Nifty may see an upmove till 5,270
As we mentioned in our yesterday's closing report, the Nifty witnessed a bounce-back today. Apart from the indicators which pointed towards such gains, faith shown by the people in power helped the gains to continue. The loss of the past six days during which the Nifty broke the 14 months' low was 444 points. We expect the Nifty to continue the gains till the level of 5,270.
As expected, the market rebounded today-ending its six-day losing streak-on assertions from the US Federal Reserve overnight. The optimism boosted markets around the world. Back here, the Nifty opened 124 points higher at 5,197 and the Sensex resumed trade at 17,245, up 387 points and crossing its psychological level of 17,000. Buying in IT, realty, consumer durables and auto stocks also supported the upmove.
The Federal Reserve on Tuesday pledged to keep rates unchanged at near zero levels through mid-2013 and added that it would take appropriate steps to prop up the sagging economy.
Rising steadily in subsequent trade, the market touched the day's high in mid-morning trade where the Nifty rose to 5,197 and the Sensex to 17,256. However, profit booking at higher levels led to the indices paring some of the gains. The indices fell to the day's lows in the post-noon session with the Nifty falling to 5,123 and the Sensex going back to 17,022.
Buying activity resumed after the indices hit the lows, propping them higher and ensuring a positive close after six days of continuous losses. At the day's close, the Nifty gained 88 points to 5,161 and the Sensex finished the session at 17,131, higher by 273 points.
The advance-decline ratio on the National Stock Exchange was a positive 1388:398.
The broader indices outperformed the Sensex today with the BSE Mid-cap index climbing 2.31% and the BSE Small-cap index advancing 2.46%.
The top gainers in the sectoral space were BSE Auto (up 4.17%), BSE Realty (up 2.98%), BSE Consumer Durables (up 2.61%), BSE IT (up 2.41%) and BSE Bankex (up 2.39%). BSE Fast Moving Consumer Goods (down 0.47%) and BSE Oil & Gas (down 0.19%) were the only laggards.
Tata Motors (up 6.08%), Maruti Suzuki (up 5.95%), Hindalco Industries (up 5.24%), Mahindra & Mahindra (up 5.03%) and DLF (up 4.31%) were the major gainers on the Sensex. ONGC (down 2.22%), ITC (down 1.15%), Hindustan Unilever (down 0.95%), Sun Pharma (down 0.68%) and Tata Power (down 0.54%) ended as the top losers on the index.
The star performers on the Nifty were Tata Motors (up 6.04%), Maruti Suzuki (up 5.78%), DLF (up 5.54%), Hindalco (up 5.10%) and M&M (up 4.82%). The main losers were Grasim (down 2.53%), ONGC (down 2.14%), ITC (down 1.68%), Cairn India (down 1.46%) and Ranbaxy (down 1.30%).
Markets in Asia, with the exception of the Straits Times, closed higher following assurances from the US Fed last night. Regional indices bounced back from a two-week decline on speculations that the US central bank might implement some new measures to boost the economy.
In economic news, China's July exports rose 20.4% from a year ago, the biggest gain since April while imports rose 22.9% year-on-year. However, analysts cautioned debt issues and lower consumer spending in the US and Europe could pose a problem in the coming months.
The Shanghai Composite gained 0.91%, the Hang Seng climbed 2.34%, the Jakarta Composite jumped 3.44%, the KLSE Composite rose 0.57%, the Nikkei 225 surged 1.05%, the Seoul Composite advanced 0.27% and the Taiwan Weighted surged 3.25%. Bucking the trend, the Straits Times declined 2.18%.
Back home, foreign institutional investors were net sellers of stocks worth Rs2,104.56 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of stocks worth Rs1,412.96 crore.
Fortis Healthcare International today said it has entered into an agreement to acquire a 65% stake in Vietnam-based Hoan My Medical Corporation for $64 million (nearly Rs289 crore). This is the company's sixth investment in eight months and is seen as an important step in consolidating its presence in the growing healthcare delivery market in Asia. Fortis Healthcare gained 0.93% to close at Rs156.65 on the NSE.
Glenmark Pharmaceuticals today said it has started Phase-IIb human trials of its 'Revamilast' molecule, which is being developed for treatment of inflammatory disorders like asthma and rheumatoid arthritis. The molecule has successfully completed pre-clinical trials and Phase-I studies in the UK. The stock jumped settled 7.02% higher at Rs327.75 on the NSE.
GVK Power and Infrastructure is expected to commence work on its 690MW hydro-electric power project at Kishtwar in Jammu & Kashmir by December 2011. The power plant is likely to be commissioned in 2017. Situated on the river Chenab, it will provide 16% of its output to the state of Jammu & Kashmir free of charge. The stock rose 4.36% to Rs19.15 on the NSE today.
Posco-India is not ready to accept the state government's proposal to exclude the swapping of iron ore clause in the original MoU. The provision of swapping of iron ore in the lapsed MoU had been opposed by many, including Jairam Ramesh, when he was the environment minister
Bhubaneswar: Ahead of the renewal of its memorandum of understanding (MoU) with the Orissa government for the 12 million tonne per annum (MTPA) greenfield steel plant in Orissa, Posco-India has sought certain modifications, reports PTI.
"Posco-India has accepted some of the suggestions made by the state government, but it wants certain modifications," state steel and mines minister Raghunath Mohanty told reporters here today.
