Indian markets failed to hold on to positive global cues, following a slump in Reliance Industries
Indian markets opened on a stronger note on the back of strong trade data from China for December 2009 and expectations of strong December 2009 quarter results from India Inc. However, markets lost momentum following selling pressure in index heavyweight Reliance Industries Ltd (RIL).
At the end of the day, the Sensex declined 14 points from the previous day’s close, ending the day at 17,527, while the Nifty closed at 5,249, up five points.
After the markets closed, Unitech was up 4% after the company said that it had booked sales worth Rs5,550 crore between 25th March and the end of 2009.
JK Tyre & Industries rose 3% on reports that the company plans to invest Rs1,200 crore over the next three-four years for capacity expansion.
Novartis India shot up 4% after its parent company reportedly secured a patent for a cancer drug.
At 10:20 hrs IST, the Sensex was up 96 points from Friday, 8 January 2010, at 17,637 while the Nifty was trading at 5272, up 27 points.
During this period, RIL fell 1% after Manisha Girotra, country head of UBS, said that the company had raised $763 million through a block sale of 3.3 crore shares. UBS was the sole arranger for the trade. She also said that the share sale at Rs1,050 each would be the last of the block trades by the company for a while.
MBL Infrastructure was trading at Rs209, a 16% premium over the initial public offer price of Rs180. The stock debuted at Rs190 on the BSE, a 5.55% premium over the initial public offer price.
Energy Development Company rose 10%, after the company secured an order worth Rs56.70 crore.
At 11:20 hrs IST, the Sensex was trading at 17,637, up 97 points from the previous day’s close, while the Nifty was up 28 points at 5,273.
Among the gainers, TVS Motors rose 7% as sales rose 34% to 119,701 units in December 2009 over December 2008.
Natco Pharma was trading up 6%, after the government stayed the suspension of the company’s Albupax manufacturing licence.
At 12:20 hrs IST, the Sensex continued to remain firm at 17,601, up 60 points while the Nifty was up 20 points at 5,264.
During this period, NTPC rose 1% on reports that the company’s follow-on public offer was expected to hit the market in the first week of February 2010.
Suzlon Energy was up 1% after the company secured an order from Gujarat Alkalies & Chemicals for setting up a 21-megawatt wind energy project in Gujarat.
Minda Industries scheduled a board meet on 11 January 2010 to consider the raising of funds by way of issue of securities on a preferential basis. The stock was trading up 5%.
At 13.20 hrs IST, the Sensex hit a fresh intraday low following decline in RIL. However, the Sensex was up 32 points from the previous day’s close at 17,572, while the Nifty was up 15 points at 5,259.
During trading hours, sugar stocks moved higher on reports that the government may allow import of duty-free white sugar beyond 31 March 2010, to boost domestic supply and curb the rising price of the sweetener, which is expected to inch closer to Rs50 a kilogram. EID Parry and Shree Renuka were up 2% and 1% respectively.
Infrastructure scrips moved upwards following commerce minister Anand Sharma’s comments that the government would spend $1.5 trillion on infrastructure over the next 10 years. BL Kashyap & Sons and GMR Infrastructure were up 3% and 1% respectively.
At 14:20 hrs IST, the Sensex was up 37 points at 17,578, while the Nifty was up 16 points at 5,261.
During trading hours, SRF and Max India were up 2% and 1% respectively on reports that promoters have revoked a substantial portion of pledged shares.
During the day, Asia’s key benchmark indices in Hong Kong, Indonesia, Singapore, China and Taiwan rose by between 0.37%-0.68%. Japan’s market was closed due to a local holiday. As per Chinese reports, China’s exports climbed 17.7% in December 2009 from a year earlier, the first increase in 14 months, and imports jumped 55.9%.
On Friday, 8 January 2010, the Dow Jones Industrial Average was up 11.33 points while the S&P 500 and the Nasdaq Composite were up 3.29 and 11.12 points.
As per US reports, data revealed that 85,000 jobs were lost during December 2009, much larger than an expected decline of 10,000. The government, meanwhile, revised figures to show that 4,000 jobs were created in November 2009, having initially estimated a loss of 11,000 payrolls during that month. The unemployment rate remained persistently high, at 10% in December 2009 against economists’ estimate of a 10.1% rate.
In premarket trading, the Dow was trading 29 points higher.
Closer home, as per reports, the government will announce industrial output data for the month of November 2009 on 12 January 2010.
