Stocks
Sensex, Nifty’s struggle to stay up fails: Wednesday Closing Report

A close above 5,605 on the Nifty will be the first sign of a reversal of the downturn. A close above 5,675 will be a strong confirmation of the upmove
 

The range-bound market gave up all its gains in the post-noon session after the rupee touched a new all-time low of 60.35 against the dollar in intraday trade. A close above 5,605 on the Nifty will be the first sign of a reversal of the downturn. A close above 5,675 will be a strong confirmation of the upmove. The National Stock Exchange (NSE) registered a volume of 57.13 crore shares and advance-decline ratio of 498:894.

 

The Indian market opened in the positive following the market regulator Securities and Exchange Board of India’s (SEBI) fresh steps to relax rules for foreign investors. The announcement was made after the market closed on Tuesday. Support from its Asian peers which were mostly higher in morning trade after the Chinese central bank assured investors that it was committed to boosting growth and would infuse funds in the banking system, if necessary, also spurred investor sentiment.

 

The Nifty opened 19 points higher at 5,628 and the Sensex started the day at 18,662, a gain of 33 points over its previous close. Gains in oil & gas and IT stocks led the benchmarks to their highs in the first hour of trade. The Nifty rose to 5,635 and the Sensex inched up to 18,691 at their respective highs.

 

However, the benchmarks were range-bound fluctuating between the red and green in morning trade, a day ahead of the expiry of the F&O derivatives contract.

 

The market continued to see choppy trade and witnessed sideways movement in the noon session. However, reports of the rupee breaching the 60-mark against the dollar and touching a new all-time low of 60.35 in today, led the market into the red post-noon trade.

 

The decline led the market to its lows towards the end of the trading session. At the lows, the Nifty fell to 5,579 and the Sensex declined to 18,514.

 

The market finally settled near the lows of the day with the Nifty losing 20 points (0.36%) to 5,589 and the Sensex falling 77 points (0.41%) to settle at 18,552.

 

Among the broader indices, the BSE Mid-cap index declined 0.67% and the BSE Small-cap index fell 0.37%.

 

The gainers in the sectoral segment were BSE IT (up 1.69%); BSE Power (up 0.93%); BSE Fast Moving Consumer Goods (up 0.66%) and BSE TECk (up 0.40%). The main losers were BSE Auto (down 1.79%); BSE Metal (down 1.31%); BSE Consumer Durables, BSE Healthcare (down 1.12% each) and BSE Bankex (down 1.03%).

 

Out of the 30 stocks on the Sensex, 11 stocks settled higher. The gainers were Hero MotoCorp (up 3.45%); GAIL India (up .36%); TCS (up 2.84%); NTPC (up 2.13%) and Wipro (up .97%). The major losers were Bharti Airtel (down 5.74%); Mahindra & Mahindra (down 4.63%); Tata Motors (down 3.02%); Jindal Steel & Power (down 2.89%) and Hindalco Industries (down 2.32%).

 

The top two A Group gainers on the BSE were—Muthoot Finance (up 8.26%) and GlaxoSmithKline Consumer Healthcare (up 7.28%).

The top two A Group losers on the BSE were—Gitanjali Gems (down 9.99%) and Glenmark Pharmaceuticals (down 6.13%).

 

The top two B Group gainers on the BSE were—Cable Corporation of India (up 20%) and Caprihans India (up 20%).

The top two B Group losers on the BSE were—Indsil Hydro Power & Manganese (down 19.50%) and IOL Chemicals & Pharmaceuticals (down 16.67%).

 

Of the 50 stocks on the Nifty, 19 ended in the in the green. The major gainers were TCS (up 3.86%); Hero MotoCorp (up 3.84%); Asian Paints (up 3.82%); Power Grid Corporation (up 2.81%) and HCL Technologies (up 2.69%). The key losers were Bharti Airtel (down 5.91%); M&M (down 5.10%); Kotak Mahindra Bank (down 4.50%); IndusInd Bank (down 4.17%) and Ranbaxy Laboratories (down 3.66%).

 

Markets in Asia, with the exception of the Chinese and Japanese benchmarks, closed higher today after the People’s Bank of China asserted that it would take steps to ease liquidity crunch faced by the nation’s banks. The Nikkei 225 settled lower against the dollar.

