Nifty rally that started on 23rd June continues; headed for 5,800 and above
Positive moves across the bourses globally helped the domestic market to make significant gains today. The markets overlooked the 25 basis points interest rate hike by the Chinese central bank for the third time this year and the nervousness over the euro zone debt crisis after Moody's slashed its ratings for Portugal which sparked a sell-off in peripheral bonds.
Also today, the European Central Bank raised interest rates by a quarter of a percentage point to 1.5%, but the Bank of England kept its key interest rate at a record low 0.5% as worries about the lacklustre recovery outweighed any concern about above-target inflation.
The Sensex and the Nifty opened higher at 18,777 and 5,633. The indices continued to rise for the whole day, up to the intra-day high of 19,098 and 5,737 in the closing session. The indices closed at nearly two-month highs. The Sensex rose 351 points to close at 19,078 and Nifty put on 104 points to close at 5,729.
The small decline over the past three of the four trading days had given a sense that a fall might begin. But today's massive gain lifted the Nifty over the resistance of 5,690 which we mentioned in our Monday closing report. A higher high tomorrow will ensure the uptrend will continue and could see the Nifty hit 5,800.
All the Sensex sectoral indices closed in the green. A major gain was seen in the BSE FMCG index which rose 2.60%, while the BSE Consumer Durables index rose 1.08%.
In the Sensex list Sterlite Industries was the only one in the negative, down by 0.73%. The major gainer was Bharti Airtel which rose by 3.88% on reports of its plan to invest approximately $1 billion in 2011 to expand its network and upgrade its facilities in Nigeria. Other top gainers on the Sensex were NTPC, Larsen & Toubro, ITC, Hindalco which rose in the range of 2.81% to 3.63%. On the Nifty, again Sterlite Industries was the only loser.
The government today announced that food inflation rose by 7.61% and the fuel price index climbed 12.67% in the week to 25th June, which is lower from the 7.78% and 12.98% respectively, in the previous week. The primary articles index was up 11.56%, compared with an annual rise of 11.84% a week earlier.
The market will soon enter the crucial period of corporate earnings. Investors will be closely watching the June quarter results commentary to gauge the future earnings outlook, even as companies cope up with cost pressures and rising interest rates. A hike in transportation costs will also add to the cost pressure.
Among the top gainers on the National Stock Exchange, Rushil Décor which got listed today ended 65% up, while SKS Microfinance bounced back 20% on the news that the bill on MFIs has proposed to have the central bank to regulate the industry and that this could help ensure orderly growth. Birla Cotsyn (down by 10%) and MPS Ltd (down 8.75%) were major losers on the NSE.
The Met department today said that the rains were a quarter below normal in the week to 6th July, slowing from the 10% above average rains in the previous week. The Empowered Group of Ministers is reportedly scheduled to meet on 11 July 2011 to consider the crucial Food Security Bill and allow export of food grains.
In the Asian markets, the Jakarta Composite gained the most at 0.78%, the Seoul Composite was up by 0.43%, whereas Taiwan and Shanghai were down by 0.58%.
After the market closed today, SBI announced a hike in base rate by 25 basis points to 9.5%, effective 11th July.
Meanwhile, US markets rallied at the opening of the session on Thursday on news that private-sector employment rose 1,57,000 in June, according to Automatic Data Processing Inc.'s employment report. This could signal that the recent economic soft patch may not last long. The numbers surprised Wall Street, coming in more than double the 70,000 increase expected by economists. The ADP report comes ahead of Friday's closely watched non-farm payrolls data. The market expectation is that hiring doubled last month from May's lacklustre initial reading of 54,000 non-farm jobs.
Private channels allowed to broadcast news from AIR. Govt considering allowing general news also
New Delhi: The government today cleared guidelines for the much-delayed FM Radio Phase III expansion that will allow private radio channels to broadcast news of All India Radio and enable revenue generation of Rs1,733 crore from the auction of license for services in 227 cities.
A meeting of the Cabinet chaired by prime minister Manmohan Singh also approved hiking the foreign investment limit for private FM radio broadcasting companies to 26% from the current 20%, PTI reports.
"The FM Phase-III policy extends FM radio services to about 227 new cities, in addition to the present 86 cities with a total of 839 new FM radio channels," information and broadcasting minister Ambika Soni told journalists.
She said the FM phase III policy will result in coverage of all cities with a population of more than one lakh through private FM channels.
"Through the auction of licences in the FM Phase III expansion, the government is expecting Rs1,733 crore of income," Ms Soni said.
The Phase I and Phase II policies have resulted in a total revenue accrual of about Rs1,733 crore up to 31 May 2011 by way of one-time entry fee, migration fee and annual fee among others.
The minister said the private FM channels will now be allowed to carry news items from AIR which was not permitted before.
Asked why news from agencies has not been allowed to be broadcast when even AIR is sourcing from newswires, she said, "I don't rule it out. When greater liberalisation takes place in time to come, it may be considered. It depends on what various ministries say and how the system functions."
Asked why private broadcasters have not been allowed to air their own news, she said, "Gradually we are allowing news on private radio stations and let's see how it goes forward."
In order to roll out the new stations the government will conduct e-auction of licences in batches and the number of batches will be decided by the I&B ministry. "In all probability, the e-auction will be held in two batches and the process is expected to be completed within this financial year," a senior I&B ministry official said.
Ms Soni said the I&B ministry will appoint an independent expert agency to conduct the e-auction.
Describing the highlights of the policy, the minister said: "FDI and FII investment in a private FM broadcasting company has been increased from 20% to 26%."
According to the new policy that has taken nearly three years to materialise, FM radio operators will be permitted to air news bulletins of AIR in an unedited format.
Moreover, non-news broadcasts pertaining to information on sporting events, traffic and weather, cultural events, festivals, examinations results, admissions, career counselling and employment opportunities among others have also been allowed.
Court asks government to file affidavit by 11th July and Tata Motors to reply by 13th July
Kolkata: The Calcutta High Court today directed the West Bengal government to file an affidavit in opposition to the Tata Motors' prayer for amendment to its original petition challenging the Singur Land Development and Rehabilitation Act, 2011.
Justice Saumitra Pal directed the state government to file its opposition by 11th July and asked Tata Motors to file its reply by 13th July.
Tata Motors had in its original petition moved on 22nd June, stated that it apprehended the Singur land leased out to it would be taken possession of by the state and prayed for status quo. But the state opposed this, submitting that the land had already been taken possession of on 21st June, when the notification of the Singur Act was published, and as such the petition was flawed, PTI reports.
Tata Motors' counsels, moving the amendment application before the court, prayed that it be heard 'in-camera'. With the state counsels agreeing, judge Pal directed that he would hear both sides in his chamber.
After a 20-minute hearing, the court asked both the parties to file affidavits and directed that the issue would be taken up on 14th July, along with the hearing of the main petition challenging the Act.
The Supreme Court had stayed the distribution of land at Singur to 'unwilling farmers' till the High Court disposed the main petition.