During the day, Anand Sharma, commerce minister, said that India’s December 2009 exports would be positive. He also said that food prices were likely to come down due to good winter crop prospects and there was no need to import wheat and rice.
Meanwhile, Ashok Chawla, finance secretary, was quoted in a media report as saying that the finance ministry backs administrative steps to tame inflation and wants a hike in policy rates only if food inflation escalates into general inflation. In order to augment supplies, all import duties may be suspended for the time being, possibly till the end of the current financial year, the report said. It further added that the finance secretary identified rice, wheat, pulses, potatoes, onion, fruits, milk, mineral oils, sugar and oil-cakes as the “commodities of concern”.
Pranab Mukherjee, finance minister, said on Saturday that the government would present its annual budget in Parliament on 26 February 2010 and was aiming at enacting legislation in the second half of this year for introducing a new Goods & Services Tax (GST). He stated that he is hopeful that growth rate could touch 8% in the fiscal year to March 2010, faster than the 6.7% clocked in the previous year.
As per media reports, industry bodies have urged the government to extend fiscal stimulus by six months this year, but a 16-year high fiscal deficit of 6.8% of gross domestic product estimated for 2009-10 has left little room for extending tax concessions.
Tomorrow, we expect Indian bourses to open higher on hopes of positive growth in industrial production, but the trend is not firm.
In the last 19 years, out of 13 times when the Sensex closed higher in the first week, on nine occasions it also ended the month in positive territory
How will January 2010 end for the markets? That seems to partly depend on how the first week ended. A study conducted by Moneylife has found that on most occasions, a positive start to the first week has led to the market gaining for the entire month of January. Over the last 19 years between 1991 and 2009, on 13 occasions the market made gains during the first week. Out of this, on nine occasions, the index also ended the month at a higher level. The Sensex has closed the first week of this year at a higher level, so this is a positive signal for investors. The phenomenon of the index closing higher at the end of the first week is explained by the fact that market participants start the New Year on a bullish note. Interestingly, of the nine times that the index ended higher for the first week as well as the entire month, on six occasions, it also ended the March quarter at a higher level.
What happens when the index ends the first week on a negative note? Interestingly, the same trend persists. Of the six times when the Sensex declined in the first week, on five occasions it also ended the month at a lower level.
As part of the UID project, the government plans to introduce a micro-payment platform that would allow for easy transactions in unbanked areas of the country. It will also create a nationwide network of BCs for enabling interoperability
The government’s ambitious unique identity (UID) project, under the stewardship of Nandan Nilekani, proposes to introduce a micro-payment platform that would make use of mobile technology. This platform would enable business correspondents (BCs) to carry out instant transactions at the remotest places in the country. The BC model has been implemented by the government in its efforts to tap the unbanked population in the country, as a part of its financial inclusion measures.
This micro-payment platform would function through low cost devices (or micro ATMs), said Mr Nilekani at Monday’s Banking Conclave 2009-10 in Mumbai. Also, these ‘micro ATMs’ would function as a network through connections with other banks across India. This would enable a person to instantly deposit or withdraw funds regardless of the bank associated with a particular BC. However, he mentioned that for this platform to become a reality, an inter-bank switch (similar to the National Financial Switch) would be required to make the system interoperable. Mr Nilekani pointed out that the National Payments Corporation of India (NPCI) would look into the matter.
Speaking at the conclave, Mr Nilekani said, “This will create a whole new paradigm in the financial inclusion process. What we propose is really creating, in effect, a low cost, high volume equivalent of an ATM network. This device will be based on a mobile phone connection and would be made available at every BC. Customers would just have to get their identity authenticated and withdraw or put money into their bank accounts. This money will not come from the ATM, but from the cash drawer of the BC.”
Stressing the importance of having these BCs connected, he added, “It is essential that it is made an interoperable system. Customers should be able to go to any BC to withdraw money, regardless of who is the merchant bank of the BC. It is similar to the way bank ATMs operate. If we have these BCs connected, it would also lead to more competition, thus bringing down transaction costs for customers.”
Mr Nilekani was also optimistic about the success of financial inclusion efforts, pointing out that various things are coming together at a very opportune and critical time to make it more feasible. These include the adoption of new technologies by the banking system, the spread of the mobile network, easy verification of identity supported by the UID project, the large flow of money between people through remittances or government welfare schemes and the regulatory environment being amenable to put things together.