 

The Hang Seng surged 2.43%; the Jakarta Composite surged 3.82%; the KLSE Composite gained 0.70%; the Straits Times advanced 0.47%; the Seoul Composite rose 0.16% and the Taiwan Weighted settled 1.59% higher. Among the losers, the Shanghai Composite fell 0.41% and the Nikkei 225 dropped 1.04%.

 

At the time of writing, key European markets were up between 1.08% and 1.84% on positive economic indicators from the US and Germany. At the same time, the US stock futures were trading in the green.

 

Back home, foreign institutional investors were net sellers of equities amounting to Rs1,285.86 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of shares totalling Rs824.36 crore.

 

Hyderabad-based pharmaceutical major Dr Reddy’s Laboratories has launched Lamotrigine Extended-Release (XR) tablets in the US market on 25th June. The move comes after the United States food and Drug Administration's approval to its abbreviated new drug application (ANDA). Lamotrigine XR is a therapeutic equivalent generic version of Lamictal XR (lamotrigine), which is indicated for the treatment of epilepsy. The stock fell 0.65% to close at Rs2,086.10 on the NSE.

 

Power equipment major Crompton Greaves today said it has bagged three orders worth over Rs231 crore from Power Grid Corporation of India. The contracts are for supplying equipment to state-run Power Grid for its Thiruvelum, Kurnool, Raipur and Wardha sub-stations. Crompton Greaves declined 3.49% to Rs78.70 on the NSE.

 

The United Nations-backed Medicines Patent Pool, Shilpa Medicare and Gilead Sciences have entered into an agreement to increase the access to medicines for HIV/AIDS treatment. The agreement covers tenofovir, emtricitabine, cobicistat, elvitegravir and a combination of the four known as “the Quad”, Medicines Patent Pool said. Shilpa Medicare gained 1.07% to close at RS255 on the NSE.

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Reliance Capital ropes in Japan’s Sumitomo, Nippon for banking foray

Reliance Capital said that both Sumitomo and Nippon would have 4%-5% stake each in the proposed bank, subject to regulatory approvals

Readying itself for a bank licence, Anil Ambani-led group's Reliance Capital today said Japan’s Sumitomo Mitsui Bank and Nippon Life would become its strategic partners in the proposed banking venture, with each having 4%-5% stake.

 

Reliance Capital, which is present in a host of non-banking financial services businesses, would be the main promoter of the proposed bank, the application for which would be soon submitted to RBI, the company said in a statement.

 

Sumitomo Mitsui Trust Bank is one of the largest banks in Japan, while Nippon Life Insurance is among Asia’s largest financial services company and already has strategic stakes in Reliance Capital’s life insurance and mutual fund units.

 

With the latest move, Reliance Capital joins a host of other entities having firmed up their plans to seek a banking licence, for which applications need to be submitted by 1st July with the Reserve Bank of India (RBI).

 

There are reports that Tatas are also among the interested candidates, while Mahindras have dropped their plans to seek a bank licence.

 

Reliance Capital said that both Sumitomo and Nippon would have 4%-5% stake each in the proposed bank, subject to regulatory approvals, while agreements to this effect have been signed with them.

 

“Sumitomo Mitsui Trust Bank is amongst the largest banks in Japan and the largest institutional investor in the country,” Reliance Capital CEO Sam Ghosh said, while adding that it would bring in vast experience in retail and institutional banking to the new venture.

 

Sumitomo has total assets of $400 billion, advances of $238 billion and net assets of $25 billion.

 

Nippon Life, also known as Nissay, is Japan’s largest private life insurer with revenues of $71 billion, profits of $2 billion and it is also present in a host of other Asian countries and in North America and Europe.

 

Reliance Capital, the financial services arm of Anil Ambani-led business conglomerate Reliance Group, is present in insurance, mutual funds, brokerage, investment banking and a host of other financial services sectors.

 

Reliance Group also interests in telecom, power, infrastructure, media and entertainment, among others.

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SEBI plans to disincentivise the ‘non-serious’ mutual funds

If a fund house is interested in just a targeted audience like HNIs or corporates they can create a PMS or Alternative investments Fund, no need to participate in the MF industry, said SEBI chairman UK Sinha

For the first time market regulator Securities and Exchange Board of India (SEBI) admitted there are non-serious players in the mutual fund (MF) industry. “The top 10 asset management companies (AMCs) manage around 77% whereas the bottom 10 players account for just 1% of the industry’s assets under management (AUM). This just shows that there are several AMCs which are not serious about their business. There is a strong need for improvement,” UK Sinha, chairman of SEBI, pointed out.

