Nifty may try to rally if today’s low holds since the recent declines have been on low volumes
The market pared its morning gains on selling pressure from consumer durables, banking and realty sectors. The Nifty may try to rally if today’s low holds since the recent declines have been on low volumes. The National Stock Exchange (NSE) saw a volume of 48.70 crore shares and advance-decline ratio of 682:714.
The domestic market opened on a flat note on concerns about the slowing pace of economic growth. On the global front, markets in Asia were mixed in morning trade on speculations that the US Federal Reserve will continue its bond-buying initiative on the back of a contraction in US manufacturing data for May. US indices settled higher on Monday amid volatile trade after Federal Reserve Bank of Atlanta President Dennis Lockhart said central bank is committed to record stimulus measures.
Back home, the Nifty opened two points up at 5,941 and the Sensex resumed trade at19,606, down four points from its previous close. Buying in metal, oil & gas PSU and healthcare stocks helped the benchmarks gain momentum after a sluggish start.
The indices continued their steady rise and hit their intraday highs at around 10.30am on support from capital goods, healthcare, banking and realty sectors. The Nifty touched 5,982 and the Sensex climbed to 19,743 at their respective highs.
The indices pared part of their gains as profit booking set in at higher levels. The market was range-bound till noon-trade in the absence of any fresh triggers.
The benchmarks slipped into the negative in the post-noon session on media reports that the Reserve Bank of India (RBI) plans to take early action against banks whose officials were recently caught in a sting operation willing to indulge in serious violation of banking norms. State Bank of India, Axis Bank, HDFC Bank and ICICI Bank were all trading lower following the report.
The market extended its losses as the indices touched their lows in the last half hour of trade with the banking sector among top losers. The Nifty fell to 5,910 and the Sensex declined to 19,522.
The benchmarks settled near their low and in the red for the third day. The Nifty ended 20 points (0.33%) lower at 5,919 and the Sensex finished the session at 19,546, a fall of 65 points (0.33%).
The broader market closed in the positive with the BSE Mid-cap index rising 0.10% and the BSE Small-cap index gaining 0.27%.
The sectoral gainers were BSE Healthcare (up 1.88%); BSE Capital Goods (up 0.77%); BSE Power (up 0.44%) and BSE fast moving consumer goods (up 0.31%). The main losers were BSE Consumer Durables (down 1.34%); BSE Bankex (down 0.95%); BS Realty (down 0.86%); BSE Auto (down 0.46%) and BSE IT (down 0.45%).
Out of the 30 stocks on the Sensex, 14 settled higher. The top gainers were Dr Reddy’s Laboratories (up 1.88%); Cipla (up 1.83%); Wipro (up 1.60%); Larsen & Toubro (up 1.56%) and Mahindra & Mahindra (up 1.13%). The major losers were Tata Motors (down 2.34%); State Bank of India (down 2.11%); Jindal Steel & Power (down 1.98%); HDFC (down 1.61%) and Sterlite Industries (down 1.40%).
The top two A Group gainers on the BSE were—Bata India (up 6.61%) and GlaxoSmithKline Consumer Healthcare (up 6.02%).
The top two A Group losers on the BSE were—Jaypee Infratech (down 5.23%) and Dish TV India (down 3.25%).
The top two B Group gainers on the BSE were—Williamson Financial Services (up 19.42%) and Sukhjit Starch & Chemicals (up 17.60%).
The top two B Group losers on the BSE were—Splash Media and Infra (down 19.94%) and Rei Six Teen Retail (down 18.81%).
Of the 50 stocks on the Nifty, 21 ended in the in the green. The main gainers were Ranbaxy Laboratories (up 4.22%); Dr Reddy’s (up 2.52%); Cipla (up 2.42%); Lupin (up 2.03%) and L&T (up 1.78%). The key losers were Tata Motors (down 2.53%); Axis Bank (down 2.51%); Sesa Goa (down 2.21%); SBI (down 2.07%) and Ambuja Cement Company (down 1.91%).
Markets in Asia closed on a mixed note as the Japanese market rose on support from financials, consumer durables carmakers while Chinese shares settled lower on pressure from consumer companies after the government ended subsidies for home appliances with effect from 1st June.
The Hang Seng added 0.01%; the Jakarta Composite climbed 1.01%; the KLSE Composite gained 0.59%; the Nikkei 225 surged 2.05% and the Straits Times rose 0.01%. Among the losers, the Shanghai Composite dropped 1.17%; the Taiwan Weighted lost 0.12% and the Seoul Composite ended flat with a negative bias.
At the time of writing, the CAC 40 of France was trading 0.31% higher, the DAX of Germany was up 0.50% and UK’s FTSE 100 gained 0.70%. At the same time, US stock futures were mixed with a negative bias.
Back home, institutional investors, both foreign and domestic, were net sellers in the equities segment on Monday. While FIIs withdrew Rs86.66 crore from stocks, DIIs pulled out funds worth 71.82 crore.
