The short-term support is at 5,300 on the Nifty
|The market traded lower, tracking weak Asian markets in morning trade. The decline, after two days of gains, was on account of the ongoing debt crisis in Europe and news that a ministerial panel is likely to meet this week to decide on diesel and domestic LPG prices.
The Sensex and Nifty opened at 18,269 and 5,457 respectively which were the day's high, too. The market then started its downward journey. The market fell to the day's low in the post-noon trade, after which it was range-bound till the end of the session.
The Nifty traded close to its support of 5,340. The Sensex fell 333 points to close at 17,993 while Nifty fell 100 points to close at 5,387.
The indices also hit their two-month lows around the same time with Sensex falling to 17,971 (its lowest intra-day since 24 March 2011) and Nifty was at 5,373 (its lowest mid-session decline since 22 March 2011). The advance-decline ratio on the National Stock Exchange was 274:1122.
A gap-down opening of the key European markets, on account of debt issues of some countries in the region, and US futures trading lower also added to the woes back home.
The broader indices were equally hammered in today's trade with the BSE Mid-cap index declining 1.41% and the BSE Small-cap index falling by 1.57%.
Barring the BSE Fast Moving Consumer Goods (FMCG) and the BSE Consumer Goods (CD) indices, all other sectoral gauges settled in the red. The top losers were rate-sensitive sectors like BSE Capital Goods (down 2.95%), BSE Power (down 2.91%), BSE Bankex (down 2.85%), BSE Realty (down 2.79%) and BSE Metal (down 2.62%). BSE FMCG gained 0.59% and BSE CD rose 0.49%.
ITC (up 2.29%) was the lone gainer on the Sensex today. The top losers were BHEL (down 6.69%), ICICI Bank (down 3.61%), Reliance Infrastructure (down 3.57%), Tata Motors (down 3.36%) and Tata Steel (down 3.30%).
The government will soon finalise the roadmap to raise a whopping Rs40,000 crore through disinvestment during the current fiscal. It will include sale of equity in blue chip companies like SAIL, ONGC, Power Finance Corporation (PFC) and Hindustan Copper (HCL). The government has already raised Rs1,162 crore by divesting 5% stake in PFC in May.
The follow-on public offer of SAIL is likely to hit the market next month and ONGC in July. Share sale programme of HCL is yet to take a concrete shape.
Markets in Asia settled sharply lower on concerns that the debt crisis in Europe will hurt the outlook for exporters in the region. This apart, preliminary data showed that China's manufacturing activity fell to a 10-month low of 51.1 in May from 51.8 in April, a sign that the rate-tightening measures has resulted in a slowdown. A strike by employees at a South Korean engine-parts supplier pulled down auto stocks in Seoul.
Also, speculations of a fall in demand for crude and metals due to the European crisis, resulted in commodity-related stocks ending lower.
The Shanghai Composite sank 2.90%, the Hang Seng tumbled 2.11%, the Jakarta Composite plunged 2.44%, the KLSE Composite fell by 0.78%, the Nikkei 225 tanked 1.52%, the Straits Times contracted 1.83%, the Seoul Composite slid 2.64% and the Taiwan Weighted closed 1.01% lower.
Back home, foreign institutional investors were net sellers of stocks worth Rs181.55 crore on Friday while domestic institutional investors were net buyers of stocks worth Rs398.19 crore.
Government has not worked out a policy on implementation of amendment to development control regulations; residents of Sewree housing complex get no help from government departments on application of rule
People living in buildings that are part of mill redevelopment projects must talk to the developers to employ erstwhile mill workers for various services in their residential blocks. Otherwise, they could be pulled up under the law, as has turned out to be the case for residents of Dosti Flamingoes complex, in Sewree. The residential complex has been built on land of the erstwhile Standard Industries and China Mill.
According to an amendment of the Development Control Regulations, DCR 58 of 3 October 2007, redevelopment projects must employ former mill workers or their relatives, and the responsibility rests with the mill owner, the developer and the present occupier of the premises. However, despite a high court directive, the government has not yet worked out a concrete policy to clarify the clause. This ambiguity has resulted in all parties concerned looking the other way on this matter of providing employment, while the residents have been left confused.
