Nifty may get support at 5,525
Weak global cues, nervousness ahead of the earnings season and an institutional sell-off were seen as the major reasons for the market decline today, the second consecutive day that it has declined.
The market opened lower this morning as worries over global growth resurfaced today. A slowdown in jobs growth in the US and a steep rise in Chinese inflation to 6.4% for the month of June pulled markets across Asia lower on Monday. The Nifty opened 13 points lower at 5,648 and the Sensex fell by 35 points from its previous close to resume at 18,828. Sectors like metals, banking, auto and realty were under selling pressure in early trade.
Trading in negative terrain, the indices touched their day's highs in the initial session with the Nifty rising to 5,653 and the Sensex up at 18,844. The market continued to move sideways as caution ahead of the quarterly earnings season prevailed.
A half-hearted recovery attempt in noon trade, was met by resistance from sellers, which pushed the market to its intra-day low in the last half hour. At the day's low, the Nifty fell 59 points to 5,602 and the Sensex erased 179 points at 18,679. However, the market finished above the day's low. The Nifty ended down 45 points at 5,616 and the Sensex closed trade at 18,721, down 137 points from its previous close.
This is the second straight day that the market has fallen, washing out all the gains made on 7th July, when the market touched a two-month high. But the Nifty's intra-day high was above the level of first resistance of 5,600.
The advance-decline ratio on the National Stock Exchange (NSE) was a poor 534:847.
Among the broader indices, the BSE Mid-cap index declined 0.31% and the BSE Small-cap index fell by 0.42%.
BSE Fast Moving Consumer Goods (up 0.52%), BSE Consumer Durables (up 0.50%) and BSE Oil & Gas (up 0.13%) were the sectoral gainers today. The rest ended lower with the BSE Realty (down 2.54%) leading the losers. It was followed by BSE IT (down 1.73%), BSE TECk (down 1.58%), BSE Metal (down 1.54%) and BSE Bankex (down 1.39%).
ONGC (up 1.59%), Mahindra & Mahindra (up 1.13%), ITC (up 1.12%), Reliance Communications (up 0.72%) and Sterlite Industries (up 0.28%) were the top Sensex gainers. The major losers on the index were Hindalco Industries (down 4.41%), DLF (down 3.25%), Wipro (down 2.28%), Infosys (down 1.98%) and Jaiprakash Associates (down 1.95%).
The main Nifty gainers were ONGC (up 1.57%), M&M (up 1.31%), ITC (up 1.17%), Grasim (up 1.07%) and Sesa Goa (up 0.73%). The top laggards on the index were Hindalco (down 4.17%), DLF (down 3.52%), Axis Bank (down 3.24%), Wipro (down 3.12%) and SAIL (down 3.11%).
Markets across Asia, with the exception of the Shanghai Composite, settled lower on concerns over the slowdown in global economic growth. The fears were fuelled on weak US employment numbers and a steep rise in China's inflation data for June. While Chinese stocks were marginally up today, premier Wen Jiabao reiterated that curbing inflation remained the government's top priority.
The Hang Seng tanked 1.67%, the Jakarta Composite fell 0.20%, the KLSE Composite declined 0.39%, the Nikkei 225 settled 0.67% lower, the Straits Times slipped 1.08%, the Seoul Composite skidded 1.06% and the Taiwan Weighted was down 0.96%, On the other hand, the Shanghai Composite added 0.18%.
Back home, foreign institutional investors were net buyers of stocks worth Rs517.33 crore on Friday. On the other hand, domestic institutional investors were net sellers of stocks worth Rs389.71 crore.
Glenmark Pharmaceuticals today said it has received Rs110 crore from Sanofi, as the second tranche of outlicensing fees for a deal with the French drug major, taking the total upfront receipts to about Rs220 crore.
In May, Glenmark Pharmaceuticals SA, a wholly-owned subsidiary of the Indian pharma major had outlicensed to Sanofi its monoclonal antibody, GBR 500, which is used for treatment of digestive disorders. The deal has a potential to generate revenue of as much as $613 million (around Rs2,720 crore). Glenmark fell 1.27% to close trade at Rs306 on the NSE today.
The Tamil Nadu Pollution Control Board (TNPCB) has issued a closure notice to Orchid Chemicals & Pharmaceuticals' Chennai-based manufacturing facility for non-compliance on the disposal of solid waste. However, the company informed the stock exchanges that it is in active dialogue with the state pollution board officials to resolve the issues and bring the plant to a fully operational stage at the earliest. Orchid Chemicals ended 0.10% lower at Rs248.40 on the NSE.
Public sector lender Bank of Baroda (BoB) is planning to open 10 to 12 overseas branches in the current fiscal. This will take its branches and office network abroad to around 100 by March 2012. The bank plans to open new branches in countries like Kenya, Uganda, Tanzania and Botswana. Among other international plans, it will be opening a joint venture company in Malaysia and is set to bag a licence in Australia. The Bank of Baroda stock was down 2.20% at Rs876 on the NSE today.
Stock of scam-tainted company gains 30% in five days; has doubled in value from a low of Rs47.35 in May
Money Matters Financial Services Limited has seen an astonishing more than 100% jump in its stock price since May 2011 when it touched its lowest level this year, following the loans-for-kickbacks scam involving LIC Housing Finance scam that broke in November last year. While the reason for the gain is not known, the stock price continues to go from strength to strength. Market sources say that there is no apparent reason for the sudden surge, except probably that the company is confident about burying the bribery scandal.