 

He was speaking at “National Mutual Fund Summit 2013” organised by the Confederation of the Indian Industry (CII) in Mumbai.

 

Mr Sinha said, “There is a need for a new (mutual fund policy) one. The (new) policy should dis-incentivise non-serious players. The bar should be raised for new players in the industry. AMCs would need a capital requirement. Many would say why more capital is required. AMCs manage funds so there is no need for capital. However, if a fund house is serious they would use the capital to invest in growth of the business. If a fund house is interested in just a targeted audience like HNIs or corporates they can create a PMS or Alternative investments Fund, no need to participate in the MF industry.”

 

The SEBI chief also mentioned that it has set up a committee to analyze the performance of AMCs and it would be submitting the report in next two-three months. Based on the report, SEBI would decide on what steps to take, he said.

 

SEBI had mandated that AMCs on a regular basis mention steps they are taking to increase mutual fund penetration. “Over the past few months, just 52 branches have been set up by fund companies. AMCs have a total of around 1,600 branches. Compare this to insurance sector, where a big insurance company set up around 300 branches in a single day,” he said.

 

Direct schemes seemed to have a positive impact, claimed Mr Sinha. From share of 12% AUM in December 2012, it has increased to 28% in May 2013. Of this direct equity share has gone up from 7% to 8% and direct debt has increased from 31% to 45% over the same period.

 

On the lack of penetration of mutual funds, HN Sinor, chief executive of the Association of Mutual Funds in India (AMFI) mentioned that the total number of folios in postal savings schemes is much more than that of the total folios of the MF industry.

 

The SEBI chairman mentioned that there would be a single SRO (self-regulatory organisation) for mutual funds. The cut-off date for receiving applications for SROs would be 31 July 2013. The AMFI chief mentioned that it is in the process of completing the formalities for setting up the SRO. The new organisation would be known as Institute of Mutual Funds in India.

 

A Balasubramanian Chairman-CII Mutual Fund Summit 2013 and CEO BSL AMC, mentioned that retail folios in the debt segment increased by 13% whereas in the equity segment retail folios declined by an equivalent number of 13%.

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COMMENTS

Deepak Gupta

4 years ago

This is strange. The SEBI chief is proposing that AMCs should use the PMS route to target HNIs - when it has been shown time and again that PMS is a non-transparent route, prone to fraud, and extremely expensive for investors because of exorbitant fee structures. SEBI is non-serious about implementing their own transparency requirements for PMS.

Instead of making all mutual funds become the same generic funds for all sections of investors, SEBI should actively promote differentiation. Mutual funds targeted at specific needs or types of investors are a good thing.

SEBI can certainly consider imposing conditions like minimum capital, minimum number of investors etc. and strict transparency rules. If it is matter of costs of monitoring too many small funds, SEBI can charge a fee from fund schemes that are below the recommended number of investors or AUM.

But, it should allow different kinds of funds to flourish.

ramanathan dwarakanathan

4 years ago

Insurance & MF are not comparable. cost structures are distinctly different.

ramanathan dwarakanathan

http://ddramanathan.blogspot.in/

sathyacumaran

4 years ago

all the sebi talk would to be media and cii and there is one more racketwhere with AMC and redemption agency they form an racket those fund which are issued are redeemed without proper signature and proper authroisation this could be proved and as such all mutual amc are fraud there is inside racket

sathya cumaran

Anil Agashe

4 years ago

SEBI's minimum corpus and membership requirements are a big joke. Why have they not revisited these for years? No scheme should be allowed unless it gets at least 5000 subscribers and has a corpus of 200 crs minimum. 50% of subscribers must be retail.
MF has to be sold like insurance. What has been done is brokers targeted HNIs and restricted selling to metros and Tier-I cities. There is need to penetrate in semi-urban and rural areas. That will require huge effort and the industry is not willing to do that.
All schemes and funds who have meager corpus must be closed immediately. Also consolidation of schemes must be ruthlessly enforced.

Nilesh KAMERKAR

4 years ago

Have the mutual fund reforms 'seriously' failed to revive the mutual fund industry?

Why are AMCs reluctant to commit more capital?

REPLY

ramanathan dwarakanathan

In Reply to Nilesh KAMERKAR 4 years ago

The issue is excessive regulation which is making the industry think twice. http://ddramanathan.blogspot.in/

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