Residents of Dosti Flamingoes complex were surprised when they were issued a notice by the state labour commission, which stated that they must employ retired mill workers or their relatives for various services in the housing society. This was followed by visits by local labour unions demanding employment for the workers in such activities as security guards. Residents say they were not told about the rule before and that the government and developers have been passing the buck.
"It is not that we are against hiring these workers. But most of the workers are old and not fit to perform duty as guards or other laborious jobs like housekeeping. They want minimum wages and we cannot even decide the quality of work for which we would be paying, which in any case is as per market rates/minimum wages, no cost arbitrage," explained a resident of the complex.
A spokesperson of the state labour commission could not confirm the controversial legislation. It is also unclear who must inform the residents about this. Dosti Corporation, the developer of Dosti Flamingoes complex, insists it was unaware of the clause, but said that it has nonetheless employed 64 mill workers. Mill owners, on their part, do not feel they are responsible for the mill workers as they have sold the mill.
A property lawyer said, "Housing societies don't fall under the jurisdiction of the labour commission, but if there is a rule pertaining to the workers, it must be followed. However, it is unclear as to who must take the responsibility, since 'occupants' mean flat dwellers." Ideally, the occupants should be notified about this before they take possession of the properties.
Ms Neera Adarkar, urban researcher and housing activist, said, "Even the workers who have got their VRS and compensation are entitled to a job, and I don't see anything wrong in employing them. However, it is between the developer and the purchaser to decide on who is to take the responsibility, and who must crosscheck whether such rules exist."
The confusion leaves room for further debates in similar cases. The residents also approached Maharashtra Urban Development Department secretary, TC Benjamin, seeking clarity on the matter, but have not made any headway. An RTI query on the legislative status of DCR 58 has also not been answered so far.
"We are quite confused, and even though we don't have to employ more than 70 guards in two shifts, we have to hire 110 because of the pressure from the labour union," a resident said. "We paying almost one crore rupees a year, and we don't even know whether we have to do it."
Mutual funds have lost 22.61 lakh folios over a period of two years. There has also been a huge outflow of Rs1,365 crore from equity mutual funds in April—the highest outflow since October 2010
The total number of folios in equity-oriented mutual funds for the retail category (which was 4.03 crore at the end of financial year 2009-10), has declined to 3.87 crore at the end of 2010-11. This decline has been continuous over the past two years. The financial year 2009-10 saw an exit of 6.13 lakh folios from equity-oriented schemes. The following year witnessed an exit of another 16.48 lakh accounts. Added to this, there has been a huge outflow of Rs1,365 crore from equity mutual funds in April-the highest outflow since October 2010. New folio creation has not been up to the mark either. This just shows that retail investors are withdrawing from equity investing in a big way at a time when income and prosperity are rising.
In the past two quarters, from October 2010 to March 2011, the folio tally for equity-oriented funds increased marginally by 21,573 accounts. A week back, Moneylife analysed a report from Computer Age Management Services (CAMS), a transfer agent for mutual funds, saying that new folio creation has not been as good as it should have been (CAMS research on creation of MF new folios throws up debate). Proving this right, we see that the addition of new folios has not made any difference in the total number of folios; in fact, the total number of folios has declined over the years. In the CAMS report, we saw that the average new folio creation over a period of two years, from August 2007 to July 2009, was 4.6 lakh new folios per month and from August 2009 to July 2010, the period post the ban on entry load, it averaged just 2.8 lakh new folios per month, even when the markets were doing well.
All these symptoms point to a much deeper problem. The equity market has turned hollow and the equity cult is shrinking, instead of spreading. This is a sorry situation against the backdrop of 8% economic growth, continued new listing of companies, rapid spread of broking networks and NSE terminals and massive inflows of money from foreign institutional investors. The regulator has done nothing about it either. The preamble of the Securities and Exchange Board of India (SEBI) mentions "To protect the interest of the investors in securities and to promote the development of, and to regulate the securities market".
SEBI has certainly failed to promote the development of the stock market and that is because it has failed to protect the interest of investors. The ban on entry load in August 2009 was intended to protect investors but this left distributors with no incentive to sell mutual funds. Mutual fund sales are continuously declining-and the investor has been left stranded.