Share prices to be range-bound: Wednesday Closing Report

Nifty may move in the range of 4,900 and 4,990

Domestic concerns, highlighted by the finance minister, and the World Bank’s cut in global growth forecast induced a high degree of volatility and saw the market snapping its four-day winning streak today. As we mentioned yesterday, the Nifty witnessed marginal fall, after making a higher high and higher low for the second consecutive day. From here we may the index moving in the range of 4,900 and 4,990. The National Stock Exchange (NSE) saw a massive volume of 76.10 crore shares being traded.

The market opened with small gains on concerns that the ongoing Eurozone debt crisis will impact IT companies. TCS, which posted an 18.26% net profit growth for the third quarter, stated that the challenges in the short-term would impact the company’s business. The Nifty opened 11 points at 4,978 and the Sensex resumed trade at 16,502, up 36 points over its previous close.

The market dipped into the red soon after the opening bell but news of a possible buyback of shares by index heavyweight Reliance Industries pushed the benchmarks higher. However, volatility saw the market fluctuating in and out of the red in morning trade.

Finance minister Pranab Mukherjee’s concerns about the government’s ability to achieve the fiscal deficit target resulted in the indices falling sharply into the negative. Sporadic buying activity led to minor gains, but those were not sufficient to push the market in the green.

A lower opening of the European indices kept the domestic market under pressure in noon trade. The World Bank cut its global growth forecast even as the Greek government is set to hold talks with its creditors on chalking out ways to cut the country’s debt and avoid a default.

The market fell to its intraday low in post-noon trade. At the lows, the Nifty went down to 4,931 and the Sensex declined to 16,384. The market continued to flip-flop till the end of trade, settling lower and breaking its four-day winning streak. At the close, the Nifty lost 12 points to 4,956 and the Sensex finished 15 points lower at 16,451.

The advance-decline ratio on the NSE was negative at 532:1204.

The broader indices underperformed the Sensex today with the BSE Mid-cap index declining 1.16% and the BSE Small-cap index dropping by 1%.

BSE Oil & Gas (up 3.12%) and BSE Realty (up 0.61%) were the only gainers in the sectoral space. The top losers were BSE Metal (down 2.19%); BSE IT (down 2.16%); BSE Capital Goods (down 2.04%); BSE TECk (down 1.77%) and BSE PSU (down 1.31%).

Reliance Industries (up 4.94%) led the gainers’ pack on the Sensex. It was followed by HDFC Bank (up 2.79%); ONGC (up 2.39%); Hero MotoCorp (up 1.67%) and DLF (up 1.57%). Tata Steel (down 4.05%); Coal India (down 3.22%); Mahindra & Mahindra (down 2.84%); BHEL (down 2.78%) and Wipro (down 2.70%) languished as the top losers on the index today.

The top performers on the Nifty were RIL (up 4.26%); HDFC Bank (up 3.16%); Reliance Infrastructure (up 2.61%); Reliance Power (up 2.20%) and ONGC (up 2.06%). The key losers were Tata Steel (down 4.52%); SAIL (down 4.29%); Coal India (down 3.48%); Kotak Bank (down 3.26%) and Axis Bank (down 3.16%).

Markets in Asia settled mixed as fresh concerns about Europe overshadowed the optimism of positive economic data that came in on Tuesday. Chinese shares settled lower on profit booking, ahead of the week-long Lunar New Year holidays next week.

The Hang Seng rose 0.30%; the Jakarta Composite gained 0.59%; the Nikkei 225 surged 0.99% and the Taiwan Weighted advanced 0.17%. Among the losers, the Shanghai Composite tanked 1.39%; the KLSE Composite fell 0.13%; the Straits Times declined 0.73% and the Seoul Composite shed 0.02%. At the time of writing, the key benchmarks in Europe were mixed while the US stocks futures were in the positive.

Back home, foreign institutional investors were net buyers of shares amounting to Rs1,025.75 crore on Tuesday while domestic institutional investors were net sellers of shares aggregating Rs429.23 crore.

Bangalore-based Sobha Developers has announced its foray into Chennai residential market by launching two ventures with a combined project size of over Rs400 crore. Sobha Meritta, coming up at Kelambakkam, has a project size of Rs300 crore while Sobha Serene has a project size of Rs120 crore and will be coming up at Porur over 3.15 acres. The stock tumbled 3.79% to settle at Rs231.10 on the NSE.

With the domestic market for independent testing solutions in India opening up, Thinksoft Global, a software testing solution provider for the BFSI segment, plans to enhance its revenues from India. The stock declined 3.29% to close at Rs45.60 on the NSE.

Dishman Pharmaceuticals & Chemicals said its Switzerland-based subsidiary Carbogen Amcis AG has acquired Creapharm Parenterals for an undisclosed amount. The acquisition will extend Carbogen Amics development and manufacturing services by adding complementary formulation and lyophilisation services and sterile GMP capabilities for the fast supply of drug products, including highly potents, for pre-clinical studies and clinical trials (Phase I, II & III), Dishman said.

Dishman settled fell 0.32% to close at Rs47on the NSE today.


AIBOC opposes Khandelwal panel’s recommendations on HR management in PSBs

The bank officers’ union has suggested that bilateral agreements between bank management and the union should be kept in mind while considering the Khandelwal Committee’s recommendations

The recommendations of the Khandelwal Committee on Human Resource Management (HRM) in the public sector banks (PSBs) have seen a stiff opposition from the bank officers’ union. Expressing their reservations on recommendations pertaining to recruitment and promotion policy, the union has requested a dialogue with the finance ministry.

