Watch out for 5,490 on the Nifty for resistance
As suspected the market rallied today adding to the over 1% gains accrued on Thursday and brushing aside fears related to rising inflation, a possible hike in diesel prices and the Reserve Bank of India's rate-tightening steps.
The Sensex and Nifty opened at 18,106 and 5,414 respectively. After hitting the intra-day low of 18,087 and 5,414 at the start of the trading session, the market gained strength as trade progressed on all-round buying support from institutional investors, taking the indices to new highs. The indices touched their day's highs in post-noon trade on a positive opening of the key European markets. The resistance of 5,470 mentioned yesterday was overcome after some effort and the market went on to hit an intra-day high of the Nifty at 5,486.
Following two days of counter-trend rally watch out for 5,490 for a slight reversal. If the market crosses this level, it may witness a strong rally up to 5600, subject to dips. The Sensex rose 221 points to close at 18,266 and Nifty gained 64 points at 5,476. The gain of 1.23% on Sensex is the maximum since 9 May 2011. The advance-decline ratio on the National Stock Exchange was a positive 1145:539.
Among the broader markets, the BSE Mid-cap index surged 1.48% and the BSE Small-cap index rose 0.89%.
Eleven of the 13 sectoral gauges on the BSE settled higher, led by BSE Realty (up 3.60%), BSE Bankex (up 2.46%), BSE Metal (up 1.98%), BSE Oil & Gas (up 1.59%) and BSE PSU (up 1.24%). BSE Auto (down 0.85%) and BSE Consumer Durables (down 0.76%) were the losers.
Hindalco Industries (up 5.78%), Reliance Communications (up 5.66%), ICICI Bank (up 4.23%), DLF (up 4.11%) and Reliance Infrastructure (up 3.85%) were the top gainers on the Sensex. The laggards were led by Tata Motors (down 6.25%), Hindustan Unilever (down 1.27%), NTPC (down 1.03%), Hero Honda (down 0.80%) and Cipla (down 0.19%).
Most markets in Asia finished trade in the green on Friday as investors resorted to bargain hunting after the recent sell-off. On the other hand, the Chinese market ended lower on inflationary pressures while the strengthening of the yen against the dollar and a downgrade of Japan's sovereign debt outlook to negative from stable by Fitch pulled down Japanese stocks.
The Hang Seng gained 0.95%, the Jakarta Composite rose 0.46%, the KLSE Composite rose 0.50%, the Straits Times was up 0.38%, the Seoul Composite climbed 0.40% and the Taiwan Weighted added 0.25%. On the other hand, the Shanghai Composite declined 0.98% and the Nikkei 225 fell by 0.42%.
Back home, institutional investors-both foreign and domestic-were net buyers of stocks on Thursday. While foreign institutional investors invested Rs124.38 crore in shares, domestic institutional investors pumped in Rs233.53 crore in the equities segment.
The three cases described in separate news reports today, underline the continuing worries over corporate checks and balances
News reports today highlighted cases against three big names in the Indian corporate world that should be a wake-up call for companies, auditors and regulators. They are State Bank of India (SBI), Wipro and Vedanta-owned Sesa Goa, all three dogged by wrongful accounting that was apparently ignored by the auditors.
These cases are all the more significant in the context of the Satyam Computer fraud, India's biggest corporate fraud that was revealed in January 2009.
SBI was named in one of the reports today, for deviations the Reserve Bank of India (RBI) has detected in the sanction of bridge loans to some telecom companies. Some telecom firms are under investigation over the out-of-turn allocation of lucrative licences.
According to the report, SBI sanctioned a bridge loan of Rs2,500 crore to Unicor without identification of any financial institution for part-financing capital expenditure, pending tie-up of long-term project finance. Also, there was no committed financial tie-up at the time of disbursement of the money, and the roll-out should have been completed within a year of getting the licence in February 2009.
A year later, SBI sanctioned a regular term loan of Rs9,475 crore for the entire project, Rs2,850 crore of which was to replace the earlier bridge loan even when there was no committed tie-up in place. While the remaining Rs6,625 crore was not released, the bridge loan rolled out till December 2010.
Similar bridge loans/bank guarantees were extended to Loop Telecom (Rs725 crore), Datacom Solutions (Rs1,100 crore), Swan/Etisalat (Rs395 crore) and they were either adjusted against regular loans later on, or rolled over. Reliance Communication was sanctioned an unsecured corporate loan of Rs2,500 crore as capex, without any assessment of the credit requirements, even when unsecured loans of this scale were simply not permitted.
The Wipro embezzlement case has gone a step further, with the US Securities and Exchange Commission (US SEC) raising doubts about the competency of company's auditors. According to a report, the US SEC has asked Wipro to prove that its auditor, KPMG India, is independent. In the event that the IT firm is not able to fulfil the directive, it could have to appoint a new auditor and even get its business books audited all over again. Wipro had delayed filing its annual report for 2010 with the US regulator due to an investigation into alleged embezzlement of an estimated Rs32 crore, by one of its employees.
In the third case, the Ministry of Corporate Affairs' Serious Frauds Investigation office has reportedly recommended the prosecution of mining company Sesa Goa on nine counts, for over-invoicing imports by Rs14.60 crore, sales by Rs42.51 crore, exports by Rs1,002 crore and excess payment of agency commission of Rs40.60 crore. The fraud office has also accused the company's independent directors and statutory auditors for not co-operating in the investigation and recommended that they be prosecuted as well.
These are serious deviations constituting misdemeanours by responsible officials of the companies' managements and dereliction of duties by the statutory auditors that does not augur well for corporate governance. Something, that the auditors' body, the Institute of Chartered Accountants of India, will have to look at closely as will the regulators, the RBI and the Securities and Exchange Board of India.
The RBI further said that all customers are entitled to receive such compensation for delays only if a claim is lodged with the issuing bank within 30 days of the date of transaction
Mumbai: The Reserve Bank of India (RBI) on Friday directed banks to reimburse customers for amounts wrongfully debited from their accounts in failed ATM transactions within seven days of an account holder’s complaint or else pay a Rs100 per day compensation, reports PTI.
“The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12 working days to seven working days from the date of receipt of customer complaint,” the RBI said in a notification.
Failure to re-credit the amount within seven working days will require the issuing bank to pay a compensation of Rs100 per day, it said.
Earlier, banks were required to reimburse customers for amounts wrongfully debited from their accounts in failed ATM transactions within 12 days.
The RBI further said that all customers are entitled to receive such compensation for delays only if a claim is lodged with the issuing bank within 30 days of the date of transaction.
The directive shall be come into effect from 1 July 2011.
The central bank instructed the issuing bank and the acquiring bank to settle failed ATM transaction disputes through the ATM system provider only.
“No bilateral settlement arrangement outside the dispute resolution mechanism available with the system provided is possible,” RBI said.
This measure is intended to reduce instances of disputes in payment of compensation between the issuing and acquiring banks, it added.