Stocks
Share prices on a downward trend: Monday Closing Report

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.

User

Housing societies on mill lands seek clarity on rule to hire former mill workers

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."

User

Retail interest in equity mutual funds is shrinking

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.

User

COMMENTS

ranjan dutta gupta

6 years ago

One day both SEBI and AMFI will realise that they made a blunder by taking some very crucial decisions in haste.It is a matter of regret that SEBI suddenly abolished entry load.It should have been eleminated in gradual way or it could be reduced to a certain extend to make things better for investors.It is very astonishing that SEBI has taken this step which is contrary to the practice of other countries in the world.Entry load is there in other countries.SEBI has forgotten that the commission used to enjoy by agents /advisors not only inclued advisory services but also general services related to investment, withdrawal, change of details,supply of documents like a/c statements,making investors alert about the position of the scheme,suggestion of alternatives.Does SEBI think for all these services 2% is quite a heavy commission?

arun adalja

6 years ago

mf industry is dyeing one day so many amc may close their business same way as brokerage houses have done it as sebi stopped incentive to mf agents and trouble started do you think amc will provide details to investor regarding schemes and other things what ARN holder was providing?

Vinay Joshi

6 years ago

MDT,

SEBI banned entry load due to mis-selling of MF by its agents. Rightfull step taken in the interest of common investors.

There has been a growth of 3.21% in AAUM over Q3 in Q4!

Value Research, has highlighted top 100 funds across 10 categories wherein still you can build your portfolio. [ETW]

Peruse - DSPBR Top 100 - 18.49%, IDFC Small & Midcap 21.84%.

It is observed that laggards JM Core 11 has returned [-]28.9% [3yrs]. Misselling.

Further what advise is given by MF agents when the fund changes its scheme mandate or merges & its impact on investments? [IN THE FIRST PLACE, why agents lack info? Its implications!]

What SEBI had done earlier, [CM, Mr.C.Bhave] & today [CM,MR.U.K Sinha] is resp, to protect the common investor.SEBI IS NO SLEEPING WATCHDOG! Malpractices have to be tackled as per enacted laws.

MF investors require able guidance & information to make an informed decision!?

THE MONEYLIFE, MDT, talks only about declining portfolios. IT HAS NOT UNDERSTOOD ITS REASON - in contra with increase of AAUM.

MF IS THE ONLY SAVIOUR FOR COMMON INVESTORS INCLUDING HNI WHO WILL NOT BE ABLE TO FOLLOW DAILY.[HNI portfolio investors, diff.]

If the equity markets have turned hollow, why MF TOP 100/200 still performing?

MDT can't answer neither you will!

WHY CAN'T YOU [or for that mater MDT] EXEMPLIFY WITH STATS. LAGGARDS, TO COUNTER TOP 200 or so PERFORMERS?!

Regards,

REPLY

dilip golani

In Reply to Vinay Joshi 6 years ago

it is true that many agents are not giving proper advice but it is equally true that retail indian investor is not interested. A retail investor normally walks into any office with a cheque of Rs 10000/-or 25000/- and just wants his money to double in 1 or 2 years. and also he wants a part of agent's commission also. he is not interested in portfolio allocation and not ready to give details. what would you do if you are an agent? what is the extra benefit that an agent gets to go the extra mile of financial planning. Talk to any retail investor for your fees and he just runs away.

Narendra Doshi

In Reply to dilip golani 6 years ago

I DO NOT AGREE with your views. Your advisory role DEMANDS that FIRST you satisfy your mindset that you will increase your clients in ALL situations, It is more your duty to convince him - the investor= if he has some wrong perceptions and give him the correct picture.If you can give him convincing answers(Only after you yourself are fully convinced of your goals) he may go away once but may eventually return if your thoughts conveyed to him are powerful enough.It may not happen immediately but if you are determined you will win & also earn handsomely in 2-4 years time.You yourself have to put in continous efforts to know how one can get returns from the prevailing schemes of MF. Best of luck as I am confident of what I have said.

Vinay Joshi

In Reply to dilip golani 6 years ago

Mr.Dilip Golani,

To some extent agree with you. Retail investor [small investor] is yet not conversant with present investment scenario.

