Share prices down on global worries: Wednesday Closing Report

Finally, the Nifty traded near its support of 5,300. A rally is possible on a close above 5,400

The market kept slipping as trade progressed on Wednesday, on dismal global cues and a decline in earnings by realty major DLF, which announced its results late yesterday. The Sensex and the Nifty opened at 17,976 and 5,389 that turned out to be the intra-day highs. Volatility was seen ahead of the expiry of the May futures and options contract that takes place tomorrow.

Global worries, a lower opening in key European markets and US futures trading in the red, prompted a sell-off by institutional investors, leading the domestic market further downward in post-noon trade. Throughout the day, the market continued the downward trend, except for a small bounce, after hitting the intra-day low. The intra-day low of 17,786 on the Sensex and 5,329 on the Nifty were the lowest since 1 March 2011.

The Sensex lost 165 points to close at 17,847 and the Nifty fell 46 points to end the day at 5,349. The advance-decline ratio on the National Stock Exchange was 494:896.

While the Sensex closed trade with a loss of nearly 1%, the BSE Mid-cap index declined 0.57% and the BSE Small-cap index fell by 0.65%.

The BSE Consumer Goods index tumbled 1.53% to emerge as the biggest sectoral loser. Other major losers were BSE IT (down 1.52%), BSE Realty (down 1.31%), BSE TECk (down 1.20%) and BSE Oil & Gas (down 0.98%). BSE Consumer Durables (up 1.23%) and BSE Fast Moving Consumer Goods (up 0.01%) were the only gainers in the sectoral space.

Jindal Steel (up 1.13%), Tata Motors (up 1%), ITC (up 0.91%), NTPC (up 0.33%) and Maruti Suzuki (up 0.12%) were the top gainers on the Sensex. The laggards were led by DLF (down 4.04%), Reliance Communications (down 2.48%), Larsen & Toubro (down 2.24%), TCS (down 2.09%) and State Bank of India (down 2.06%).

In a setback to the Cairn-Vedanta deal, solicitor-general of India (SGI) Gopal Subramanium has re-affirmed that the government can impose pre-conditions like equitable sharing of royalty in the all-important Rajasthan block, for clearing Vedanta Resources' takeover of Cairn India.

In his initial opinion on 24th March, the solicitor-general had said that the transfer of Cairn India shares to Vedanta should be allowed only if mining conglomerate agreed to treating royalty paid by ONGC as cost-recoverable from its revenues.

Markets in Asia settled mostly lower on worries that price pressures in China will force the government to continue with its hawkish stance. News of a 12.5% fall in Japanese exports in April, pushing the country into its first trade deficit, and concerns about sovereign debt issues in Europe also weighed on investor sentiment.

The Shanghai Composite declined 0.90%, the Jakarta Composite fell 0.15%, the Nikkei 225 skid 0.57%, the Seoul Composite tanked 1.26% and the Taiwan Weighted lost 0.34%. On the other hand, the Hang Seng added 0.07%, the KLSE Composite rose 0.09% and the Straits Times gained 0.18%.

Back home, institutional investors-both foreign and domestic-were net buyers of equities on Tuesday. Foreign institutional investors pumped in Rs188.16 crore into stocks and domestic institutional investors bought shares worth Rs32.95 crore.


Franklin Templeton to launch Asian Growth, US Opportunities funds

By investing in these two foreign funds, you may or may not get greater diversification, but would you get higher returns?

More and more fund companies are furiously bringing foreign funds to India. It has almost become a fad. In March 2011, Franklin Templeton filed offer documents with the regulator to launch its FT India Feeder-Templeton Asian Growth Fund and FT India Feeder-Franklin US Opportunities Fund. As the names suggest, one invests in Asian securities and the other in US securities.

Feeder funds allow Indian investors to put their money in international mutual funds that would give them an exposure to companies in other regions.

The asset allocation plan is to invest 80%-100% in units/securities of overseas mutual funds/unit trusts with a medium- to high-risk profile. The scheme will also invest up to 20% in debt securities and money market instruments with a low- to medium-risk profile.

