Nifty’s rise has to go beyond 5,355 for the bounce to be meaningful
The market showed strong resilience today, shrugging off weak global cues, high food inflation data and poor US and Asian market trends, to end with decent gains. Buying in heavyweights also supported the upmove.
Weak global cues saw the domestic market opening lower today. The Nifty was down nine points at 5,269 and the Sensex started the day at 17,527, lower by 24 points. Banking, realty, auto and metal stocks were on the sellers' radar in early trade, pushing the indices to their intra-day lows in the first 15 minutes. At the day's low, the Nifty slipped to 5,252 and the Sensex to 17,482.
Select buying in stocks like Reliance Industries, ITC and Infosys helped the market overcome initial hiccups and trade in the green. The gains improved as the session progressed and investors shrugged off the spike in food inflation data. The market touched its intra-day high in noon trade, with the Nifty at 5,331, up 53 points and the Sensex surging 204 points to 17,755. Then a weak opening in the European markets dampened sentiments a little and the indices pared some gains. The market traded sideways thereafter, closing slightly below the highs of the day. The Nifty closed at 5,320, a gain of 41 points, and the Sensex advanced finished at 17,727, a good 177 points up.
After six trading sessions, the Nifty today managed a higher high and a higher close. The high of the day was 5,331. The intra-day high was the first resistance we had mentioned in Wednesday's closing report. The next resistance is at 5,355.
The advance-decline ratio on the National Stock Exchange was a poor 584:808.
While the key indices had a good session, the broader indices settled lower. The BSE Mid-cap index shed 0.06% and the BSE Small-cap index fell by 0.33%.
BSE Consumer Durables index (up 4.01%) was the top sectoral gainer. It was followed by BSE Fast Moving Consumer Goods (up 2.18%), Oil & Gas (up 1.95%), BSE IT (up 0.98%) and BSE TECk (up 0.79%). BSE Healthcare (down 0.53%), BSE Realty (down 0.36%) and BSE Metal (down 0.14%) were the losers.
ITC (up 3.37%), Reliance Communications (up 3.36%), Reliance Industries (up 2.90%), Hindustan Unilever (up 1.83%) and ONGC (up 1.36%) were the top stocks on the Sensex. Cipla (down 1.97%), Maruti Suzuki (down 1.72%), BHEL (down 0.78%), HDFC (down 0.78%) and Hindalco Industries (down 0.54%) were the losers on the index.
Among the Nifty stocks, ITC (up 3.46%), RCom (up 3.36%), RIL (up 2.95%), Reliance Capital (up 2.64%) and HUL (up 2.33%) were the gainers, whereas Maruti Suzuki (down 2.50%), Cipla (down 1.92%), IDFC (down 1.56%), Grasim (down 1.52%) and Sun Pharma (down 1.39%) were the losers.
Food inflation touched a two-and-half month high of 9.13% in the week ended 11th June from 8.96% in the previous week and 23% in the second week of June 2010. The latest food inflation numbers are the highest since the week ended 26 March 2011, when the rate of price rise of food items touched 9.18%.
Commenting on the development, finance minister Pranab Mukherjee said the high inflationary regime was not acceptable and efforts would be made to bring it down.
Concerns about the slowdown in the pace of the global economy resulted in the markets in Asia closing mixed. Lower GDP forecast by Federal Reserve chairman Ben Bernanke, at the end of the two-day central bank meeting yesterday, hurt investor sentiments.
Meanwhile, China's manufacturing may expand at the slowest pace in 11 months in June, a preliminary purchasing managers' index showed. The 50.1 level reported by HSBC Holdings Plc and Markit Economics compares with the final reading of 51.6 in May. Despite this, the Shanghai Composite settled higher.
The Hang Seng fell 0.46%, the KLSE Composite declined 0.27%, the Nikkei 225 was down 0.34%, the Seoul Composite slipped 0.39% and the Taiwan Weighted tanked 0.62%. On the other hand, the Shanghai Composite surged 1.44%, the Jakarta Composite added 0.05% and the Straits Times gained 0.06%.
Back home, foreign institutional investors were net sellers of stocks worth Rs287.40 crore on Wednesday. On the other hand, domestic institutional investors were net buyers of shares worth Rs157.37 crore.
RIL has made a natural gas discovery in the very first well drilled on its D9 block in the Krishna Godavari basin off the east coast of India, its junior partner Hardy Oil and Gas Plc said today. However, Hardy did not give the reserves that the discovery may hold, saying the potential commerciality of this discovery is being ascertained through more data gathering and analysis.
UIDAI chairman Nandan Nilekani said plans are on track to issue Aadhaar numbers to 600 million people in three to three-and-half years
Bangalore: One million Indian residents are expected to enrol for unique identity (Aadhaar) number every day from this October, reports PTI quoting chairman of Unique Identity and Development Authority of India (UIDAI) Nandan M Nilekani.
