Share prices may struggle with an upward bias: Tuesday Closing Report

Nifty may rise if it crosses the level of 5,430

The market, which opened marginally in the red on weak global cues, saw little movement for most part of the session. However, select buying in late trade helped the indices close higher for the second day in a row.

Today the Nifty moved in a narrow range of 5,378 and 5,428. We had mentioned in our yesterday’s closing report that the index should cross the level of 5,430 to see the uptrend regaining strength. In a major part of today’s session the benchmark tried to move higher after each fall. The index may fall to 5,300 if it doesn’t cross the level of 5,430. The National Stock Exchange (NSE) had a volume of 92.64 crore shares.

The market opened marginally lower, tracking the weak Asian markets in early trade after global ratings agency Moody’s on Monday warned that it would cut the triple-A ratings of France, UK and Austria. At the same time, the agency downgraded the ratings of Italy, Portugal, Spain, Slovakia, Slovenia and Malta. Back home, the Nifty lost nine points to resume trade at 5,381 and the Sensex opened at 17,767, down six points from its previous close.

The indices fell to their intraday lows in initial trade with the Nifty falling to 5,378 and the Sensex slipping to 17,743. But, buying in mid-cap and small-cap stocks soon helped the market gather some momentum to emerge into the positive.

Headline inflation for January coming in at a 26-month low of 6.55% helped the market clock some gains in the pre-noon session. However, lack of any fresh triggers kept the market range-bound almost for the entire trading session.

A pick-up in buying activity in the last half hour enabled the benchmarks touch their intraday highs towards the close of trade. At the highs, the Nifty touched 5,428 and the Sensex rose to 17,890. The market closed marginally below those levels. The Nifty closed at 5,416, 26 points up and the Sensex settled at 17,849, a gain of 76 points.

The advance-decline ratio on the NSE was in favour of the gainers at 1023:768.

The broader indices outperformed the Sensex today as the BSE Mid-cap index surged 1.15% and the BSE Small-cap index gained 0.83%.

Rate sensitive sectors were in demand today. The top sectoral indices were BSE Capital Goods (up 2.30%); BSE Realty (up 2.29%), BSE Auto (up 2.14%); BSE Bankex (up 0.81%) and BSE Consumer Durables (up 0.65%). BSE Healthcare (down 0.57%) and BSE Oil & Gas (down 0.21%) ended as losers in the sectoral space.

Among Sensex stocks, Larsen & Toubro (up 3.87%); Tata Motors (up 3.74%); State Bank of India (up 3.26%); Maruti Suzuki (up 3.24%) and Hindalco Industries (up 3.18%) were the top performers.  On the other hand, Cipla (down 6.28%); Tata Power (down 3.61%); ONGC (down 1.67%); Bharti Airtel (down 1.45%) and Jindal Steel (down 0.88%) were the main losers.

The top five Nifty stocks were Reliance Communications (up 5.69%); Tata Motors (up 5.56%); L&T (up 5.21%); Maruti Suzuki (up 3.67%) and Hindalco Ind (up 3.59%). The main losers on the index were Cipla (down 5.96%); Tata Power (down 3.33%); Siemens (down 1.94%); ONGC (down 1.73%) and Bharti Airtel (down 1.62%).

Markets in Asia closed mixed as fears of further downgrade of key European economies by Moody’s made investors nervous. In another development, the Bank of Japan, in a policy shift, added 10 trillion ($130 billion) to its asset buying and lending scheme. The central bank also said it would target consumer inflation of 1% as its short-term goal.

The Shanghai Composite declined 0.30%; the Jakarta Composite fell by 0.23%; the Seoul Composite lost 0.15% and the Taiwan Weighted slipped 0.36%. On the other hand, the Hang Seng gained 0.15%; the KLSE Composite rose 0.21%; the Nikkei 225 climbed 0.59% and the Straits Times advanced 0.37%. At the time of writing, European markets that opened weak after Moody’s ratings downgrade, were trading mostly higher and the US stock futures were in the green.

Back home, foreign institutional investors were net buyers of shares totalling Rs469.77 crore on Monday, whereas domestic institutional investors were net sellers of equities aggregating Rs597.31 crore.