The committee headed by the former chairman of Bank of Baroda, Dr Anil K Khandelwal, had submitted 105 recommendations on HRM in July 2010. Recently the government accepted 56 of them.  

The committee recommended that 50% of the vacancies in officers’ cadre should be filled through direct recruitment. However, All India Bank Officers’ Confederation (AIBOC) feels that such recommendation is against the career interest of clerical employees and cuts the bilateral agreement between the bank management and the union. Currently 25% of the recruitment is through this bilateral agreement.

 According to AIBOC, the most controversial recommendation is the performance-based incentive. The committee suggested that there should be accountability for non-performance through premature retirement of an employee after a review, on reaching 55 years of age.  The union points out that the topic of performance or non-performance is debatable, for instance a bank manager can claim achievement only if the staff supports him. Accepting such suggestion of rewarding the individual without taking in to account the team work will be counter productive.

In a memorandum sent to the Department of Financial Services, GD Nadaf, general secretary of AIBOC said, “The existing bilateral understandings and agreements between bank managements and officers’ organisations in the area of promotions, transfers and service conditions may be allowed to continue.”

The committee suggested fast-track promotion by reducing the minimum length of service. This, AIBOC says has lot of practical issues as each bank has its own requirement and there cannot be a standardized policy. Currently, the promotion policy is based on bilateral agreements and takes care of career aspirations. It is also in lieu with the recently amended guidelines issued by the ministry of finance.  

According the union, the recommendation to review all internal settlements affecting mobility, flexible utilization of staff productivity, performance and customer service will affect the banks’ industrial relations. “Any effort to unilaterally change the existing settlements which are time-tested and evolved through mutual consultations will vitiate the industrial relations in the banks,” says AIBOC, in its monthly journal Officers’ Voice, run by the Corporation Bank Officers’ Organisation.

 It adds, “The finance ministry which represents the ownership of PSBs, has every right to issue policy guidelines; but the implementation of the policy should be left to the banks’ boards.”

Speaking to Moneylife, TR Bhat, former member of AIBOC and advisor of Officers’ Voice says that, “So far as the promotion and recruitment policy is concerned, there is a bilateral agreement between the bank management and the union. It is also within the regulatory mandate. I don’t see why there is a need for a separate guideline. Each bank has its own requirements and the ground realities are different. What suits ‘X’ bank may not interest ‘Y’ bank.”


World Bank slashes global growth forecast for 2012 to 2.5%

According to the World Bank, the world economy has entered a “dangerous period” and some of the financial turmoil in Europe has spread to developing and other high income countries, which until earlier had been unaffected

Washington: The World Bank today sharply lowered its global economic growth forecast for 2012 to 2.5%, citing European financial turmoil and weak growth prospects in emerging nations, including India, reports PTI.

The multilateral agency had earlier projected that the world economy would expand by 3.6% this year.

In its biennial report, ‘Global Economic Prospects’, the multilateral agency slashed the growth forecast for high income and developing countries this year and in 2013.

“The global economy is now expected to expand 2.5% and 3.1% in 2012 and 2013 (3.4% and 4% when calculated using purchasing power parity weights), versus the 3.6% projected in June (2011) for both years,” the report said.

According to the World Bank, the world economy has entered a “dangerous period” and some of the financial turmoil in Europe has spread to developing and other high income countries, which until earlier had been unaffected.

It said this contagion has pushed up borrowing costs in many parts of the world, and pushed down stock markets, while capital flows to developing countries have fallen sharply.

“Europe appears to have entered a recession. At the same time, growth in several major developing countries (Brazil, India and, to a lesser extent, Russia, South Africa and Turkey) is significantly slower than it was earlier in the recovery, mainly reflecting policy tightening initiated in late 2010 and early 2011 in order to combat rising inflationary pressures,” the report said.

“As a result, and despite a strengthening of activity in the United States and Japan, global growth and world trade have slowed sharply,” the World Bank said.

The multilateral agency also revised its projections for growth in high income and developing countries downward for 2012 and 2013.

“High income country growth is now expected to come in at 1.4% in 2012 (-0.3% for euro area countries, and 2.1% for the remainder) and 2% in 2013, versus a June forecast of 2.7% and 2.6% for 2012 and 2013, respectively,” it said.

The report further added: “Developing country growth has been revised down to 5.4% and 6% versus 6.2% and 6.3% in June.”

Global trade is projected to grow by only 4.7% this year, compared to 6.6% in 2011. However, trade is likely to bounce back in 2013 with an annual growth of 6.8%.

The fall in trade is on account of a reduction in trade financing by banks.

The report said in the event of a major crisis, the global downturn might last longer than the 2008-09 slowdown as high income countries do not have the fiscal or monetary resources to bail out the banking system or stimulate demand to the same extent as four years back.

“Although developing countries have some manoeuvrability on the monetary side, they could be forced to pro-cyclically cut spending—especially if financing for fiscal deficits dries up,” the World Bank said.

It also said that developing countries are more vulnerable now than they were in 2008.

According to the report, even though fiscal conditions in developing countries are better than in high income countries, government balances have deteriorated by 2% or more of the GDP in almost 44% of developing countries.

“... and some 27 developing countries have government deficits of 5% or more of GDP in 2012. As a result, developing countries have much less fiscal space available to respond to a new crisis,” it said.


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