It is always darkest before dawn...
Major inflows needed for Nifty to reach 5,190
The market discounted the interest rate hike by the Reserve Bank of India and was in the positive for almost the entire trading session today. However, strong volatility capped the gains resulting in a near flat close.
Yesterday, we mentioned that the Nifty should stay above 5,065 and not make an intra-day low below 4,967. Today, the Nifty touched an intra-day low of 5,068, around its previous close of 5,075 and closed at 5,084. If buying continues, we may see a strenuous journey to the level of 5,190. However, if the trend reverses, we may see the Nifty slide to 4,875. The gains on the National Stock Exchange (NSE) were on huge volumes totalling 79.46 crore shares.
The market opened in the positive, tracking its peers in the Asian region which were higher in morning trade, on news that the European Central Bank (ECB) would help European banks to avail of dollar funding. The Nifty opened 47 points higher at 5,123 and the Sensex resumed trade above the 17,000 mark at 17,048, up 177 points. There was brisk buying in oil & gas, PSU, IT, metal and realty stocks.
The indices were range-bound ahead of the RBI’s mid-quarter monetary policy review. A huge bout of institutional buying minutes before the rate hike announcement lifted the indices to the day’s high. At the intra-day high, the Nifty went up to 5,144 and the Sensex to 17,123.
The news of the 25 basis points hike in the repo and reverse repo rates dragged the indices to the lows of the day. The Nifty slipped into the red at 5,068, while the Sensex managed to stay above yesterday’s close at 16,890. But investors chose to ignore the negatives and continued buying, putting the indices on a higher trajectory once again.
Some nervousness in late trade resulted in the market paring most of its gains, but it still closed positive for a third straight day. The Nifty added nine points to close at 5,084 and the Sensex finished trade at 16,934, up 57 points.
The advance-decline ratio on the National Stock Exchange (NSE) was a negative 638:775.
The broader indices closed mixed today; the BSE Mid-cap index was up 0.36% whereas the BSE Small-cap index closed 0.01% lower.
In the sectoral space, BSE PSU (up 1.66%), BSE Power (up 1.55%), BSE Realty (up 1.26%), BSE Auto (up 1.14%) and BSE Consumer Durables (up 0.65%) were the top gainers. Fast Moving Consumer Goods (down 1.22%), BSE IT (down 0.86%) and BSE TECk (down 0.70%) were the losers.
Some major stocks in the Sensex that gained were Tata Motors (up 7.02%), ONGC (up 5.61%), NTPC (up 4.75%), Sterlite Industries (up 3.66%) and Tata Power (up 2.69%). The losers were led by Hindustan Unilever (down 2.65%), Wipro (down 2.37%), BHEL (down 1.39%), Tata Steel (down 1.30%) and Jindal Steel (down 1.10%).
The top performers on the Nifty were Tata Motors (up 6.12%), ONGC (up 5.58%), NTPC (up 4.41%), Sterlite (up 3.54%) and Power Grid Corporation (up 3.49%). Ambuja Cement (down 4.96%), HCL Technologies (down 4.01%), Reliance Communications (down 2.96%), Wipro (down 2.74%) and Reliance Capital (down 2.69%) ended at the bottom of the index.
Markets in Asia closed higher as the ECB and other global policymakers initiated efforts to help European banks get dollar funding. The move boosted exporters and financials across Asia. Investors will now eye the two-day European Union finance ministers’ meeting, which is to start later today. US Treasury secretary Tim Geithner will also attend the meeting.
The Shanghai Composite rose 0.13%, the Hang Seng gained 1.43%, the Jakarta Composite surged 1.61%, the Nikkei 225 jumped 2.25%, the Straits Times advanced 0.83%, the Seoul Composite advanced 3.72% and the Taiwan Weighted settled 2.60% higher.
Back home, foreign institutional investors were net buyers of stocks worth Rs136.55 crore on Thursday. Similarly, domestic institutional investors were also net buyers of equities worth Rs4.40 crore.
