Share prices to move sideways: Tuesday Closing Report

Nifty may move in a narrow range of 5,185 and 5,275

Clarification on the government’s proposed GAAR norms led the market higher in post-noon trade. We had mentioned in yesterday’s closing report that if the Nifty closes above any previous day’s high the downtrend may reverse. Today the index managed to cross the previous day’s high but closed below that level. From here we may see the index moving sideways in a narrow range of 5,185 and 5,275. The National Stock Exchange (NSE) saw a volume of 78.20 crore shares.

The market opened higher on supportive global cues after US Federal Reserve chief Ben Bernanke reiterated the need to retain the ‘easy’ monetary policy for some more time to reduce unemployment. The announcement lifted US stocks overnight and also led to gains in the Asian pack in early trade today. Reflecting the positive trend, the Nifty opened 59 points higher at 5,243 and the Sensex resumed trade at 17,209, up 156 points over its previous close.

However, profit booking soon set in, pushing the indices to the day’s lows in the first hour itself. At the lows, the Nifty fell to 5,185 and the Sensex went back to 17,061.

The benchmarks were range-bound till about 1.30pm. The government’s clarification that it would not target the participatory notes in a blanket manner under its newly proposed General Anti-Avoidance Rule (GAAR) lifted the market to its intraday high in post-noon trade. At the highs, the Nifty rose to 5,278 and the Sensex jumped to 17,367.

Intense choppiness resulted in the benchmarks closing below the highs of the day. The Nifty closed 59 points up at 5,243 and the Sensex gained 205 points to settle at 17,257.

The advance-decline ratio on the NSE was 719:1010.

While the key benchmarks closed over 1% higher, the broader indices underperformed the Sensex. The BSE Mid-cap index lost 0.07% and the BSE Small-cap index fell by 0.17%.

Barring the BSE Power index (down 0.07%), all other sectoral gauges ended higher. They were led by BSE Consumer Durables (up 2.07%); BSE Fast Moving Consumer Goods (up 1.69%); BSE Realty (up 1.56%); BSE TECk (up 1.23%) and BSE Metal (up 1.22%).

DLF (up 4.31%), Cipla (up 3.79%); Sterlite Industries (up 3.56%); Hindustan Unilever (up 3.42%) and Bharti Airtel (up 3%) were the top gainers on the Sensex. The major losers were Maruti Suzuki (down 1.79%); BHEL (down 1.05%); Coal India (down 0.69%); NTPC (down 0.54%) and Sun Pharma (down 0.19%).

The top performers on the Nifty were DLF (up 4.52%); Cipla (up 3.81%); Sesa Goa (up 3.65%); Sterlite Ind (up 3.33%) and HUL (up 3.26%). The main laggards on the index were Maruti Suzuki (down 1.87%); Jaiprakash Associates (down 1.34%); HCL Technologies (down 0.97%); Grasim (down 0.90%) and BHEL (down 0.85%).

Markets in Asia, with the exception of the Chinese benchmark, settled higher on optimism from the US. A report indicating an unexpected improvement in German business confidence also supported the outlook.

The Hang Seng surged 1.60%; the Jakarta Composite advanced 1.18%; the KLSE Composite rose 0.32%; the Nikkei 225 jumped 2.36%; the Straits Times gained 1.49%; the Seoul Composite climbed 1.02% and the Taiwan Weighted settled 0.78% higher. Bucking the trend, the Shanghai Composite fell by 0.15%. At the time of writing, the key European indices were trading with gains of 0.25% to 0.64% and the US stocks futures were in the positive.

Back home, institutional investors were net sellers in the equities segment on Monday following an announcement by the government on Monday to tax on participatory notes (P-Notes), with the implementation of the General Anti-Avoidance Rules effective from 1 April 2012, as proposed in the Budget. While foreign institutional investors pulled out funds worth Rs135.29 crore, domestic institutional investors withdrew Rs200.94 crore.

