Sensex, Nifty unlikely to make a major move -Weekly closing report

Nifty has to hold above 7,470 for it to make efforts to move up

The S&P BSE 30-share Sensex closed the week that ended on 20th June at 25,106 (down 123 points or 0.49%), while the NSE’s 50-share Nifty closed at 7,511 (down 31 points or 0.41%) for the week. We had mentioned in our previous week’s report that the Indian indices may suffer further weakness. This entire week witnessed the indices moving lower except for gains made on Tuesday.

Market sentiments in India were affected with the rising crude oil price and consequent effect of it on the current account deficit (CAD) of the country. The annual rate of inflation based on the monthly wholesale price index (WPI) accelerated to 6.01% (provisional) for May 2014, from 5.2% in April according to the data released by the government said on Monday. The WPI inflation for March 2014 was revised upwards to 6%, from 5.7% reported earlier. Nifty closed at 7,534 (down 9 points or 0.11%) on Monday.

Ahead of the Fed meet, the indices back home witnessed a sideways move for most of the session on Tuesday however, a sudden rise in the last hour made the index close in the positive covering up most of the losses of the previous two trading session. Nifty closed at 7,632 (up 98 points or 1.30%).

The International Monetary Fund (IMF) cut its growth forecast (2% in 2014 down from an April estimate of 2.8%) for the US economy this year and said the Fed may have scope to keep interest rates at zero for longer than investors expect. The IMF left a 2015 prediction unchanged at 3%, and said it doesn't expect the US to see full employment until the end of 2017, amid low inflation.

Taking into consideration the rising inflation the current government unveiled some anti-inflationary measures. The effort to remain in the green was washed off when the Nifty was pulled suddenly in the red at the beginning of the afternoon session after which it remained there till the end of the session. Nifty closed at 7,558 (down 74 points or 0.96%) on Wednesday.

In spite of the positive cues from the US, the market back home didn’t react much to it.
Nifty closed at 7,541 (down 18 points or 0.23%) on Thursday. The highlight of the day was SEBI's Board announcing new norms for public shareholding for all listed companies including PSUs, ESOP scheme, offer for sale -OFS mechanism as well as research analysts.

After a two-day policy meeting the Fed Chair Janet Yellen said that she foresees interest rates to stay low for a considerable time, not specifying the timetable for the same, after the buying ends.

On Friday, the market witnessed a range bound session and ultimately the indices closed in the negative for the third consecutive session. Nifty closed at 7,511 (down 29 points or 0.39%). India's Ministry of Petroleum & Natural Gas said that there is no disruption in supply of crude oil from Iraq to India so far. However the state-run oil marketing companies have been asked by the Ministry to prepare a contingency plan both for the short and medium term including diversification of their resources for import of crude oil in order to minimise the impact of any geo-political instability in the middle-east.

For the week, among the other indices on the NSE, the top two performers were Media (3%) and IT (3%) while the worst two performers were Energy (2%) and Auto (2%).

Among the Nifty stocks, the top five stocks for the week were G A I L (6%); Asian Paints (5%); Infosys (4%); Tata Consultancy Services (4%) and IndusInd Bank (4%) while the top five losers were Mahindra & Mahindra (7%); Reliance Industries (4%); United Spirits (4%); BPCL (3%) and Hero MotoCorp (3%).

Of the 1,468 companies on the NSE, 698 companies closed in the green, 750 companies closed in the red while 20 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


Farm & Farm Inputs




Software & It Services




Telecom Services














Sensex, Nifty may remain range-bound – Friday closing report
Nifty may continue to move sideways for quite some time before the next upmove