Regards,

ranjan dutta gupta

6 years ago

Dear Mr.C.H Mehta,

You agree or not our Mutual Fund Industry is in a very deplorable condition.FDs were always there in the past .yes rates changed but then inflation also increased.Tell me what is the difference with 7% interest and inflation of 6% and 10% interest with inflation of 9%.There is no difference.But investors are crazy to put money in FD.They are locking their money for 24 to 36 months hoping to enjoy the rate of 10% or 10.25%.If inflation rate will go to 10% they are in negative return zone with tax factor considered.Commodity market was there previously.Gold ETF started more than 3 years back.People are now little more interested in commodities.Foreign funds comes in India and invest and they make their profit and we indians just look at them and saying we are unlucky.It is paradoxical that our EPFO is not ready to invest in equity maket even 10% of the corpus but the foreign PF money is getting invested in Indian market.That is why our Mutual Fund asset base is $143 billion where a small country like Mauritious will population fraction of Indian population is having Mutual Fund asset base of $169 billion.Shame to us

REPLY

DILIP GOLANI

In Reply to ranjan dutta gupta 6 years ago

very true I do agree with you Indian retail public can wait for 8 and half years to double their money in KVP but when you talk them about MF even 2year period is a long time and if things don't work out in first 2 years as was the case between 2007-2009 they would shun MF, curse the advisor and switch to FD

Narendra Doshi

In Reply to ranjan dutta gupta 6 years ago

Well said Mr. Ranjan Dutta Gupta.

Muthu

In Reply to Narendra Doshi 6 years ago

Well articulated points. Where to look for details like MF asset base of Mauritius?

C H Mehta

6 years ago

The data you have provided is informative for small investors, but not your analysis and conclusion. For instance, you have not co-factored the influence of growth in commodity market, increase in FD interest rates, and turn around in real estate.
Moneylife's analytic skills are limited to finding faults for everything with SEBI. That is a shame.
Chaitanya Mehta (Chetan)

Roopsingh

6 years ago


I agree to Mr Govind Shanbag that most funds have underperformed their bench marks,the reason being our so called "Expert" fund managers-i despite a IFA and MF distributor-i do not advice my investors to look beyond 5 yrs horizon unlike most of advices given by some people-i think our markets expanded only due to FII and not due to domestic retail participation-the reason being share holders were never given their due share of income by promoters-shares move as per wishes of promoters and operators(thanks to SEBI-the sleeping watchdog)-and i have kept in my mind the downturn of japan nikke index which was 40000 few decades back but now only 10000 after 3 decades(people lost huge keeping the long term view-same is with shanghai index which was 38000 3 yrs back and now only 22-23000-will that again touch 38000?so i think one should not be lured by ROSY picture presentation of fund managers and then some of brain washed IFAs carry the same message to investors which ultimately results in huge loss to hard earned money of investors-i strongly believe that IFAs are being used by AMCs for their benifit and not for the benifit of investors and real culprits for all losses to investors are AMCs and fund managers who mismanaged peoples money very badly.

NANU NATVERLAL MEHTA

6 years ago

I strongly feel that those selling Mutual Funds to the New Customers are Cheating as there is absolutly no service offered by either AMCS or the Agents and only false promises.it is high time that Regulatory Body take some very strong action against those selling Mutual Funds.

REPLY

prabal biswas

In Reply to NANU NATVERLAL MEHTA 6 years ago

Cheating in what sense? Please stop talking out of your hat. Dont make a comment just because you had a scope of doing so.

shankar

6 years ago

Why SEBI does not come out with a Regulation that every fund must perform well.Some fund houses fund does extremly well but some goes to hell.why there is no regulation to make every fund perfom well.why SEBI not come out with such Rules & regulation.SEBI only sees Mutual Fund Agents Entry Load.SEBI does not see Poor performing funds.The Fund Managers get stomach full of salaries but to them there is no regulation to make the fund perform well.Why there is no regulation that if a fund underperform than the fund managers salary will get cut off.why?Every body only sees only the 2.25% of entry load.

shankar

6 years ago

In the past when there was entry load I use to monitor the returns of the Investors because there was entry load.But now why should I do that.Investor can get 15% to 25% return in Mutual fund but what we MF agents get--TAMBURA.

Trilok Sharma

6 years ago

This Reduction having some reason-
1. No Incentive to Agents/Distributor
2. High Flactuation in stock market during year 2008 to 2011
3. Good Interest on Fixed Deposit and on PPF as well as on Insurane Products
4. Unawareness about power of SIP

So investor have to analyse all these things and SEBI should restore the faith of retail investor .

