Look for a resistance of 5,500 on the Nifty
The fall in the indices which began on 1st July 2011 may take a pause for now with the easing of debt issues in the US, which also helped stock futures trade higher today. The Nifty which hit a 27-day intra-day low today may see a small rally up to the 5,500 level.
Extending its fall for the second day on global concerns, the market opened lower this morning. The Nifty resumed trade at 5,402, down 55 points from its previous close, and the Sensex opened at 17,970, down 140 points, well below the 18,000 mark for the first time in 28 days. Realty, capital goods, auto and banking stocks were under pressure in early trade.
The indices traded sideways till noon after which the market fell to its intra-day low. At the day’s lows the Nifty was at 5,379, below the psychological 5,400 level for the first time in 27 days, while the Sensex dipped to 17,860.
Weaker-than-expected results from realty major DLF and telecom giant Bharti Airtel added to the woes.
Buying in select stocks in the post-noon session resulted in a marginal recovery, and helped the indices to the day’s highs. At the intra-day high, the Nifty was at 5,423 and the Sensex touched 18,006. But selling pressure resulted in the market coming off the highs and the indices moved sideways in subsequent trade.
The market closed down for the second day in a row with the Nifty settling at 5,405, down 52 points, and the Sensex at 17,941, a loss of 169 points.
The advance-decline ratio on the National Stock Exchange (NSE) was 608:1108.
The broader indices also ended lower, but did better than the benchmark. The BSE Mid-cap index fell by 0.33% and the BSE Small-cap index declined by 0.66%.
The BSE Metal index (up 0.30%) and BSE Fast Moving Consumer Goods index (up 0.26%) were the only gainers in the sectoral segment. The top losers were BSE Capital Goods (down 2.65%), BSE Auto (down 1.45%), BSE Healthcare (down 1.02%), BSE IT (down 1%) and BSE Consumer Durables (down 0.93%).
Reliance Infrastructure (up 2.76%), ITC (up 0.90%), Tata Power (up 0.71%), Hindalco Industries (up 0.52%) and ONGC (up 0.45%) were the major gainers on the Sensex. The losers were led by Larsen & Toubro (down 4.33%), Tata Motors (down 3%), DLF (down 2.15%), Bajaj Auto (down 2.03%) and Jindal Steel (down 2.01%).
The top performers on the Nifty were SAIL (up 3.18%), Reliance Infra (up 2.50%), Sesa Goa (up 2.25%), BPCL (up 1.76%) and Tata Power (up 1.14%). The draggers were L&T (down 4.23%), Tata Power (down 2.95%), Axis Bank (down 2.87%), Bajaj Auto (down 1.94%) and DLF (down 1.89%).
Gold hit a new all-time high on Wednesday, rising by Rs640 to Rs24,330 per 10 grams on heavy buying by stockists and driven by a rally in the overseas market. Silver also rose on industrial demand and increased by Rs1,500 to Rs60,100 per kg.
Markets in Asia were also lower for a second consecutive day with the easing of US debt concerns that brought some economic problems to the forefront. Data released on Tuesday which showed a fall in US consumer spending and decline in factory output across the world, signals a slowdown in the world economy.
Recovering from its early losses, the Shanghai Composite shed 0.03%, the Hang Seng plunged 1.91%, the Jakarta Composite declined 0.99%, the KLSE Composite fell 0.63%, the Nikkei 225 tumbled 2.11%, the Straits Times tanked 1.47%, the Seoul Composite dived 2.59% and the Taiwan Weighted slipped 1.49%.
Back home, foreign institutional investors were net sellers of stocks worth Rs201.68 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of equities worth Rs139.88 crore.
As a direct fall-out of the iron ore mining scam in Karnataka, JSW Steel today said it has closed down two blast furnaces of about 2.3 million tonnes steel production capacity at its Vijayanagar plant in Bellary district due to the unavailability of iron ore. JSW Steel, whose iron ore requirement stands at about 60,000 tonnes per day, sources about half of its requirement from the Bellary-Hospet region and has about two-three days stock left. The share price closed 5.50% higher at Rs709.70 on the NSE.
Venus Remedies has received its first patent from the US PTO for its novel research product, Vancoplus. With the grant of this patent, which is valid up to December 2027, the company is set to tap the US market. The stock fell 2.14% at Rs241.90 on the NSE.
Housing Development Finance Corporation, India’s leading mortgage lender, has hiked its retail prime lending rate on housing loans by 50 basis points (bps). The new rates are effective from 1st August. The hike in retail lending rate reflects tight monetary conditions and is in line with the recent increase in key interest rates by the Reserve Bank of India (RBI). The scrip fell by 0.66% to close at Rs680.50 on the NSE.
The Goa-based manufacturer of electrolytic products has put off a share buyback plan without giving any reason, two weeks after making the announcement which saw the stock price shoot up by over 28%. Now, it has lost 18%
Company promoters are using a well-proven method to manipulate the price of their stocks and the inaction of the market regulator in these instances indicates that it does not have a problem with such manipulation.
The method is simple: Just make a positive announcement, whether it be about the issue of bonus shares, a proposal to buy back shares, or simply timing the announcement of good results. The stock price rises, the manipulators register good gains, then step back from the announcement.
A recent example is the announcement by Goa-based De Nora India that it would consider a share buy-back.
