Share prices indecisive: Monday Closing Report

Nifty may move sideways between 4,845 and 4,930

The market, which opened lower following the nine-nation sovereign downgrade by S&P over the weekend, settled in the green on late buying amid a great deal of volatility. The Nifty is presently in an indecisive zone. However, a major event may help the market find direction. The index may see a sideways move in the range of 4,845 and 4,930. The National Stock Exchange (NSE) saw a volume of 62.69 crore shares.  

The market witnessed a gap-down opening tracking the Asian markets which trading with cuts of around 1% in morning trade following the S&P downgrade of nine Eurozone countries, including France, over the weekend. The Nifty opened 22 points lower at 4,844 and the Sensex lost 68 points at the opening bell to start the day at 16,087. Metal, capital goods and banking stocks pulled the indices lower in early trade.

Volatility kept the market range-bound in morning trade with the benchmarks touching their day’s lows around 10.30am. At the lows, the Nifty fell to 4,827 and the Sensex went back to 16,038. Reports of a sharp drop in headline inflation for December resulted in select buying by institutional investors, which pushed the indices higher in noon trade.

While the lower opening of the key European indices saw the domestic market pare some of its gains, an improvement in the European markets in subsequent trade induced risk appetite among Indian investors. Select buying enabled the market hit its intraday high in the last hour. At the highs, the Nifty touched 4,881 and the Sensex rose to 16,214.

The market closed off the highs of the day, but in the positive for the second day in a row. The Nifty settled eight points higher at 4,874 and the Sensex gained 35 points to end the day at 16,189.

The advance-decline ratio on the NSE was in favour of the decliners at 874:906.

Among the broader indices, the BSE Mid-cap index lost 0.03% while the BSE Small-cap index gained 0.33%.

BSE Capital Goods (up 2.07%); BSE IT (up 1.80%); BSE TECk (up 1.59%); BSE Auto (up 0.78%) and BSE Fast Moving Consumer Goods (up 0.69%) were the top sectoral gainers. On the other hand, BSE Oil & Gas (down 1.71%); BSE Healthcare (down 0.62%); BSE PSU (down 0.57%); BSE Realty (down 0.52%) and BSE Bankex (down 0.30%) settled at the bottom.

The top performers in the Sensex list were BHEL (up 3.67%), Maruti Suzuki (up 2.89%); Larsen & Toubro, Sterlite Industries (up 2.56% each) and State Bank of India (up 2.22%). The laggards were led by Reliance Industries (down 2.55%); NTPC (down 2.35%); HDFC Bank (down 1.74%); Hindustan Unilever (down 1.56%) and DLF (down 1.55%).

The top five stocks on the Nifty were Maruti Suzuki (up 4.38%); BHEL (up 3.64%); SBI, L&T (up 3.03% each) and IDFC (up 2.90%). The major losers were Reliance Power (down 3.30%); NTPC (down 2.68%); Kotak Bank (down 2.45%); RIL (down 2.26%) and HDFC Bank (down 2.03%).

Markets in Asia settled lower as the S&P’s ratings downgrades over the weekend ignited fresh concerns about the unending Eurozone debt crisis. Even the sharp rise in core machinery orders in Japan failed to boost investor sentiment. Japanese machinery orders jumped 14.8% in November, beating analysts’ expectations for a 6% rise.

The Shanghai Composite tumbled 1.71%; the Hang Seng declined 1%; The Jakarta Composite dropped 0.65%; the KLSE Composite declined 0.92%; the Nikkei 225 tanked 1.43%; the Straits Times fell by 1.26%; the Seoul Composite was down 0.87% and the Taiwan Weighted settled 1.09% lower. At the time of writing, the major European indices were trading weak and the US stock futures were in the red.

Back home, foreign institutional investors were net buyers of shares amounting to Rs293.51 crore on Friday. On the other hand, domestic institutional investors were net sellers of shares totalling Rs177.26 crore.

