If today's low holds, we may see a short-term bounce till 4,820, but the trend is down
The market closed lower for the fourth day in a row on concerns about a collapse of the banking sector in Europe and a fall in domestic financial stocks following the SBI downgrade yesterday. The Nifty managed to skip yesterday's low, however it continued to make a lower high. The index had a restrained fall of 20 points to close at 4,751. If the Nifty is able to sustain above today's low, we may see a short-term bounce till 4,820, but the trend is down.
A firming trend in Asia after the US markets settled positive overnight resulted in the domestic market opening higher this morning. The Nifty opened at 4,791, up 19 points and the Sensex gained 103 points at 15,968. Buying in IT, metals and realty sectors supported the gains. On the other hand, banking stocks continued to underperform for the second day today.
While the indices were in the positive for the entire morning session, the market witnessed volatile trade today. The benchmarks rose to their intra-day highs at around 12.30pm with the Nifty rising to 4,828 and the Sensex going crossing the psychological level of 16,000 to touch 16,045.
However, a sharp sell-off a short while later saw the market being hurtled into the negative terrain and touching their intra-day lows. At the lows, the Nifty fell to 4,741 and the Sensex went down to 15,761. A minor recovery from the lows of the day pushed the market into the green, but sellers became active once again to pull the indices down. The market closed lower for the fourth day with the Nifty falling 21 points to 4,751 and the Sensex settling at 15,792, down 72 points. NSE reported volume of 50.58 crore shares today.
The advance-decline ratio on the NSE was 496:926.
The broader indices underperformed the Sensex today with the BSE Mid-cap index down 0.975 and the BSE Small-cap index falling 0.90%.
The sectoral gainers were BSE Healthcare (up 0.80%), BSE Realty (up 0.55%), BSE Fast Moving Consumer Goods (up 0.52%) and BSE IT (up 0.01%). The top losers were BSE Bankex (down 2.52%), BSE PSU (down 0.67%), BSE Consumer Durables (down 0.62%), BSE Oil & Gas (down 0.58%) and BSE Metal (down 0.4%).
Jaiprakash Associates (up 3.86%), DLF (up 2.63%), Sun Pharma (up 1.70%), Coal India (up 1.55%) and ITC (up 1.46%) were the top performers in the Sensex space. State Bank of India (down 4%) continued to be the top loser for the second day. It was followed by Hindalco Industries (down 3.65%), ICICI Bank (down 2.72%), HDFC Bank (down 2.65%) and Jindal Steel (down 2.55%).
The key gainers on the Nifty were JP Associates (up 4.38%), DLF (up 3.24%), Sun Pharma (up 2.48%), Tata Power (up 2.27%) and Dr Reddy's (up 1.94%). SBI (down 4.22%), Hindalco Ind (down 3.80%), BHEL (down 3.40%), Jindal Steel (down 3.23%) and ICICI Bank (down 2.82%) were at the bottom of the index.
Markets in Asia settled mostly lower as doubts persisted about the efforts of European policymakers to avert a banking crisis. Adding to the European woes, Moody's Investor Services on Tuesday lowered its rating on Italian bonds by three notches.
The Hang Seng settled 3.40% lower, the Nikkei 225 fell by 0.86%, the Straits Times shed 0.09%, the Seoul Composite tanked 2.33% and the Taiwan Weighted declined 0.83%. On the other hand, the Jakarta Composite gained 0.73% and the KLSE Composite climbed 1.05%.
Back home, foreign institutional investors were net sellers of stocks worth Rs971.44 crore on Tuesday whereas domestic institutional investors were net buyers of shares worth Rs555.81 crore.
State-run power equipment major BHEL today said it has bagged a Rs3,800-crore order from Dainik Bhaskar Power for setting up a 1,320MW thermal power plant in Madhya Pradesh. BHEL's scope of work envisages the design, engineering, manufacture, supply, erection, testing and commissioning of supercritical boilers, steam turbines and turbo-generators along with state-of-the-art controls and instrumentation (C&I) and other associated auxiliaries like transformers and a switchyard. The stock closed at Rs311.50, down 3.40% on the NSE.
Leading engineering and construction company Punj Lloyd today said it has bagged an engineering, procurement and construction (EPC) contract to set up Qatar's first plant for manufacture of polysilicon, the raw material used to build solar cells. However, the company did not disclose the value of the contract. Punj Lloyd ended 0.57% higher at Rs52.70 on the NSE.
Wind power company Suzlon Energy today said it has bagged an order from GAIL for supply of wind turbines to the state-run gas distribution major's upcoming project in Karnataka. The order comprises 17 wind turbines of 1.5MW capacity each, to be commissioned in 2012. The stock fell 1.97% to close at Rs34.90 on the NSE.
Moody's today re-affirmed its financial strength rating of 'C-' for ICICI Bank, given its sizeable retail deposit franchise as well as its importance to the national payment system as the second-largest commercial bank
New Delhi, : A day after downgrading its rating of public sector lender State Bank of India's (SBI) financial strength, Moody's today re-affirmed its rating for ICICI Bank and said the private sector lender continues to maintain a robust franchise and a strong liquidity, capitalisation and earnings profile, reports PTI.
"Moody's believes that the probability of systemic support for ICICI Bank is high, given its sizeable retail deposit franchise as well as its importance to the national payment system as the second-largest commercial bank," the ratings agency said.