Further, Retail investor are core stock investor and backbone of the market.
Thanks
With Best Regards
CA Trilok Sharma

Dr Vaibhav Dhoka

6 years ago

With NO INCENTIVE,lot of paper work, unnecessary regulation like self declaration for individual IFA's,badly performing schemes and above all NON PERFORMING regulator SEBI there is ought to be gloom in the mutual fund industry.The compulsory KYC for MF's for any amount has added salt to injury of IFA's.

NANU NATVERLAL MEHTA

6 years ago

I have writteearlier also that one of the main and possibly the only reason people have lost total confidence because AMCS and mutual fund agents have STOPPED SENDING EVEN ONE ANNUAL STATEMENT of their Holdings with yhe result that many many persons like me feel completly CHEATED by this AMCS &THEIR rogue agents.NOBODY BOTHERS TO IMPROVE THIS PHENOMINA.

Muthu

6 years ago

Equity investments – whether shares or mutual funds- is a long term product. But the industry promotes them most during the bull run. We cannot blame them alone as investors chase momentum or price. People are not willing to buy assets when they are priced lower but prefer when they are actually higher.

Again SIPs are too sold and bought for short term.

The ideal period for equity investment should not be less than 10 years.

I wonder how many of us have invested regularly in good funds for a long term. Even SIPS made during the last 3 ½ years after the market has touched all time high would have fetched much superior returns than the debt instruments discussed in the comments section.

I can quote many good funds. See their since inception, 5 year or 10 year returns – both lump sum and SIP – how many of us would have stayed invested ignoring the greed and fear.

Many people who are claiming sour grapes are the one who exactly invests at the peak of the market. When Sensex touched 21,000, we pumped money into equity funds and enthusiastically subscribed to IPOs like Reliance Power. Even application forms were sold then at premium!

If equity cult has to penetrate, the way in which equities are sold and purchased should change.

By investing regularly and for long term, making lump sum investments only when market is attractive or reasonable, one would end up getting a far superior return than any other asset class.

I’ve been investing in mutual funds since 1998. From an investor to investment advisor and then to a personal finance advisor – I transformed because of conviction.

If there is no conviction and if we react to everyday noises and want to make quick and easy money, we are bound to be disappointed.

My suggestion:

Assuming a 9% growth rate and 6% inflation, the nominal growth rate works out to 15% p.a. Our income, expenses.. everything is counted only in nominal terms. So if the over all economy grows @ 15%, the corporate sector is expected to do much better. When we make a forward looking statement, we assume only what the Sensex has returned in the last 3 decades – around 18% annualized returns- though good actively managed funds have provided a superior return from the time of their inception.

In our opinion, for next two decades or more, Indian equities would provide superior return to any other asset class. Invest regularly and map the same to your long term goals. Never stop your regular long term investing irrespective of market cycle.
As mentioned above, please avoid lump sum investments in bull markets. If you want to commit lump sum in equities, even for long term, do it only when valuations are relatively attractive.

REPLY

Narendra Doshi

In Reply to Muthu 6 years ago

You have said it all,better than me, although I also share your statement on "CONVICTION" THIS IS THE REAL WORD.

Narendra DOSHI

6 years ago

If you see the returns when the stock market or rather your portfolio of schemes is on the upturn, fixed instruments may not appear more attractive.It is indeed possible to some extent to get returns well above the fixed instruments, if one allowws for some more appropriate time extension.Mr. Shanker may also review my views.I am satisfied and am confident that you need to be periodically monitoring your investments to get returns much more than the fixed income one. You may also need to modify/redeem fully/partially from some MF schemes if they are not seen to be rewarding.There is NO COMPULSION for anyone to stick to what one has invested in (unlike fixed instruments) but modify the investments wrt schemes and asset allocation to get higher returns.i have been getting higher returns in almost 80% of the cases, since last 5 years.

shankar

6 years ago

Returns in Mutual Fund is only an Ilusion.We put money in MF to get high returns but when time comes to reedem them the return that we get becomes much lower than Fixed Interest products.On the other hand SEBI baned entry load.what will Agents do.Why should they sell MF.there is no free lunch.Why should Agents care about the interest of Investors.Time is not far away when people will not even like to hear of MF because PPF now gives 9.5%.Senior citizen gets almost 10% gauranteed.why should one park money in Mutual fund.there is no sense..NSC/KVP/PPF/Bank FD/Post office Recurring/Post office MIS is much much better..Mutual fund MIP gives less than Post office MIS.so it is worthless to invest in Mutual fund products.I ask my investors to put money in Post office/FD etc.....Stay away from mutual fund..Mutual fund is only for the Corepatis not for common people

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)