Sloppy market conditions have forced Development Credit Bank (DCB) to defer its QIP issue to next fiscal and the small private lender is now hoping to raise up to Rs120 crore in the first quarter of FY12-13. In January, last year, the bank had announced plans to raise up to Rs150 crore through a QIP issue by August. The stock declined 2.22% to close at Rs9.65 on the NSE.

Pharma major Ind-Swift has entered into an agreement with Roche Diagnostics India to promote a test for detecting heart attack, ‘TROP T rapid assay’, in India. Roche Diagnostics’ TROP T rapid assay is a point of care test which can detect whether a patient is having a heart attack through a simple whole blood test. Ind-Swift fell 2.21% to settle at Rs110.60 on the NSE.

GAIL Gas, a wholly-owned subsidiary of GAIL India has signed a memorandum of understanding (MoU) to establish Rs5,000 crore liquefied natural gas (LNG) import facility at Kakinada or Vishakhapatnam in Andhra Pradesh. The floating storage and re-gasification unit (FSRU)/ LNG terminal of 3.5 to 5 million tonnes per annum is likely to be the first such facility on the east coast of the country with an estimated investment of Rs5,000 crore. GAIL added 0.13% to close at Rs373.95 on the NSE.


Government should file suo moto complaints on behalf of consumers say activists

According to activists the government can seek help of consumer organisations and together should file suo moto complaints in larger public interest

The Union government, especially the Ministry of Consumer Affairs, is seeking proper guidelines for suo moto complaints in consumer affairs to ensure that genuine complaints having larger public interest are taken and are not picked up arbitrarily. However consumer activist and lawyers believe there is no need for separate guideline as the Consumer Protection Act itself clearly defines who can be the complainant or the nature of complaints.

In the absence of guidelines governing suo moto complaints, the Ministry is reluctant to file complaints on behalf of consumers against misleading advertisements or grossly deficient products or services. Experts say that the government need a political will and if it takes such action it can be as good as a class action.

Shirish Deshpande, advocate and chairman, Mumbai Grahak Panchayat, says, “There is a locus standi to take suo moto action. The definition of complainant, as per the Act, includes government. So they can take a suo moto action. Secondly, in Section 12, the Act clearly lays down basis for the kind of complaint that can be considered and complaint which would have larger public interest. Hence there is no need for separate rules by the Ministry. It only requires political will.”

Although the Consumer Protection Act provides provision for suo moto complaints; there are no guidelines. Therefore, officials are hesitant to act. So there are few such cases where both- the union and state governments have acted.

According to sources, the Ministry is seeking help from consumer organisations to frame guideline for taking suo moto action. This is to ensure that complaints which are full filling quantitative and qualitative criteria such as large complaints of similar nature and or where there is huge monetary loss to the consumer, is taken up. This will also ensure that complaints are also not arbitrarily picked up.
“In case of misleading or false advertisements or any gross deficiency, product recall or unfair trade practise, if government files a complaint, it could be a class action in the interest of the consumers,” Mr Deshpande added.
In May 2010, Maharashtra Food and Drug Administration (FDA) filed a charge sheet, in local court against advertisement of health drink Complan for claiming that the drink adds two inches to children’s height.

Pritee Shah, chief general manger, Consumer Education and Research Centre  (CERC) and Editor of Insight , a consumer magazine, believes that the government should have a mechanism to initiate such action. “In the US and UK, there are separate commissions which are empowered to take suo moto action. If such mechanism is developed, here as well it would yield much better results.

“During a CERC event on misleading advertisement, it was discussed that if the government take suo moto action, then who has to give the evidence. Is it the government, who is also the complainant or the advertisers to substantiate their claims? After much deliberation, it was held that advertisers should prove their claims,” Ms Shah said.

Activists say that government should seek help of consumer organisations and together file suo moto complaints in larger public interests. Roland Martins, co-ordinator, Goa Civic and Consumer Action Network, says, “The government needs to be proactive to take up suo moto complaints. There so many misleading or fake advertisements across various sectors like education, health etc. If each department acts against them, it would definitely help the consumers. The government departments, in such matters, can also seek the advice of consumer organisations.”