The rise in the Money Matters stock began in May and it has shot up higher since the chairman of LIC Mr TS Vijayan was cleared on 4th July. The Money Matters stock gained more than 10% today to close at Rs96.10, up over 30% from its close of Rs73 on 4th July.
While LIC Housing Finance, which suffered the maximum after the scam, has shown a slow recovery of 4% since the crash in November, Money Matters is suddenly galloping at a stunning pace. On 23rd November, the Money Matters stock closed at Rs663.90, while LIC Housing Finance closed at Rs261.63. The next day, when the scam broke, the stocks suffered heavily, and Money Matters fell to Rs531.2 and LIC Housing Finance to Rs213.71.
It was downhill for both stocks after that. LIC Housing recorded its lowest level on 17th January at Rs151.75, while Money Matters plunged to Rs47.85 on 18th May. However, it has started to recover mysteriously since then.
Money Matters, however, refused to say anything about this sudden gain. "Ours is a listed company," a company spokesperson said. "There are a lot of factors that push stock prices up or down. It is difficult to pinpoint any one particular reason. All information is available in the public domain and we cannot add anything to that."
The otherwise little-known Money Matters Financial Services shot into the limelight in November last year, when its managing director and chairman Rajesh Sharma and other senior officials were arrested by the Central Bureau of Investigation for allegedly bribing bank officials to sanction huge loans to housing firms, bypassing rules and regulations.
Some big names from the banking world were also dragged into the controversy. Among Money Matters clients were entities like DB Realty, Hindustan Construction Company, Suzlon Energy and Vatika, all of whom distanced themselves after the scam broke.
Ramchandra Nair, CEO, LIC Housing Finance, Naresh Chopra, secretary (investment) LIC, RN Tayal, general manager of Bank of India (Delhi), Maninder Singh Johar, director, Central Bank of India, and Venkoba Gujjal, deputy general manager, Punjab National Bank (Delhi), were also arrested in the scam. While they were released on bail later, the Bombay High Court refused bail to Mr Sharma earlier this year, saying that he was the 'kingpin' in the multi-crore kickbacks-for-loans scam.
Asked whether the air has been cleared about the controversy and whether some confidence-building exercise has boost the company's stock price, Money Matters was again evasive. "The company definitely does what it is supposed to do and we have taken a few initiatives, but we cannot comment on this. As insiders, we cannot give anyone any information," the spokesperson said.
In the 2010-2011 annual report, Rajesh Sharma had said about the CBI investigation, "We believe this to be the hand work of some of our rivals who wished to curtail our speed of progress. We have denied all the charges and are sure that our officials will prove their innocence. We would not like to offer any explanation here as the matter is sub-judice. However I would only like to add that there has been no case against the company for any sort of wrong doing and there are no restrictions on the functioning of the company."
Commenting on the Money Matters stock movement, an analyst said, "The stock is showing a sturdy recovery. It is difficult to comment further on this, since no information is available publicly about this. But since the controversy hasn't settled down, we would ask the investors to be cautious."
Department states that there has been a more than 70% drop in traffic of these postal items. RTI activist Subhash Chandra Agrawal awaits response from government to his suggestions for changing some basic services
The use of simple postal facilities like postcards and inland letters has declined sharply over the past decade, since the introduction of the quicker Speed Post system and private courier services.
According to data from the postal department received by RTI activist Subhash Chandra Agrawal, the traffic of postcards has dropped 76% from a little over 336 crore in 1999-2000 to about 78 crore in 2008-09. Similarly, the use of inland letters has fallen 72% from 355 crore to 98 crore in the ten-year period.
Mr Agarwal had, in his application to the postal department, asked to know when the use of these postal items was at their peak, but the department could not give this information.
Postcards and inland letters were the most popular format and in many places the only means of postal communication some years ago. But fewer and fewer number of people use this service today, particularly in urban areas, where private courier services and e-mail is preferred over the post.
While e-mail is convenient, private couriers are known to be quicker in delivering letters and packages. It is also possible that the use of these once-common postal facilities has gone down even in towns and villages, with the availability of mobile telephone services that has changed the systems of communication quite dramatically.
Of course, a postcard which costs just 50 paise or the inland letter at Rs2.50 is still the only affordable for a majority of people. Some postcards (also called Meghdoot post card) that carry advertisements are even cheaper at only 25 paise.
But Mr Agrawal believes that the postcards should be charged one rupee ("Because 25-paise coins have been discontinued and even beggars refuse to accept coins below one rupee."), while the inland letter service should be discontinued altogether as it has lost its utility.
He has suggested that the Meghdoot post card should be priced at one rupee instead of the ordinary post card tariff of 50 paise and that whatever subsidy on this could be borne by advertisers sponsoring the Meghdoot post card.
In his recommendations to the government that were sent separately in May, Mr Agrawal also said that the Registered Post service be merged with the Speed Post by expanding the Speed Post network to more cities and towns and introducing an acknowledgement-due receipt with Speed Post for a charge of Rs5.
He has recommended a one-nation-one-tariff system of Rs15 for Speed Post instead of the current Rs12 for local and Rs15 for non-local delivery for a package of minimum 50 gm. He also said it was senseless that the next 450 gm is charged an additional amount equivalent to the charge for the initial 50 gm and urged that this loss in revenue be corrected.
Similarly, Mr Agrawal referred to the foreign mail tariffs that were fixed decades ago, saying that there should be separate rates for air mail and sea mail instead of the imposing a surcharge for air mail on the haphazardly fixed sea mail rates.