Though the MoU with the South Korean steel major lapsed on 21 June 2010, it was yet to be renewed because of certain reasons including the iron ore swapping clause.
Sources in the know said that Posco-India was not ready to accept the state government's proposal to exclude the swapping of iron ore clause in the original MoU.
Under the lapsed MoU, iron ore high in alumina content not exceeding 30% of the total annual requirement for the Paradip plant could be swapped with an equal quantity of low alumina content iron ore or with better content imported for blending to produce better quality steel and conserve energy.
The provision of swapping of iron ore in the MoU had been opposed by many, including Jairam Ramesh, when he was the environment minister.
While according final forest clearance to the Posco project on 2nd May, Mr Ramesh as the minister for environment and forest had said: "The MoU had provision for export of iron ore which made me deeply uncomfortable with this project.
I would expect that the revised MoU between the state and Posco would be negotiated in such a manner that exports of raw material are completely avoided."
The government was examining Posco India's application for modification and certain in-principle decision would be taken, the minister said.
"We have almost finalised the draft of the MoU through consultation with Posco-India. Have patience, we will renew the MoU with Posco soon," chief secretary BK Patnaik said.
Authorities appear clueless even after repeated incidents of ships grounding, colliding and sinking off the country’s coast. Now activists and citizens have raised some serious questions on the state of our naval security
The shipping authorities are all at sea about the ship MV Rak's long wait and subsequent sinking near Juhu. There seems to be little headway with the investigations, even though incidents of ships grounding, colliding and sinking at Mumbai have been repeated since a long time. Activists and citizens have raised serious questions about the state of our naval security.
"There is an urgent need for upgrading the surveillance system. How was it that the ship was anchored near the beach since 21st July and nobody took a note of it?", asked Captain Ashok Malkani, shipping veteran. The ship was on a voyage from Indonesia to Dahej in Gujarat, just 20 hours away from Mumbai.
"It is most strange for the vessel to stay at anchor off Mumbai, when it could have reached and docked at her intended port of discharge, received her provisions and spares, and unloaded all her cargo," Mr Malkani told Moneylife. "The vessel would have lain in good safety, instead of weathering rough monsoon sea conditions for 14 days."
A leading Marathi daily, quoting unnamed sources, revealed that before MV Rak was sunk, it was illegally provided with oil supply and a few Customs and Mumbai Port Trust officers were complicit in this activity.
What makes the case of Rak more intriguing is that it is not a standalone case. Equally strange is the case of MV Pavit, which was abandoned off the Oman coast on 29th July. It drifted off, grounded near the Juhu-Versova beach on 31st July and subsequently sank. The crew was rescued by a US naval ship before being brought to port by an Indian merchant vessel. Experts believe that the ship purposefully sank near Mumbai, because wind direction and other maritime factors indicated that it should have drifted off to the Gulf of Kutch. How it came to Mumbai remains a mystery.
There is the case of cargo vessel MV Wisdom, which was grounded near Juhu beach for almost a month this year. It became a tourist attraction, and was finally hauled back into the ocean on 2nd July after a salvage operation. Last year, MSC Chitra and MV Khalija collided off the Mumbai coast, which resulted in the oil spill that spread as far as Raigad and Elephanta. The captains of the ships kept blaming each other, and even now, little information is available as to how the collision happened.
"This is baffling," said EAS Sarma, former finance and power secretary, who is settled in Vishakhapatnam, the Eastern Naval Command base. He said, "The intelligence agencies and the authorities should look for patterns in these cases. All information must be collated centrally. And even if they say that they do not have enough resources or ships, what prevented them from making random checks? Usually, a lot of information comes out in such checks."
Commenting on the obvious lack of intelligence inputs in such cases, Mr Sarma suggested that the coast guards should involve the local people and the fishermen for getting information. He said that since fishermen go off to the sea daily and interact with a lot of people, they are a valuable source of information. If the authorities give them identity cards, a strong network can be established.
The environmental impact of these fiascos is also a serious issue. Oil continues to leak from Rak at the rate of 8-10 tonnes per day, as per the latest review report by the director general of shipping. The director general has declared that the oil streak has stretched up to 5-6 kilometres along the Alibaug shoreline.
Environmental activist Sumaira Abdulali told Moneylife, "The government is paying lip service, and not doing anything concrete. Oil is still leaking, and they are not using the appropriate technology." The Khalija-Chitra collision last year damaged the mangrove belt in and around the city; contaminating shores and threatening fishing activity.
MV Rak was a 27-year-old ship. Indian merchant navy veteran Veeresh Malik has raised the question on how an overage ship with improper documents was allowed entry into Indian waters. Most of the Indian vessels are on the verge of breaking down, said Mr Malik. While Western countries spend a lot on coastal security, the Indian government rarely beefs up its arrangements.
Ships which are more than 20 years old are not allowed in European or American waters. As per USA's maritime rules, a ship must inform the coast guards four days in advance and wait 1,000 nautical miles away from the coast, show the documents and then enter.
Captain Malkani, however, thinks that the strength of the monsoon should not be underestimated. He pointed out that all these incidents happened during the monsoon. "When the ship is anchored, the waves in the monsoon keep hitting the bottom which damages it. Indian shipping companies know this phenomenon of the monsoon. Ships coming from other countries should first upgrade themselves and understand the monsoon first to avoid such accidents," he said.