PSL and its wholly owned foreign subsidiary, PSL FZE, based in Sharjah, UAE, have recently secured orders aggregating over Rs742 crore for the manufacture of pipes and the provision of ancillary coating services from various international and domestic clients. The stock surged 3.12% to close at Rs69.50 on the NSE.

Japanese steelmaker JFE Steel Corporation has increased its stake in India’s JSW Steel to 15%. JFE Steel Corporation in a statement said that it has raised its ownership ratio in JSW Steel to 15% by partly converting its GDRs into common shares. Pursuant to this ownership increase, JSW Steel will become an “equity method affiliate” of JFE Steel from this quarter. JSW Steel gained 2.30% to close at Rs832.95 on the NSE.

Diamond Power Infrastructure plans to spend Rs753 crore to expand its current manufacturing plant to produce conductors and medium voltage cables at Vadodra. The expansion is to be completed over 30 months in three phases beginning April 2013. The stock gained 2.98% to close at Rs131.35 on the NSE.


RBI hikes bank rate after nine years to 9.5%

The bank rate, which has been increased by 350 basis points to 9.50%, was kept unchanged since April 2003

Mumbai: After a gap of nearly nine years, the Reserve Bank of India (RBI) has increased the bank rate by 3.50 percentage points to 9.50% with immediate effect, reports PTI.

“This (the increase) should be viewed and understood as a one-time technical adjustment to align the bank rate with the marginal standing facility (MSF) rate rather than a change in the monetary policy stance,” the RBI said in a notification, adding the new rate will be effective from 13th February.

The bank rate has lost its significant as a monetary policy tool as the central bank presently signals stance through changes in repo, the rate at which banks borrow short-term funds from RBI.

The bank rate, which is the standard rate at which the RBI buys or re-discount bills of exchange or other commercial paper, is presently used as a penal rate which the banks have to pay for their failure to meet the mandatory Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

The bank rate, which has been increased by 350 basis points to 9.50%, was kept unchanged since April 2003.

According to RBI, it should technically be higher than the repo rate, which is the policy rate. The repo rate currently stands at 8.5%, while the reverse repo rate is 7.5%.

It was kept unchanged, “mainly for the reason that monetary policy signalling was done through modulations in the reverse repo rate and the repo rate under the Liquidity Adjustment Facility (till 3 May 2011) and the policy repo rate under the revised operating procedure of monetary policy (from 3 May 2011 onwards)”, the RBI said.

Moreover, it added, “Under the revised operating procedure, MSF, instituted at 100 basis points above the policy repo rate, has been in operation, which in many ways serves the purpose of the bank rate.”

While the policy repo rate and the MSF rate have become operational, the bank rate continued to remain at 6%.

The bank rate is also used by several other organisations as a reference rate for indexation purposes.

The RBI said that it has consulted various stakeholders relying on the bank rate as a reference rate before arriving at the decision to revise it.

“Based on the feedback received, it is determined that the bank rate should normally stay aligned to the MSF rate,” it said.


SBI General Insurance ties-up with My TVS, India Assistance

SBI General will provide emergency roadside assistance to its policy holders anytime and for any car across the country

Private insurer SBI General Insurance entered into a tie-up with My TVS and India Assistance to provide emergency roadside assistance to its policy holders anytime and for any car across the country.

"We plan to rapidly expand our motor insurance business in 2012. We hope that this tie-up coupled with a world-class technology platform and a passion for paying claims in the most efficient manner will add value to our overall customer offering," SBI General Insurance Managing Director and CEO R R Belle said in a release issued here.

This emergency roadside assistance cover will cost the policy-holders as little as 36 paise per day, besides offering them the widest such facility in the country.
This ensures 24 x 7 emergency road side assistance for any car, any time, across the country (except J&K and North Eastern states) covering over 1,600 locations in 20 states.

The tie-up will ensure that customers get hassle-free services like towing, attending flat tyre and battery jump start. The services can be availed even when the vehicle is down due to non-accidental reasons. This optional add-on cover is extended to vehicles as old as eight years.

SBI General Insurance aims to leverage the immense opportunity offered by the motor insurance segment.

The private insurance company is a joint venture between the State Bank of India and Insurance Australia Group (IAG), Australia's leading general insurance provider.


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