Share prices on a slow decline: Wednesday Closing Report

Nifty to sustain fall till 5,495

The stock market slipped a little further today, following the cautious outlook expressed by finance minister Pranab Mukherjee and indications of more monetary tightening to come, after the Reserve Bank of India's surprising 50 basis points rate hike yesterday.

The Nifty lost 28 points (or 0.50%) to close at 5,547, not as severe as yesterday's 105-point drop, but volumes were more or less the same again today. We expect the Nifty to fall up to the 5,495 level.

The market bounced back in initial trade this morning. Ignoring concerns about the US debt crisis that capped most Asian markets, the Nifty opened at 5,589, up 14 points from its previous close, and the Sensex resumed trade 53 points higher at 18,571. The benchmarks rose to their day's high early on, with the Nifty at 5,592 and the Sensex at 18,579.

However, in choppy trading the market lost the early gains and the indices fluctuated on either side of the neutral line. Selling pressure in mid-morning trade resulted in the market going southward. Capital goods, power and realty sectors were under pressure.

The indices slipped to their intra-day lows in noon trade, the Nifty to 5,522 and the Sensex to 18,359. There was a marginal recovery in subsequent trade, but the gains were not sufficient to pull the indices out of the red.

The Nifty finally closed 28 points down at 5,547 and the Sensex closed at 18,432, a loss of 86 points.

The advance-decline on the National Stock Exchange (NSE) was 742:1010.

The broader indices outperformed the Sensex today as the BSE Mid-cap index closed 0.23% up and the BSE Small-cap index added 0.03%.

The noteworthy sectoral gainers were BSE Consumer Durables (up 1.46%), BSE Fast Moving Consumer Goods (up 0.28%) and BSE TECk (up 0.14%). The losers were led by BSE Capital Goods (down 1.86%), BSE Power (down 1.51%), BSE Bankex (down 1.04%), BSE Realty (down 0.98%) and BSE Oil & Gas (down 0.80%).

The major gainers in the Sensex list were Maruti Suzuki (up 2.42%), Reliance Communications (up 1.58%), HDFC (up 1.33%), Bharti Airtel (up 1.32%) and DLF (up 1.28%). The laggards on the benchmarks were BHEL (down 4.40%), Jaiprakash Associates (down 3.28%), Hindalco Industries (down 2.67%), Wipro (down 1.82%) and Reliance Infrastructure (down 1.78%).

The top performers on the Nifty were Maruti Suzuki (up 3.32%), Sesa Goa (up 3.22%), DLF (up 1.54%), RCom (up 1.28%) and Bharti Airtel (up 1.22%). The main losers on the index were BHEL (down 4.33%), PNB (down 4.09%), Jaiprakash Associates (down 3.41%), Hindalco Industries (down 3.18%) and Siemens (down 2.56%).

Markets in Asia settled mixed after a weak start, as positive earnings offset fears of a US default. Good earnings reports from Fanuc, Nippon Steel and LG Electronics supported the gains while JFE Holdings and Tokyo Electric Power disappointed investors.

The Shanghai Composite gained 0.76%, the Jakarta Composite surged 1%, the Straits Times rose 0.22%, the Seoul Composite and the Taiwan Weighted advanced 0.26% each. On the other hand, the Hang Seng lost 0.13%, the KLSE Composite fell 0.23% and the Nikkei 225 declined 0.50%.

Back home, foreign institutional investors were net sellers of stocks worth Rs177.75 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of equities worth Rs31.49 crore.

State-owned Indian Oil Corporation (IOC) has successfully raised $500 million through an overseas bonds issue to fund its capital needs. The issue was oversubscribed by about four times and IOC received offers to the tune of about $2 billion. The bonds will have a tenure of 10 years and be utilised for meeting part of IOC's capital expenditure requirements. IOC closed 1.14% higher at Rs323 on the NSE.