Wind energy major Suzlon today said its unit REpower Systems has signed contracts with ABO Wind for the supply of 13 wind turbines. “The turbines will be installed for two wind farms in Burgundy. The wind farms will generate a total output of more than 26 megawatts (MW),” Suzlon said in a statement. The stock gained 1.42% to Rs10.75 on the NSE.
Mobile value-added services provider On Mobile Global has entered into a definitive agreement to acquire Boston-headquartered Livewire Mobile, a provider of managed mobile entertainment solutions for network operators and device manufacturers. On Mobile will pay $17.8 million for the purchase of LiveWire’s business assets and certain liabilities, subject to certain contingent payments, the Bangalore-based company said on Tuesday. OnMobile advanced 1.88% to close at Rs35.20 on the NSE.
Lanco Infratech has been awarded a major EPC contract by Gujarat Industries Power Company. The contract, worth Rs3,294 crore, is for setting up of 2x300 MW lignite-based thermal power project. The stock gained 3.41% to close at Rs9.10 on the NSE.
“Any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery,” the RBI said, adding the restrictions are applicable with immediate effect
The Reserve Bank of India (RBI) today extended the restrictions on gold import to other agencies in addition to banks, in a bid to curtail demand for the precious metal for domestic use amid widening current account deficit (CAD).
“It has now been decided to extend the provisions (of 13th May circular) to all nominated agencies/premier/star trading houses ...accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery,” the RBI said, adding the restrictions are applicable with immediate effect.
On 13th May, such restrictions were put on banks.
RBI also said all Letters of Credit (LC) to be opened by nominated banks and agencies for import of gold “under all categories will be only on 100% cash margin basis”.
Further, it said, all imports of gold will necessarily have to be on “Documents against Payment (DP)” basis as the imports on “Documents against Acceptance (DA)” will not be permitted.
The restrictions will, however, not apply to import of gold to meet the needs of exporters of gold jewellery.
The government and RBI have been taking steps to reduce gold import. High import has widened the CAD, with such deficit hitting a record high of 6.7% of GDP in the third quarter of 2012-13.
The import of the yellow metal during the first two months of the current fiscal are estimated at $15 billion.
Gold imports by India, the world’s largest consumer, stood at 860 tonnes in 2012.
Yesterday, the Financial Stability Development Council (FSDC), chaired by finance minister P Chidambaram, had discussed the issue of high import of gold.
The RBI found irregularities like violation of KYC norms and cash transactions being sliced into smaller amounts, gold sold without following norms and using cooperative banks as conduit for issuing cheques
Not absolutely ruling out money laundering, the Reserve Bank of India (RBI) plans to take early action against banks whose officials were recently caught on tape in a sting operation willing to indulge in serious violation of banking norms.
Leaving it to Parliament the issue of amending laws to provide heavier penalty on banks indulging in such acts, RBI governor D Subbarao also dismissed perceptions that the central bank was going soft on errant banks.
“What action? I cannot tell you because action on this has to be taken at lower level at the RBI. So it is premature to conclude that the RBI is going soft or harsh on this. We got to follow a process. Just because media is investigating today, we can’t say the RBI has to penalise tomorrow otherwise it is soft,” he told the media.
The governor said that under rule of law, there is a process to be followed and it was being followed.
“After the process comes to a close, which I hope is sooner rather than later. If you believe the penalty has been too soft or too harsh, you have a privilege to make a statement,” he said.
Referring to the special investigation that was done into Cobrapost’s expose on some major private banks, Subbarao said the bank managements were issued show-cause notices and action will be taken accordingly.
He said the RBI alone cannot check money laundering and banks too cannot ascertain the source of money while taking deposits.
“Is this money laundering, we do not know... we are not saying there is no money laundering. I am saying whether this money laundering has to be investigated by a much bigger process involving much bigger agencies,” Subbarao said.
When asked about the penalty which could be imposed on erring banks, he said the RBI can levy a maximum of Rs1 crore.
“Barclays was penalised $450 million and HSBC was some amount like that. So we are talking about peanuts here,” Subbarao said, adding, it was up to law makers whether to increase the penalty or not.
He was replying to a question whether penalty on banks needed to be increased.
RBI had launched the investigation into the working of banks following the expose which showed some bankers giving suggestions to customers on ways to bypass regulatory norms.
Subbarao said following the expose, RBI carried out a special investigation of the three private banks and 40-45 branches and also their head offices were looked into.
He said a thematic study of 30 banks was also done to see if the problem was in whole system or in certain banks only.
Subbarao said the RBI found irregularities like violation of KYC norms and cash transactions being sliced into smaller amounts, gold sold without following norms and using cooperative banks as conduit for issuing cheques.
The expose had named several banks in both public and private sector banks and also insurance companies whose officials were shown purportedly willing to violate several banking norms and were prepared to do money laundering.