On 13 July 2011, the company stated in a filing to the Bombay Stock Exchange (BSE) that it would consider a share buyback plan at its board meeting. "A meeting of the board of directors of the company will be held on 27 July 2011, inter alia, to consider and take on record the unaudited financial results for the quarter ended 30 June 2011 and to consider a buyback of equity shares in accordance with SEBI regulations and subject to regulatory authorities."
Reacting to the news, the company's stock, which was languishing for about eight weeks, jumped by 5% to close at Rs89.35 on the day of the announcement. Then onwards, it continued to rise till 26 July 2011, when it closed at Rs104.50, a 17% gain in two weeks. The stock hit an intra-day high of Rs112 on 25th July.
Then, on 27th July, the company said it had decided to defer the buyback plan without giving any reason. The stock dropped 7% to close at Rs97.05. The company informed the BSE that the "board of directors of the company at its meeting held on 27 July 2011, inter alia, has decided to defer the proposal for buying back its own shares by the company."
Market observers point out that these moves are executed smartly. While the company announced its results at about 1.45pm, the information about deferring the share buyback was available only at about 3.30pm, around the time the stock market closes. Investors are asking why the company had to announce the proposal to buy back shares in the first place, if it was unsure about going through with it.
"It has now become a good stock manipulation exercise to call a board meeting on a share split, bonus issue, or buyback and then simply say that the board has deferred it. It is high time that the Securities and Exchange Board of India acts to stop such manipulation," complained one retail investor, who has invested in De Nora India.
A message from Moneylife to the company by email a week ago, has not received any response yet.
After the arrest of its COO, Speak Asia is shedding 'crocodile tears' saying it cannot send surveys to its panellist from this week as its server has been taken over by the Economic Offences Wing of the police. The MLM company is now also unofficially talking about an exit option for panellists
Speak Asia, the troubled multi-level marketing (MLM) company, continues to spread false promises through other sites associated and maintained by its panellists. Following the arrest of its chief operating officer (COO) Tarak Bajpai by the Economic Offences Wing (EOW) of the Mumbai Police, the company is now trying to put the blame the police for 'not being able to send surveys' to its panellists. It also is talking about providing an exit option for them.
What is interesting is that Speak Asia is not saying anything officially. Instead, it is using Websites and blogs maintained by its agents to spread such news among panellists.
Citing an "internal, official" communication from Speak Asia, bizbasket.net, one such Website operated by an agent based in Bengaluru, says, "Please Go Through The Official Communication Received From SpeakAsia In This Regard." The communication is an image of a letter supposed to be sent by the company. The letter also talks about providing an exit option to existing panellists as well as not sending any surveys from Wednesday (that is 3rd August).
It says, "As communicated above, certain services including survey scheduling will be interrupted due to the EOW taking the access of our server. So the surveys will not be uploaded in the next schedule (starting Wednesday) till the server access is with EOW."
This ultimately means that all 19 lakh panellists of Speak Asia will not get their survey income of Rs1,000 per week henceforward. As we have mentioned earlier, the company has not paid a single paisa to panellists since 13th May and owes them about Rs2,280 crore. This is the very same company that had claimed it was backed by very good technology and had plenty of servers to send the surveys.
The letter published by Bizbasket also 'proudly' mentions the availability of an exit option to all panellists of Speak Asia, from 5th August. "This is a Very Hot News which is being shared by SpeakAsia Management. A Giant Step Towards Genuinity - The Exit Option. Those Who Feel They Cannot Earn From SpeakAsia Or Doubt Their Being Genuine Can Now Exit SpeakAsia - The Doors Will Be Opened Starting 5th August."
However, many panellists who are posting comments on Bizbasket and other sites are more worried about their money and nothing else. One panellist writes on SpeakIndiaonline.com, "This letter is fake, there is no name in signing and till now all pop ups are from Team Speakasia and now there is marketing department sending letter...all this is fake...."
On the Bizbasket site, another panellist writes, "What is this? When someone will exit company (pay) back amount? How? When they are not having any (money) payment gateway, how they will pay? If they have some manage to pay than why they are not paying normally? Something is fishy. One way they can pay, when someone exit other when someone want his survey amount that time they don't have any (money) payment gateway... Sorry can't understand this".
This exactly is the point. When Speak Asia is not paying any money to its panellists since 13th May, how is the company going to pay money to those who want to use the exit option? In addition, the terms and conditions mentioned are more beneficial to the company as those who have earned any reward points (RPs) would find that much less money if he opts for exit. This means, he must use the RPs to buy whatever is available on the company site or forget the amount equivalent to the RPs.
Moreover, the letter also tries to 'threaten' panellists who want to use the exit route that they would be on their own and would have to face the authorities themselves. It says, "If the panellists EXIT, it is his sole responsibility to satisfy the queries raised by any authorities of the money coming in his bank account".
This sounds funny because even at present, it is the responsibility of the panellist to provide satisfactory answers and pay taxes on the money earned through filing surveys of Speak Asia, as the company does not believe in the tax deduction at source or TDS system. From our interaction with some tax consultants and officials from the income-tax (I-T) department, we have learned that it would be mandatory for panellists to show the extra income earned in their I-T returns and pay the appropriate taxes applicable. In any case, they cannot hide the additional income or decide not to pay any taxes as the money transfers are recorded in their bank transactions.
The question about exit option to panellists of Speak Asia was first raised in the press conference called by the company's then legal advisor Ashok Saraogi. At present, Speak Asia does not offer any refund in case of cancellation of subscription, but the senior lawyer told journalists that he would raise the issue of allowing discontinuation of subscription with the Speak Asia management within a week.
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