Recently, the Insurance Regulatory and Development Authority (IRDA) announced that it is planning to take insurance complaints suo moto in order to ensure fair play by the insurance companies.


Iranian oil: Slippery for India

Without a comprehensive oil conservation policy in place and prolonged indifference towards developing renewable energy sources, we may be heading for a catastrophe, say industry veterans

Foreign publications are in a tizzy, analysing and commenting on the rapidly escalating petroleum face-off between Iran on one hand, and the western world on the other.  However, India is unprepared to deal with the crisis. Without a comprehensive oil conservation policy in place and prolonged indifference towards developing renewable energy sources, we may be heading for a catastrophe, say industry veterans.

The US and European Union sanctions threaten to reduce sales of Iranian oil; while Iran has issued a counter threat of closing off the Strait of Hormuz, which is used by tankers carrying 17 mmbd (million barrels a day)—about a fifth of the world’s consumption. India, which is the second largest buyer of oil, has started to feel the pinch from the US restrictions on doing business with Iran. But since it has no sanctions in place in case the situation strains further, India may be heading towards a disaster.

“I am really concerned for the world and Indian economy. During the first two oil shocks LPG penetration in residential use was not all that high. Today it is very high in urban areas—more than 80%. Unlike developed countries we do not have sufficient strategic petroleum reserves. Also, we do not have the flexibility to switch between different kinds of fuels,” comments Bhamy Shenoy, who worked for Conoco in all phases of International petroleum industry from 1966 till 1987; and later served as an advisor for several oil companies and energy organisations in former Soviet countries and USA. Presently involved with many NGOs in Mysore, Mr Shenoy had successfully introduced the coupon system in Mysore, which rid the PDS of corruption in some districts in the state.

He says, “Now with the speculators ever ready to gamble, there will be quantum jumps in oil price. However for India, I am concerned about the physical shortage of petroleum products where required and the kind of unrest it will create. There will be riots in major cities of India when consumers will look for LPG.”

Though it is unlikely that Iran will risk military action by closing off the Strait of Hormuz, if that happens, it will be an unprecedented catastrophe, says Mr Shenoy.  He says, “There is a possibility that Indian public sector oil companies losing as much as Rs360,000 crore on an annual basis should there be closure of Strait of Hormuz. Losses of 16 to 17 mmdb cannot be replaced easily. The International Energy Agency (IEA) has agreed that they would release 14mmdb from their emergency stockpile.  Even assuming that IEA will succeed, there will be total chaos.” Unfortunately Indian planners do not have any contingency plan for such a disaster, he says, and instead, are only focusing on getting waivers from the USA.

His views are seconded by EAS Sarma, former power and finance secretary at the Centre. Mr Sarma says, “A small disruption in oil supplies can upset our apple cart easily. It can lead to political upheavals. Our transportation system can break down. The low-income families have become heavily dependent on kerosene everywhere. They have also become dependent even on subsidised LPG in some states. An oil supply disruption can hit the poor very hard.”

Mr Sarma also estimates that with oil supplies plateauing and the oil demand increasing from countries like China, India and Brazil, one should not be surprised to find the oil price crossing $200 per barrel in the near future. Dependence on imports from Mid Eastern countries will also affect India’s foreign relations.

“I have written several times to the government trying to impress on it the emerging seriousness of the oil crisis. My letters have drawn a blank,” says Mr Sarma. “The only issue on which there is political wrangle is on whether the prices of diesel and LPG should be increased or not, while there are bigger challenges ahead. Any responsible government, by now, would have gone in for a comprehensive oil conservation programme and a concerted effort to shift to renewable sources of energy.”

Mr Sarma rightly points out that neither nuclear power nor coal-based power will provide any relief on the oil front. “The latest move of the government to get imported nuclear reactors will compound the problem further by making us totally dependent on the West for both the reactors and the fuel. I hope that there is realisation, though belated, on the part of the prime minister to understand the emergent developments and respond to the same,” he says.


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