The next support for the Nifty is at 4,970. Volumes were sharply lower in today’s fall
Asian markets opened weak today, followed a sharp fall in the US markets on Monday, leading to a weak opening in domestic bourses. The Sensex opened 208 points below the previous close at 16,817, while the Nifty opened 69 points below at 5,049. Yesterday, we had indicated that the Nifty may move between 5,070 and 5,160. However, we had said that in case the index closes below 5,070, we may see a substantial correction. Today the Nifty made a lower high and lower low at 5,058 and 5,011 respectively and closed below 5,070 (the support level given yesterday) at 5,038 (it fell 81 points). From here, we may see the Nifty moving sideways to the level of 4,970. Over the last 62-day period, (including today), Tuesday witnessed the lowest volume of 44.93 crore shares on the NSE (National Stock Exchange).
The Sensex moved in the range of 16,825 and 16,669 to close 277 points down at 16,748. Today’s fall of 1.63% on the Sensex and 1.58% on the Nifty is the maximum loss after 4 October 2011. The advance-decline ratio on the NSE was 81:402.
All BSE sectoral indices ended in the red today— the maximum loss being seen in BSE IT (down 3.67%) and BSE TECk (3.11%). Out of the pack of 30 Sensex stocks, four ended in the positive—NTPC ended flat, while 25 stocks ended in the red, maximum loss being seen in TCS, which fell 7.71% on the back of its lesser-than-estimated results, followed by Tata Motors (down 3.64%); Hindalco Industries (3.57%); Sterlite Industries (3.48%) and Wipro (down 2.94%). The Nifty’s 50 stocks saw 10 gainers and 39 losers while Sesa Goa ended flat.
Global news continued to be negative. China's annual economic growth eased to 9.1% in the third quarter, the slowest pace since 2009, from 9.5% in the previous quarter, the National Bureau of Statistics said on Tuesday, as tight domestic monetary policy and easing foreign demand crimped activity. There were also concerns about mounting bad-debt risks faced by local banks; high debt levels being carried by provinces and a severe cash crunch which is impacting rail & road construction in the world’s second-largest economy.
European indices were also trading in the red. Domestic indices hit their intraday low after the European market opened. Germany's finance minister cautioned against hopes for a ‘quick-fix’ to solve Europe's debt problem, reminding investors not to become “too optimistic” about a rapid development to the two-year-old crisis. On the other hand, Moody's decision to review France’s triple-A credit rating cast new doubt on Tuesday on Europe's hopes of drawing a line under its sovereign debt crisis, five days before a crucial EU (European Union) summit. The US ratings agency said late on Monday that it may slap a negative outlook on France's ‘AAA’ rating in the next three months, if the costs for helping to bailout banks and other euro-zone members like Greece stretch the country’s budget too much.
Finance minister Pranab Mukherjee said yesterday that India remains “firmly on track” to achieve annual economic growth of 8%-9% in the medium-term. But the country needs to stay alert and respond to emerging global challenges, the FM said at a conference.
India's headline inflation will remain under pressure until December and maintaining growth momentum along with price stability remains the biggest policy challenge, according to a finance ministry statement released on Tuesday.
The company was demerged 10 months back though it is yet to be listed; SEBI approved the listing after eight months but now BSE is yet to give its nod
The dwindling population of retail investors in India is time and again made to suffer due to wrongdoing by companies. Often, buybacks, delisting & demergers are announced, resulting in a sudden spurt in the share price and then the company defers from actually going through with the announcement, leaving small-time investors mired in losses.
Take the case of Five X Finance and Investment Limited, a demerged arm of Octant Industries, (formerly listed as ‘Octant Interactive’ on the BSE, or Bombay Stock Exchange), which has not yet been listed for more than 10 months now.
Octant Interactive Technologies Ltd demerged its financial division business and vested in Five X Finance and Investment Ltd, with a whopping 80% of its capital as per the demerger agreement, on 7 December 2010. However, the company has still not received approval from the BSE. This has left retail investors in the lurch with a majority of their capital stuck in the unlisted firm.
Moneylife had earlier reported on how the delay in listing of Five X, due to delay in approval by the Securities and Exchange Board of India (SEBI), had left investors trapped in the unlisted company. (See: Post de-merger, Octant Interactive shareholders still await listing of spun-off business ).
Now after eight months, the market regulator has given listing approval to the company. But this time it is the BSE which is yet to give its nod.
