma Fincorp plans to set up a 100% subsidiary for housing finance. The company will soon apply for a licence to the National Housing Bank, said Sanjay Chamria, vice-chairman and managing director, Magma. The stock gained 1.58% to close at Rs70.90 on the BSE.
MRF has begun tyre production at its new Rs900 crore plant in Tiruchi (Tamil Nadu).The plant which will manufacture a full range of tyres, will cater to both domestic and export requirements. The stock rose 0.18% to settle at Rs11,251.10 on the NSE.
“Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening...” IMF said
New Delhi: Cautioning that governance concerns have weakened business sentiment in the country, the International Monetary Fund (IMF) on Friday lowered India's growth projection to 6.9% for 2012, reports PTI.
The IMF in January pegged Indian economic growth to expand 7% for this year.
“In India, the lowered growth outlook in 2012 owes much to a slowdown of investment which partly reflects structural factors,” the multilateral agency said.
IMF called for renewed efforts to revive the ‘flagging’ structural reform agenda.
Apart from some financial reforms and measures to broaden the use of public-private partnerships (PPPs) announced in the 2012-13 Budget, the implementation of reforms related to infrastructure is likely to proceed slowly, it noted.
IMF’s Asia-Pacific Regional Economic Outlook released today also pointed out that domestic factors too have played a role in India’s growth slowdown over the second half of 2011.
“Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening...” IMF said.
However, the multilateral agency has retained India’s growth estimate at 7.3% for 2013. As per the IMF, the national economy grew by 7.1% last year.
IMF also called for steps to improve investment climate, remove infrastructure bottlenecks and expand education opportunities, thereby boosting reforms.
“It is also important for India to make progress in reducing barriers to trade, in order to maximise the potential of its continuing demographic dividend,” IMF said.
On price rise, the multilateral agency stressed that fiscal consolidation is the key to containing inflationary pressures and creating space for priority development needs.
Headline inflation declined to 6.89% in March, from 6.95% in February.
“Consolidation efforts should focus on limiting non-priority spending, including fuel-related subsidies, while providing more room for public investment and health and education,” the report said.
Another overseas fund of funds scheme is set to launch with little clear edge over Indian equities
Since the beginning of this year three fund houses have filed offer documents with the Securities and Exchange Board of India (SEBI) to launch overseas fund of funds. Two of them DSP Blackrock US Flexible Equity Fund and Reliance US Dollar Fund filed their offer documents last month itself. ICICI Prudential had earlier filed its offer document to launch ICICI Prudential US Bluechip Equity Fund, but it is yet to be launched. Now the fund house plans to launch another overseas fund of funds—ICICI Prudential Global Stable Equity Fund. This scheme would invest 80%-100% of its assets in units/shares of Nordea 1—Global Stable Equity Fund (N1—GSEF) and/or similar overseas mutual fund schemes. The remaining part of the portfolio would be invested in domestic money market securities or schemes. The objective of the scheme is to provide ‘adequate’ returns by investing in the units of the overseas funds. But why would one want to invest in an overseas fund when one could earn more than adequate returns by investing in Indian equity? Not to forget the tax benefit. Moneylife analysed the returns of the foreign fund N1—GSEF and found that the Sensex performed much better in most of the periods.
Excluding the last one-year period, the Sensex has performed much better in the long-term periods. Had one invested in a good equity diversified fund in the same period one would have earned better returns. The prospectus of the fund mentions that the “investment manager for the fund would focus on equities providing a potential of stable return over a time span of several years”. However, it seems that it would take the fund some more years to stabilise.
The fund has as holding of over 104 companies from various countries and sectors. Around 52% of the fund’s portfolio is invested in US stocks. The fund is also invested in stocks of UK, Japan, France and Switzerland. Its top five holdings include Abbott laboratories, Wal-Mart Stores, Exxon Mobil, Microsoft and Johnson & Johnson, all of which are based in the US.
Additional Scheme Details
Minimum Investment amount: Rs5,000 and in multiple of Rs1,000 thereof
Additional Investment amount: Rs1,000 and in multiple of Rs1,000 thereof
Minimum Instalment for SIP: Rs1,000
Annual scheme recurring expenses: 2.5% p.a. of average daily net assets
Exit load if switched before one year: 1%, and nil after one year
Taxation: Investors would be subject to long-term and short-term tax on capital gains