"As UIDAI scales up the systems both at the back-end by adding more technologies and at the front by adding more enrolment stations, it is confident of achieving this goal," he said.
Speaking at a conference with the theme 'Next Generation Service Delivery-Enabled by Aadhaar', organised by NASSCOM and UIDAI, Mr Nilekani said as of now 95 lakh (9.5 million) people have been issued with Aadhaar numbers.
Another UIDAI official said the figure is expected to cross one crore today.
Mr Nilekani said plans are on track to issue Aadhaar numbers to 600 million (60 crore) people in three to three-and-half years. He said the entire enrolment infrastructure would stabilise in the next few months, adding, UIDAI has built a massive biometrics-based capabilities.
"We are very comfortable that in the next few months, we will have critical mass of people around the country who will have Aadhaar numbers with them," he said.
He said UIDAI would create for the first time in the country a national devices' infrastructure, which is inter-operable.
Mr Nilekani said devices compliant with Aadhaar standards-whether they are in bank branches, or kirana stores or post offices or in schools or public health centres or anywhere-would be inter-operable.
This means that one can withdraw money from a PC in post office from one's bank account elsewhere.
"This kind of inter-operability across different delivery points...is the first time it is going to happen (in the country)," Mr Nilekani said.
He said Aadhaar numbers would help people in having 'portable health records'-that logs their visits to hospitals-which can be 'locked and unlocked' only by them so that the privacy is maintained.
UIDAI would create a national online identity management platform. With Aadhaar numbers, people have online and 'portable' identity which can be authenticated and verified by across the internet and through mobile phones.
"Aadhaar will increasingly be the basic 'Know Your Customer' (KYC) for a wide variety of products and services," he said.
He said RBI and the finance ministry have already notified Aadhaar numbers to be KYC for opening bank accounts, The Department of Telecom has notified it to be KYC for getting SIM card or phone connection and Oil companies for LPG connection.
Sikkim and Tripura have notified that Aadhaar would be the basis for proof or identity, house address and for availing government services.
Increasingly in the next two-three years, Aadhaar would be the KYC to access a wide variety of products and services, Mr Nilekani said. "In other words, if you have Aadhaar number, that's sufficient proof of identity, sufficient proof of address and sufficient KYC to access that."
It is not just banning entry loads in haste by SEBI that has led to reduced interest in mutual funds. There are many other reasons which exchanges and SEBI tend to ignore
In August 2009, then Securities and Exchange Board of India chief, CB Bhave, introduced the ban on entry load. Nearly two years later, after an outflow of Rs19,549 crores from equity funds (between August 2009 and May 2011) and a decline of 22.61 lakh equity-oriented mutual fund accounts (April 2009 to March 2011), the new SEBI chief, UK Sinha, is planning to incentivise distributors in order to provide "organised and sustainable growth of the mutual fund industry".
This 'experiment' by SEBI has cost the fund industry dearly. But incentivising distributors is just part of the solution to the problem of fund flows. The fact is, retail investors are not interested in equity markets for a variety of reasons, a fact that the stock exchanges and SEBI refuse to acknowledge. SEBI will have to look into other issues as well, attract investors to the fund industry and the securities market as a whole.
One of the main objectives of SEBI is to regulate and develop the securities market. But the apex body has fallen short in doing that and Mr Sinha has admitted as much.
The entry load for mutual funds was banned in order to make it fairer. The move was intended to reduce the cost for investors. But, was the cost for starting investing the only reason for the lack of retail participation? Unfortunately, the SEBI board failed to look at other factors. Among some of the other factors that deter retail investors from putting money in the markets are the unexplained volatility in the market, manipulation of IPOs, poor performance of 40% of funds, several counts of mis-selling, lethargic complaint redressal and lack of financial awareness. A majority of the population, therefore, finds it safer to keep cash lying in savings accounts or fixed deposits. In 1990-91, 32% of household savings was invested in bank deposits. Now that figure has climbed to 51%.
SEBI made the decision to ban entry load in haste, without adequate research, survey or discussions with investors. It failed to judge the cause of the problem. Will SEBI make the same mistake all over again?
We know that the number of equity folios has declined along with the huge redemption of funds, but is the lack of incentives to distributors the main cause for this? Unfortunately, there is no comprehensive research to support the case. For sure, this is one of the reasons, but the board has to address other issues as well.
The SEBI chief also plans to look into the regulation of distributors, disclosure of track record of fund managers by asset management companies, the break-up of institutional and retail money of fund houses and simplifying the KYC norms across its domain. These are good signs that the board intends to take active steps towards regulating the market. But whether the implementation of these plans will attract retail investors back is to be seen.
Moneylife has published numerous articles pointing out the declining retail participation in mutual funds. You may be interested to read: ("Retail interest in equity mutual funds is shrinking";) ("Huge mutual fund outflow points to a much deeper malaise")