The reiteration of a financial strength rating of 'C-' for ICICI Bank came a day after Moody's downgraded SBI from 'C-' to 'D+' on account of the public sector lender's deteriorating asset quality and rising non-performing assets (NPAs).
A 'D' rating suggests "modest intrinsic financial strength, potentially requiring some outside support at times", while a 'C' rating denotes "adequate intrinsic financial strength".
On ICICI Bank, Moody's said the rating reflects the bank's solid franchise as the second-largest commercial bank in India.
"In addition, strong capitalisation, liquidity and earnings profile support the rating.
"The rating also reflects its high borrower concentration in the form of mandatory government securities portfolio, weaker asset quality compared with peers, a difficult operating environment due to rising interest rates, uncertainty in the global economy and the intense competition it faces in domestic markets," Moody's said.
ICICI Bank, India's largest private sector lender, has an asset base of $90 billion. The private lender had over 2,500 branches and over 6,000 ATMs at the end of last fiscal.
It has three main business lines-retail banking; wholesale banking, including corporate and investment banking; and international banking.
According to Moody's, after consolidating its business for two years in order to overcome the difficult economic conditions and rising delinquency in consumer loans, ICICI Bank posted moderate asset growth of 12% in 2010-11.
"By leveraging its technological investments and favourable personnel profile, it has developed systems and procedures to offer efficient banking services to Indian customers. The acquisition of Bank of Rajasthan in August 2010 has also helped in strengthening the franchise and branch network in northern India," it said.
According to Moody's, ICICI Bank is one of the few financial services brands from India that is recognised in developed Asian and Western financial markets.
'ICICI Bank has also been a forerunner in developing financial products that meet the growing needs of Indian corporates and retail consumers. This has resulted in a strong and diversified earnings profile," Moody's said.
The agency said corporate loans and secured retail loans will be the growth drivers for the bank in the future.
"It has a market share of around 6% in deposits and banking assets and is closely intertwined with the fundamentals of India's economy," Moody's said.
The bank has a diversified earning profile, with corporate and retail loans contributing 21.3% and 38.7%, respectively, to its total business.
The remaining loans are spread across the rural sector (9.7%), small and medium enterprises (4.8%) and overseas locations, which are primarily corporate loans (25.5%).
The ratings firm also pointed to ICICI Bank's capital adequacy ratio, which is 19.6%, and core Tier-I ratio of 13% to justify its rating.
"It has been able to control net addition to gross NPAs by increasing its recovery efforts," Moody's said.
The credit ratings agency had in September last year assigned a 'C-' rating to ICICI Bank and said it has a strong franchise and sound financial position.
ICICI Bank reported a 53% growth in consolidated net profit to Rs1,667 crore during the first quarter of 2011-12 from Rs1,091 crore in the same period last fiscal.
Its total income went up by 8.9% during the quarter ended 30th June to Rs14,749 crore from Rs13,535 crore in the same period of the previous fiscal.
Speak Asia’s financial advisor and the man behind the money transfer from India has confessed that the company’s ‘business plan’ was nothing but a Ponzi scheme, which works with continuous enrolling of investors and replaces them as they suffer losses and quit the scheme
Speak Asia's troubles seem to be not ending with the recent confession of its financial consultant Sanjeev Dandona to the Economic Offences Wing (EOW), that the company was indeed running a Ponzi scheme. Earlier in 2002, Mr Dandona (along with seven other people) was charge-sheeted by the Central Bureau of Investigation (CBI) for allegedly issuing forged permits to new auto-rickshaws in New Delhi. But more about that later.
"He (Mr Dandona) has confessed that the company was running a Ponzi scheme," an official close with the investigation of Speak Asia, which had duped people on the pretext of promising income for merely filling e-surveys, told Moneylife.
Mr Dandona was arrested by the EOW on 29th September, after it was learnt that he was the proxy owner of Kritanj Management & Allied Services and is linked with Speak Asia. Kritanj Management is the master distributor of Singapore-based Haren Ventures Pte Ltd (HVP) for e-zines in India. Mr Dandona is also alleged to be advising HVP and Tulsient Tech Pvt Ltd and also transferring funds collected by Speak Asia agents to Singapore.
Just the day after the arrest of Mr Dandona, it was revealed that the online surveys, which Speak Asia used to claim (and its agents used to believe), were actually created not in Singapore, but in Mumbai. This was revealed following a confession from Nayan Khandor, a Web designer and director of Dadar (central Mumbai)-based Brand Salon, that his firm was active in creating the online surveys for Speak Asia.
According to an investigation officer, Mr Khandor confessed that he was given the task of creating online surveys and designing the e-magazine by Speak Asia's chief executive Manoj Kumar Sharma and has been involved in this job since February 2010. The material seized from Mr Khandor's office also indicates his close relation with Speak Asia.
Coming back to Mr Dandona—he was earlier charge-sheeted by the CBI along with seven other people, including three officials from the Transport Department of Delhi Government for allegedly issuing forged permits to new auto-rickshaws. Last year in May, Justice Vipin Gandhi of the Delhi High Court dismissed Mr Dandona's petition saying, "Prima facie, his involvement appears to be deep-rooted. It cannot be said that on the basis of the allegations contained in the charge-sheet the petitioner W.P (Crl.) 586/2010 Page 15 of 16 may not have been involved in the criminal acts attributed to him. Consequently, I see no merit in this petition and dismiss the same."