In a filing with the BSE, dated 2 September 2011, Octant Industries said,
“The demerged Undertaking/Resulting Company ‘Five X Finance and Investment Ltd’ has revived the approval under 19(2) (b) SC (R) Rules, 1957 from SEBI for listing the company with stock exchanges.”
It added, “Post the approval from SEBI, the company is under the process of obtaining listing approvals with the concerned exchange (BSE).”
Here again, retail investors are at the receiving end of the deal. “Now they are waiting for permission from BSE, but in the past 45 days there is no update or sign from the company regarding permission from the BSE. And we (investors) don’t have any other way as the company is not responding to email from investors as usual, and there is no other way we can contact them and get an update about the listing procedure. It is really a horrible experience as our entire money is stuck in Five X as the ratio was 80% to 20%,” complained an investor who had invested in Five X, who spoke to Moneylife preferring anonymity.
As per the Scheme of Agreement, post the demerger, Octant Interactive Technologies Ltd’s shareholders got 4 shares in Five X Finance and Investment for every 5 shares in Octant Interactive which they held. For every 5 shares of Octant Interactive, the equity holder was to receive 1 share of Octant Industries, each share with face value of Rs10. In other words, the shareholders of Octant Interactive were given 80% of their current holding in Five X Finance and 20% in Octant Industries. This effectively reduced shareholder stake in Octant Industries.
Industry experts say that investors are suffering with the majority of their capital stuck in unlisted firms solely due to delay in SEBI and stock exchange approval.
Interestingly, Octant Industries, which got only 20% capital, was successfully listed on 7 February 2011.
Five X says that it is awaiting BSE’s approval. When asked about the investors’ money, a company official told Moneylife, “We can’t do anything unless we get listing approval from the BSE.”
An email query to BSE did not solicit any reply till the time of publishing this story.
For the RuPay launch, the National Payments Corporation of India is waiting for PoS clearance to kick off the service which is set replace the processing systems of global majors like VISA and MasterCard
After much deliberations and hype over the RuPay card, the unique domestic card in India which is set to replace global real-time payment processing firms like VISA and MasterCard, the service will be commercially launched with full functionality by March 2012 by the National Payments Corporation of India (NPCI).
AP Hota, chief executive officer and managing director, NPCI, told Moneylife, “Currently RuPay cards are being issued with limited functions, they are usable only in ATMs and micro-ATMs (used by bank business correspondents). Once we get the clearance for PoS (point-of-sale) usage, which is expected to come about in March 2012, the card will be launched with full functionality.”
The RuPay initiative entails the setting up of a network switch, which acts as a payment gateway that connects all ATMs and PoS terminals.
An NCPI spokesperson said, “Once PoS acceptance and e-commerce infrastructure is ready, NPCI will go ahead for final approval for rolling out RuPay cards that would be accepted on all channels.”
Since June 2011, RuPay cards have been issued with limited functions, and only used as ATM and micro ATM cards. These cards are not used for other commercial purposes such as usage in departmental stores and shopping centres. Four banks have issued this card. “The RuPay cards issued by four banks are widely used in around 85,000 ATMs across the country. Co-operative banks such Gopinath Patil Parsik Janata Sahakari Bank, NKGSB Cooperative Bank and Kashi Gomti Samyut Gramin Bank (which is a regional rural bank or RRB), have issued RuPay for ATM usage, while Bank of India has issued (RuPay) for micro-ATMs for the purpose of the business correspondents of the bank,” added Mr Hota.
Currently, domestic banks have no option but to tie up with VISA or MasterCard for connectivity between cardholders, merchants and issuing banks, not just within the country, but across the globe in the absence of a domestic Indian payment processing system.
Every transaction done in India using a debit or credit card issued by a domestic bank is routed through network switches owned by VISA or MasterCard, and both entities are based outside the country. But now RuPay would eliminate the need for this connectivity outside India for domestic transactions.
NCPI plans to focus on urban co-operative banks and RRBs. “We plan to enter a market mainly consisting of urban co-operatives and RRBs since they don’t issue any cards at the moment, and there is no other player in that area,” said Mr Hota.
In 2009, the RBI (Reserve Bank of India) had asked the Indian Banks’ Association (IBA) to launch a not-for-profit company and design a rival card—then tentatively called ‘India Card’, which was to meet the requirements of domestic banks.
And finally, the RBI’s plan is materialising and RuPay will act like Union Pay of China, which is the domestic real-time payment processing system for Chinese banks.