As we mentioned on Thursday, the Indian indices moved in a narrow range and the effort to stay in the green ultimately ended with the market closing Friday in the red for third consecutive session.
The S&P BSE Sensex opened at 25,238 while NSE Nifty opened at 7,543. Sensex moved in the range of 25,056 and 25,276 to close at 25,106 (down 96 points or 0.38%) while the Nifty moved between 7,497 and 7,561 and closed at 7,511 (down 29 points or 0.39%). The NSE recorded a volume of 103.29 crore shares. India VIX rose 0.56% to close at 18.8475.
India's Ministry of Petroleum & Natural Gas said that there is no disruption in supply of crude oil from Iraq to India so far. However the state-run oil marketing companies (OMCs) have been asked by the Ministry to prepare a contingency plan both for the short and medium term including diversification of their resources for import of crude oil in order to minimise the impact of any geo-political instability in the middle-east.
The monsoon has covered half of the country four days behind the usual schedule. Meanwhile, all India seasonal rainfall up to 18 June 2014 from the beginning of the month was 45% below long period average, the India Meteorological Department said.
Bharti Airtel will name PD Sarma as the new managing director of its Bangladesh subsidiary in place of Chris Tobit who will return to Bharti Airtel India. Sarma currently hub chief executive of the company's mobile operations across West Bengal, Kolkata, Odisha, Assam and Northeast circles, will directly report to Bharti Airtel CEO Gopal Vittal. Bharti Airtel (0.24%)  was among the top four gainers in the Sensex 30 pack.
Media reported that Mahindra and Mahindra had no 'definitive' plans about setting up a manufacturing plant in Brazil. The stock was the top loser (2.87%) in the Sensex 30 stock.
The Gems and Jewellery Export Promotion Council (GJEPC) said gems and jewellery exports is likely to rise to USD 44 billion during this financial year if there are positive policy changes. Gitanjali Gems (5.00%) and Titan Company (3.98%) were among the top four gainers in the ‘A’ group on the BSE.
According to the Banking Codes and Standards Board of India, the overall score of public sector banks with respect to the level of compliance with the implementation of codes was lower at 69.6 against that of all banks at 74.2 per cent. The overall score of private sector banks (78.2) and foreign banks (88.6) was above the all banks’ average. The overall scoring was based on five parameters — information dissemination,
transparency, customer centricity, grievance redressal and customer feedback. The following PSU banks, Union Bank (4.19%), Indian Bank (4.09%), Oriental Bank (3.92%), Allahabad Bank (3.86%) and Central Bank (3.83%), were among the top seven losers in the ‘A’ group on the BSE.
US indices closed flat on Thursday.
Except for Shanghai Composite (0.15%), Hang Seng (0.11%) and KLSE Composite (0.23%) all the other Asian indices closed in the red. Seoul Composite (1.20%) was the top loser.
US Futures were trading in the green while US Futures were trading marginally higher.


New proposal on higher gas price based on production 'practical' says Nomura

The oil ministry proposal of new price only for incremental gas is a practical one to resolve the complex and long pending price issue, says Nomura

The petroleum ministry has proposed that a higher gas price as per the Rangarajan formula be allowed only for incremental production over and above average FY14 production, says a report from Financial Express. The proposal is negative in near term for producers, but a practical one to resolve the complex and long pending price issue, says Nomura in a research note.


"While it is just a proposal, and will need to be debated and approved by the Cabinet Committee of Economic Affairs (CCEA), to us it seems like an interesting idea to resolve the vexed gas price issue," the report says.


Nomura says, it (the proposal) will resolve the twin problems of giving a good price to encourage new investments, and at the same time no sharp cost increase for current gas users of gas particularly power, fertiliser and city gas.


"While operational modalities can be complex, we think these can be resolved. For example, in existing producing fields production will typically decline, and even to sustain current production, companies need to incur cost. If companies are not given a suitable higher price for sustaining

production, all the focus may shift to bringing new production online, at the cost of not sustaining current production," it added.


A bulk of the current production is from the nominated blocks of ONGC and Oil India. Nomura says, "If price hikes are not made applicable on the existing production, there may not be much protest from ONGC and Oil India, we think. We have held a view that, after the 100%-plus increase in June 2010, there was not much rationale for increasing administered pricing mechanism (APM) gas prices."


"For KG-D6, the existing pricing formula $4.2/mmbtu has already expired on 31 March 2014 and new pricing is due from 1st April. However, as the contractors, RIL, BP and Niko have already initiated the arbitration on gas pricing, government can decide not to give price hike

now pending result of arbitration," Nomura said.


Nomura expects the new proposal is likely to be negative for current producers, especially ONGC and OIL. It said, "While denial of higher gas price for existing production in KG-D6 would be negative for RIL, we think that the company can get the benefits retrospectively if it wins the arbitration proceedings initiated on gas pricing. We think that RIL has a strong case in the arbitration given that current pricing for the KG-D6 was valid only till March 2014 and production sharing contract (PSC) provides for market determined pricing."


According to the research note, the proposal would be positive for mid or downstream companies, while in the gas space GAIL, Indraprastha Gas and Gujarat Gas would emerge as beneficiaries. "No sharp increase in gas price for current domestic gas will be a key positive for GAIL in particular,as GAIL is using gas for internal consumption for LPG/ Petchem production as well as internal consumption of pipelines. In our numbers, we are assuming a domestic gas price increase to $8.5/mmbtu from 1 July 2014. City gas companies such as IGL and Gujarat Gas, would not need to increase the retail prices for CNG and domestic piped gas. This would provide these fuels with competitive advantage v/s other liquid fuels, and will likely spur volume growth," Nomura added.



Gurudutt Mundkur

2 years ago

Subsidies should be restricted to those bellow the poverty line. Those above should pay the appropriate manufacturing price plus profit @10%. Thus the user pays the market price and subsidies are saved. If the user cannot afford a particular product let him not use it. If I cannot afford LPG, I must use a cheaper fuel. If I cannot afford AC travel, I must travel by Sleeper class.

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