TCS and Wipro are among three companies vying to bag the prestigious IT solutions project for Tirumala Tirupati Devasthanam (TTD) that is aimed at helping devotees. Currently TTD offers four main e-services such as e-seva, e-accommodation, e-sudarshanam and e-hundi to the devotees and the new Sri Seva project would help the administration in providing rooms, 'laddus' as well as tonsuring. TCS closed 0.07% up at Rs1,145.50, but Wipro dropped 2.06% to Rs402.

Praj Industries has bagged an order worth about $22 million for a large ethanol plant in Colombia, from Isolux Corsan of Spain, the main contractor for the project of Bioenergy SA.

As per the contract, Praj Industries will supply the main process plant for ethanol production, including concentration of vinasse for use as liquid fertiliser. Praj Industries declined 1.17% to close at Rs88.45 on the NSE.


Nomura appoints Prabhat Awasthi as head of equities

Prabhat Awasthi will be responsible for the delivery of Nomura’s strategy for equities in India and strengthening the firm’s local presence

Nomura, the global investment bank, today, announced the appointment of Prabhat Awasthi as the head of equities, India. Mr Awasthi will be responsible for the delivery of Nomura's strategy for equities in India and strengthening the firm's local presence.
Mr Awasthi will report to John Adair and Paul Dolan, joint heads of equities, Asia-Pacific.   

"Prabhat's leadership and contribution to the build-out of the India franchise means  he is well qualified for this position. He has over 17 years' experience in the Indian  equity markets and brings invaluable experience and relationships to the role," says Paul Dolan, joint head of equities, Asia-Pacific.

Mr Awasthi joined Nomura in October 2008 as the head of equity research, India, which he will continue to oversee. Prabhat joined Nomura from Lehman Brothers, where he held the same position. 


RBI rate hike may not be the last increase: FM

“I am optimistic that measures taken by the RBI by adjusting the crucial rate will have impact and inflation will come down,” finance minister Pranab Mukherjee said when asked whether he was surprised by the 50 bps increase in key interest rates by the RBI

New Delhi: A day after the Reserve Bank of India (RBI) raised its key interest rates to check inflation; finance minister Pranab Mukherjee on Wednesday indicated it may not be the last increase for now, reports PTI.

“I don't think it is end of the tunnel. It is not like that. It does not happen (that way),” he told reporters, when asked whether RBI is nearing the end of the interest rate increase cycle.

The RBI on Tuesday hiked its key short-term lending and borrowing rates by 50 basis points (bps) to contain inflation which is nearing the double-digit mark.

Tuesday’s rate hike by the RBI, the 11th since March 2010, evoked sharp reaction from the industry which said the decision would hurt investment and pull down growth.

When asked whether he was surprised by the 50 bps increase in key interest rates by India’s central bank, Mr Mukherjee said, “I cannot say it surprised me. It is substantial no doubt, but given the situation it was necessary.”

The RBI’s decision is likely to make auto, home and corporate loans expensive and many banks have indicated that they would increasing their lending and deposit rates in response to the hike announced by the central bank.

Admitting that inflation at 9.4% in June was “reasonably high and unacceptable”, Mr Mukherjee said it was a global phenomenon and the whole world was reeling under the impact of rising prices of fuel and other commodities.

The government and the central bank are taking steps to check price rise, he said, adding, “I am optimistic that measures taken by the RBI by adjusting the crucial rate will have impact and inflation will come down.”

Inflation, Mr Mukherjee said, might not come down to below 6%-7% by the end current financial year.

“We are fighting against inflation...increase in repo and reverse repo by the RBI yesterday conveys a strong signal... (but) we shall have to keep in mind that year-end inflation may not be less than 6%-7%," he said.

In an economy, Mr Mukherjee further said, “You cannot have a carpet under which you can keep all these things and at the same time things will remain stable.”

He said crude oil prices went up from $89 per barrel when the budget calculations were made to $107-110 currently.

He also recalled that India had lived with very high inflation, at 24% in 1974. It was 18% in 1990.

The finance minister said that he would take up the issue of volatility in commodity and crude prices at the international fora including the Group of Twenty (G-20).


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