Sensex, Nifty to rally upto 16th: Weekly Closing Report
The market shot up on expectations of strong showing by BJP and NDA. If so, the indices will stay buoyant till 16th.

The BSE 30-share Sensex closed the week that ended on 9th May, at 22,994.23 (up 590 points or 3%), while the NSE’s 50-share Nifty closed at 6,858.80 (up 164 points or 2%) for the week. We had mentioned in the past week that this reporting week may see the Sensex, Nifty making gains. Although the markets started the week on a weak note, on Friday the indices surged to new life time highs.
The indices closed in the positive on Monday. Although the index tried edging higher the gain were marginal with the index giving up most of the intra-day gains by the end of the session. Nifty closed at 6,699 (up 5 points or 0.07%). The positive news from the US labor market played on the market sentiments. The 288,000 increase in employment marked the biggest upside surprise since February 2012 and followed a 203,000 rise the prior month. An index measuring the share of industries hiring climbed to 67, the highest level since January 2012. The jobless rate dropped to 6.3%, the lowest since September 2008.
On Tuesday the market tried moving higher, as well. The OECD said that India's economy may make a gradual recovery this year, helped by a rebound in capital investments as well as a pick-up in private consumption, but rising bad loans at its banks threaten to choke the recovery. Nifty closed at 6,715 (up 16 points or 0.24%).
On Wednesday, Nifty edged lower and closed at its lowest since 27 March 2014. Nifty closed at 6,653 (down 63 points or 0.93%). On one hand, US trade deficit narrowed in March as exports grew by the most in nine months, while on the other hand, services index in China from HSBC Holdings Plc and Markit Economics dropped to 51.4 in April from 51.9 in the previous month. On Thursday too, Nifty was listless closing at 6,660 (up 7 points or 0.11%).
India Ratings & Research, a Fitch Group Company anticipates gold prices to decline in  FY15 to the range of Rs25,500/10g to Rs27,500/10g.
On Friday the market began slowly but soon it rose vertically as speculators massively build positions in frontline banking and cement stocks, on an assumption that NDA is likely to get a majority and come to power easily. The index closed at its new life time high. Nifty closed at 6,859 (up 199 points or 2.99%) and Sensex closed at 22,994 (up 650 points or 2.91%).
For the week, the top two performers among the NSE indices were Bank (7%) and Energy (5%) while the worst two performers were I T  (-3%) and Pharma (-2%).
Among the Nifty stocks, the top five stocks for the week were ICICI Bank (10%); Hindalco Industries (9%); IndusInd Bank (8%); Bharat Heavy Electricals (8%) and Reliance Industries (7%) while the top five losers were Bharti Airtel (5%); Lupin (-4%); HCL Technologies (-4%); Infosys (-3%) and Tech Mahindra (-3%).
Of the 1,422 companies on the NSE, 656 companies closed in the green, 722 companies closed in the red while 44 companies closed flat.
 Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:

ML Top sector   ML Worst sector  
Refineries 3% Telecom Services -5%
Con_EPC_Infra 2% Software & I T Services -3%
Industrial Intermediates 2% Media -2%
Consumer Durables 2% Financial Services -2%
Chemicals 1% Cement -2%



RIL, BP and NIKO issue arbitration notice to government
Is Reliance putting pressure to implement 10th January gas pricing guidelines?

Reliance Industries Ltd (RIL) and its partners BP plc of UK and Niko Resources has issued a notice of arbitration to the Indian government seeking implementation of domestic natural gas pricing guideline 2014 that were notified on 10 January 2014.
"We requested the government to announce the gas prices as soon as the Model Code of Conduct was over, with effect from 1 April 2014 given that fact that our contracts had expired in March 2014. The ministry of petroleum and natural gas (MoPNG) indicated gas prices would only be announced for the 2nd quarter 2014, completely ignoring the Cabinet decision to change prices from 1 April 2014. This contradictory move has resulted in a loss to the contractor group and the government of Rs300 crore per month," RIL said in a note.
According to sources, the stock market anticipates the Manmohan Singh government to take a decision on this issue between13th to 16th May, as the model code of conduct would come to an end on 12th May. On Friday, RIL share price rose about 4% to Rs997.35 on the BSE, while the 30-share benchmark ended the day around 3% higher at 22,994. 
According to the joint statement issued by the three companies, the non-implementation of the guidelines, is delaying their ability to appraise and develop other significant discoveries made last year. 
"The continuing delay on part of the Government of India in notifying the price in accordance with the approved formula for the Gas to be sold has left the Parties with no other option but to pursue this course of action.  Without this clarity, the Parties are unable to sanction planned investments of close to $4 billion this year," the companies said in a joint release.
It said, "Overall, the Parties were planning to invest $8-10 billion in the next few years to significantly increase production from the KGD6 block. This domestic production is essential for meeting India’s energy needs and will also help conserve foreign exchange which is required for imports of natural gas into India at the present time. All of this requires clarity on pricing."
According to the note, gas pricing has been debated for over two years with a Cabinet decision, which approved a Rangarajan Committee price formula in 2013. This price formula was not an arms-length price as per the Production Sharing Contracts (PSC), yet it showed intent to move towards and transition to arms-length pricing. However, implementation of the Cabinet decision has been deferred leading to no clarity on gas price from 1 April 2014 for the contractor group to plan their future investments.
The government notification, dated 10 January 2014, giving effect to this price, was actually gazetted on 17th January, for the price to be effective from 1 April 2014.
Although the contract and revision of price structure has been going on for months now, the Oil Ministry decided to approach Election Commission for clearance to announce the price because of the election schedule. The poll watchdog committee advised the government to hold the rate till mid May, by which time actual voting process would be completed.
Last year in June, the Cabinet Committee on Economic Affairs (CCEA) headed by prime minister Manmohan Singh approved near doubling of natural gas prices to $8.4 per million metric British thermal unit (mmBtu) from 1 April 2014, a move that may result in rise in power tariff, urea cost and CNG prices.
While RIL’s KG-D6 gas price was fixed in 2007 at $4.205 per mmBtu for first five years of production, APM gas rates were last revised in June 2010 when prices were raised to $4.2 from $1.79. RIL began production from its eastern offshore KG-D6 field in April 2009.
Apart from basic price per unit, RIL believes that the new price will be effective for supplies between 1st April and 30th June and it is only the dollar value to calculate the price, which has to be announced (or reconfirmed).
Fertilizer companies, on the other hand, have taken a stand that whatever the new price is fixed by the government, it cannot be applicable "retroactively". The new price, in any case, excludes local levies, marketing margins and transmission tariff. 
In the past, Reliance charged 13.5 cents per mmBtu as marketing margin over and above government set price of $4.205 per unit from KG-D6 gas, for the first five years' production, which ended on 31st March. 
The Rangarajan formula would be applicable for five years.
The Rangarajan formula uses long-term and spot liquid gas (LNG) import contracts as well as international trading benchmarks to arrive at a competitive price for India.
While the Rangarajan panel had recommended revising domestic gas prices every month based, the oil ministry changed it to a quarterly revision.
Though the average of the two currently comes to $6.775, the price of gas from April 2014 if these guidelines come into effect would be around $8.42 and over $10 in the following year. This is because Petronet’s deal with Qatar’s RasGas (India’s only functional long-term LNG contract) had a price-cap, which was lifted in January 2014, linking gas prices fully with crude.