Delta Corp through its joint venture company—Delta Corp East Africa (DCEAL)—has entered into a binding sale agreement with International Bank for Reconstruction and Development (World Bank) for the sale of its property in Kenya, the Delta Centre. The property is to be sold for around $22.8 million on terms and conditions mutually agreed between the parties. The property is in the final stage of development and will be handed over to the World Bank upon completion. Delta Corp gained 1.19% to close at Rs110.10 on the NSE.
Tata Steel has bagged a $70 million order to supply 84,000 tonne of rails for a new high-speed track on the new 302km, South-Europe-Atlantique line connecting Bordeaux and Tours in France. The company will manufacture the steel required for the project at its Scunthorpe facility in the UK, before being rolled into rail at its Hayange mill in North-East France. Tata Steel dipped 1.21% to close at Rs460.
ABB, the power and automation technology company, has bagged an order worth more than $15 million from JK Paper to supply integrated automation and power equipment and related engineering and commissioning services. The ABB stock tanked 4.39% to close at Rs827.95.
TV companies hope festive season will revive fortunes. Look to digitisation to improve revenues, even as print segment takes away consumer ad money
With rising inputs costs and inflation, big national advertisers in the conventional sectors have undertaken significant cuts in ad spend and this is hitting broadcasters hard. TV channels are now looking forward to the festive season and digitisation over the long run, to improve their fortunes, but at least one brokerage believes that the print segment will still outperform TV.
"The TV ad industry witnessed a slump in ad sales till August 2011, mainly on the back of reduced ad spend by sectors like FMCG, real estate, banking. Adding to that, competitive intensity and fragmentation in the industry have also gone up," Pinc Research stated in a sector update.
Zee Entertainment has been affected the most and has lost out to Star, Colours and Sony in TRPs. That is mostly due to Zee's non-reality shows and the popular prime time soaps that have become the staple for others. Sony, too, which was languishing during the IPL with significantly low ratings, has seen viewership improve post IPL with 'Bade Acche Lagte Hain' and the recent launch of 'Kaun Banega Crorepati'. Star touched all-time high ratings recently with the big television premiere of 'Singham'. About 124 million viewers tuned in to the screening.
But Pinc says dependence on advertisements will decrease once digitisation is achieved. Experts, however, are cautious about this. "While digitisation is definitely catching up, the importance of advertisements cannot be ruled out. To say that premium payability option will be an adequate substitute for advertisements will be a bit far fetched at this point," says an analyst. But the situation could improve with the coming festive season.
On the other hand, the regional print industry has performed well, and has maintained its double-digit ad growth. Currently, the industry is growing at a 12% CAGR for 2011-2015. The report estimates that print will continue to prosper, riding on sectors like automobiles, education and infrastructure.
"Advertisements in the current economic scenario are largely driven by volumes and moderately by yields. Innovations like adding more space, or providing colour ads at a discounted price, have helped in offering lower effective ad rates which has helped to increase ad volumes," Pinc Research says.
Newsprint costs are also expected to come down in the next few months and this has added to the buoyancy of the sector. "We expect listed print players-DB Corp, HT Media, Hindustan Media Ventures and JPL to register ad revenue CAGR of 13-15% over FY11-FY13," the brokerage says.
Judge asks state government, Tata Motors to file final notes by 20th September
Kolkata: The Calcutta High Court today directed the West Bengal Government and Tata Motors to file written notes of argument by 20th September, as hearing on the petition by the company challenging the Singur Act concluded today.
Justice IP Mukerji is expected to deliver the judgement in the case before the Diwali holidays which begin 1st October. The petition challenges the constitutionality of the Singur Land Rehabilitation and Development Act 2011.
The hearing concluded after Tata Motors counsel S Pal finished his submissions in reply to the arguments by the state on its position on the constitutionality of the Act, PTI reports.
Tata Motors opposed the High Court's initiative on compensation to it for the government, vesting land at Singur which was leased to the company. The counsel disagreed with the proposal and informed the judge that there was no mention of the leasehold value of the land in the government's proposal which could be 500% higher than that of the structure constructed at Singur.
The state government, on the other hand, said that the Hooghly district judge would determine the compensation, in line with the principle laid down under section 23 and 24 of the Land Acquisition Act 1894. The company has taken away all machinery from Singur, to Sanand in Gujarat, where it has set up a new plant to make its Nano small car.