The US feeder fund will be benchmarked against the Russell 3000 Growth Index and the Asia Growth Fund will be benchmarked against the MSCI All Country Asia (ex-Japan) Index. The Russell 3000 Growth Index measures the performance of the broad growth segment of the US equity universe, with Exxon Mobil, Apple, IBM, Google, Microsoft, Oracle and Coca Cola among its top ten stocks.

The MSCI All Country Asia (ex-Japan) Index is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of Asia, excluding Japan. As of 31 December 2010, the MSCI All Country Asia (ex-Japan) Index covered the indices of 10 developed and emerging market countries, namely China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand.

These funds will charge an exit load of 1% on units that are redeemed/switched out within one year of allotment. The minimum application amount is Rs5,000.

It is not clear what extra advantage investors would get by investing in these funds. Global funds offer diversification benefits by investing in stocks like bio-tech, technology, energy, agriculture and mining, which an Indian investor may not be able to buy by just investing in domestic schemes. But funds that put your money in other countries don’t necessarily offer higher returns or diversification.

In the period April 2009-March 2010, the Sensex was up 77%, while the MSCI All Country Asia (ex-Japan) Index was up 68%. Non-correlated market movement is not easy to find. As for returns, the Russell 3000 gave an annualised five-year return of 5.05% against the Sensex which gave an annualised return of 9% over five years ending 30 April 2011.



Suresh Singh Bisht

5 years ago

The advantage of interenational funds is diversification only though the returns may not be higher than the Indian markets. However, one should keep in mind that investing in interenational fund reduces risks to a extent as money is not invested in one market only.


5 years ago

wish to become agent

Cairn India net jumps 10-fold on higher oil price

While 2010-11 was the first full year of safe and consistent operations at the Rajasthan oil fields, Cairn realised $94.2 per barrel for oil produced in January-March quarter as opposed to $71 per barrel the previous year

New Delhi: Cairn India (CIL) today reported a 10-fold jump in its quarterly net profit on back of higher crude oil price and consistent performance at the nation’s biggest onshore oilfield in Rajasthan, reports PTI.

Consolidated net profit in the fourth quarter through March rose to Rs2,457.79 crore from Rs245.19 crore an year earlier, the Indian unit of Edinburgh-based Cairn Energy Plc said in a statement here.

While 2010-11 was the first full year of safe and consistent operations at the Rajasthan oil fields, Cairn realised $94.2 per barrel for oil produced in January-March quarter as opposed to $71 per barrel the previous year.

Mangala, the biggest oilfield in the Rajasthan block, is currently producing 125,000 barrels per day (bpd) but has potential to go up to 150,000 bpd without any new investment. But the oil ministry has for unknown reasons held back approval for raising output for nearly a year now.

“Our enhanced understanding of the Mangala reservoirs, following development drilling in the field, indicates a production potential of 150,000 bpd, subject to joint venture partner ONGC and government approval,” Cairn said.

With Mangala field consistently producing at approved plateau rate of 150,000 bpd, it is now focussed on the second phase of Rajasthan development.

Bhagyam field, the second largest find in Rajasthan, is likely to be put into production in October and will reach plateau production of 40,000 bpd by the calendar year end.

“We are now focused on the second phase of the Rajasthan development to reach the currently approved plateau production of 175,000 bpd, which will account for 20% of the country’s crude production," Cairn said.

Further, Cairn plans to put into production Aishwariya field in 14 months from the date it receives necessary government sanctions.

Aishwariya will produce 10,000 bpd sometime in second half of 2012 calendar year and together with 150,000 bpd of Mangala and 40,000 bpd of Bhagyan, total output from Rajasthan would be 200,000 bpd (10 million tonnes a year).

“In addition to the above, the enhanced oil recovery (EOR) pilot project in Mangala which commenced in early 2010 is progressing as per expectations. The successful implementation of EOR in Rajasthan has the potential to increase recoverable reserves by more than 300 million metric barrels of oil equivalent (mmboe), and materially extend the duration of the plateau production,” the statement said.

Cairn said it has sale arrangements in place for 155,000 bpd of oil from Rajasthan and it is in discussions with the government for finding buyers for additional volumes.


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