Sadbhav Engineering today said it has bagged a Rs1,220 crore order from NHAI for four-laning of the Solapur-Bijapur section of NH-13. The project, to be executed on a BOT (Toll) basis, has a concession period of 20 years from the appointed date. The scrip closed 3.01% higher at Rs153.80 on the NSE.

Dr Reddy’s Laboratories, the country’s second largest pharma company, expects to sign a definitive agreement by June with Japan-based Fujifilm for a joint venture that will develop and produce generic drugs for the Japanese market. The stock settled at Rs1,684, a gain of 1.23% over its previous close.

KPIT Cummins, a product engineering and IT consulting firm, has entered into a Priority Customer agreement with Pune based InnovizeTech Software, to deploy their patent-pending software product—Sapience. The solution will be initially implemented in key business units by roles within KPIT Cummins. The stock declined 20.9% to close at Rs77.40 on the NSE.


KKR appoints Tashwinder Singh as director at India unit

‘Tashwinder Singh will identify and develop strategic partnerships to grow KKR's private equity and non-banking finance operations in India,’ KKR said in a statement

Global investment firm Kohlberg Kravis Roberts & Co (KKR) has appointed Tashwinder Singh, a former Citigroup official, as director of its India-based unit.

In his new role, Singh, who has worked with Citigroup India for over 18 years, will identify and develop strategic partnerships to grow KKR's private equity and non-banking finance operations in India, KKR said in a statement.

Commenting on the appointment, Sanjay Nayar, Member of KKR and CEO of KKR India said: “The increasing need for strategic capital has led us to partner with and provide multi-asset solutions to promoters helping them scale-up growth.”

Tashwinder’s depth of experience and relationships with high potential businesses across India will strengthen our efforts in establishing partnerships with promoters, who share our philosophy and gain from the long-term value and operational benefits we seek to provide, he said.

A Citigroup veteran and managing director, Singh was the business head, commercial banking before moving on to lead the company’s private bank.

KKR India has 15 investment professionals based in Mumbai, focusing on both private equity and non-banking financial services


PPF interest rates go up from 8.6% to 8.8%

The hike in small savings rate, according to experts, may put some pressure on banks to increase deposit rates to attract investors

Millions of small investors will get better returns on popular post office schemes like Public Provident Fund (PPF) and Monthly Income Scheme (MIS), with the government hiking interest rates on such schemes by up to 0.5% with effect from 1 April 2012.

Interest rate on PPF have been increased to 8.8% from 8.6%, while MIS will attract 8.5% interest as against 8.2% now, said a Finance Ministry release.

Post office term deposits of one and two years will earn 8.2% and 8.3% interest, respectively, an increase of 0.50%.

The new rates would remain effective for the entire 2012-13 fiscal.

The hike in small savings rate, according to experts, may put some pressure on banks to increase deposit rates to attract investors.

As per the release, the National Savings Certificates (NSC) having maturity of five and 10 years will now attract 8.6% and 8.9% interest, respectively, up 0.2% each.

There has been no change in the post office savings deposit rate which has been retained at 4%.

Interest rate for three-year term deposits has been raised to 8.4% from 8%. Similarly, interest rate on five-year deposit has been raised from 8.3% to 8.5%.

The five-year recurring deposits will fetch an interest of 8.4%, against 8% at present.

The rate for senior citizens savings scheme (SCSS) has been hiked to 9.3% from 9%.

In November last year, the government had decided to make small savings attractive by making interest rates on them in tune with that offered by other securities in the market.

In the last fiscal, there had been a decline in the investment in National Small Savings Fund (NSSF) and the government had to make up for it by hiking its borrowing programme.

The revision in the interest rates will help in maintaining the attractiveness of the small savings schemes vis-a-vis fixed deposit schemes operated by banks.

The government as part of economic liberalisation process had freed the interest rates on banks deposits, giving freedom to lenders to fix rates depending upon the asset-liability position, but continued to fix rates for small savings schemes.


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