2 years ago


Monster Rally in Sensex, Nifty will keep the market trending higher: Friday closing report

Nifty is likely to continue to trend higher until May 16th

The Indian market started on started on a sedate note and fell mildly into the negative as well.  After this, around 12:00 noon, it began its monster rally and closed at its new life time high. Both Sensex and Nifty made the highest daily gain since 19 September 2013.

Sensex opened at 22,375 and moved higher to hit a life time high of 23,048 after hitting a low of 22,317 and closed at 22,994 (up 650 points or 2.91%) while the Nifty opened at 6,654 and hit a low of 6,652 and moved higher to hit an all-time high of 6,871 and closed at 6,859 (up 199 points or 2.99%). The NSE recorded a huge volume of 89.92 crore shares. India VIX rose 9.92% to close at 37.7050.

Except for Pharma (0.48%) all the other indices on the NSE closed in the green. The top five gainers were Bank Nifty (5.47%), Finance (5.20%), Realty (4.82%), P S U Bank (3.91%) and Service (3.61%).

Of the 50 stocks on the Nifty, 46 ended in the green. The top five gainers were I D F C (8.25%), ICICI Bank (7.21%), Ambuja Cements (6.76%), Axis Bank (6.19%) and Tata Power (5.70%). The top three losers were Lupin (1.48%), Dr Reddy (0.99%) and NMDC (0.03%).

Of the 1,564 companies on the NSE, 920 companies closed in the green, 559 companies closed in the red while 85 companies closed flat.

BHEL (up 5.21%) was among the top five gainers in the Sensex 30 pack. The Maharashtra cabinet has approved the project worth Rs 2,731-crore of BHEL in Bhandara district to produce solar photo voltaic cells providing employment to 3,000 people. The company will produce 240 mw solar photo voltaic cells and 100 mw photo voltaic modules at its plant in Sakoli in Bhandara district.

The only three losers in the Sensex 30 stock were Dr Reddy (fell 0.84%), TCS (fell 0.19%) and Sun Pharma (0.13%).

Unitech (rose 8.64%) was among the top four gainers of the ‘A’ group on the BSE. Unitech Limited's managing director Sanjay Chandra on Wednesday recently told a Delhi court that the Central Bureau of Investigation has "falsely implicated" him in the 2G scam case, where a former telecom minister has been accused of granting mobile permits to ineligible companies. He was accused of cheating, forgery and criminal conspiracy with prime accused and former telecom minister A Raja in the grant of telecom licences despite being ineligible.

Today, again, Financial Technologies (fell 4.99%) came out as huge loser following the arrest of the companies chairman Jignesh Shah in connection with the Rs5,500 crore-fraud at the National Spot Exchange or NSEL. Financial Technologies was the top loser in ‘A’ group on the BSE.

In the interview on Thursday, Narendra Modi exuded confidence that the BJP would win with a clear majority and form the strongest and most stable government since Rajiv Gandhi's time.

US indices closed mostly in the negative on Thursday. Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the labor market continues to gain traction. Jobless claims fell 26,000 to 319,000 in the week ended May 3 from a revised 345,000 in the prior period, the Labor Department reported in Washington.

Except for Shanghai Composite (0.21%), NZSE 50 (0.17%) and Taiwan Weighted (0.46%) all the other Asian indices closed in the green. Jakarta Composite (0.77%) was the top gainer.

China's consumer price index rose 1.8% in April from a year earlier, the smallest rise in 18 months, while the producer price index dropped 2.0% in its 26th straight fall, the National Bureau of Statistics said on Friday.

European indices were trading in the red. US Futures were trading marginally lower.
In Europe, The European Central Bank kept interest rates unchanged on Thursday. They left the main refinancing rate at a record low of 0.25%.


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