Shares prices may move in a narrow range: Thursday Closing Report

The Nifty may trade between 5,600 and 5,680

The market finished for an eighth consecutive day in the green, but the rally should moderate now. With the short covering following the deep pessimism in mid-June over, the market will trade in a narrow range.

The positive outcome of the Greek government's vote of confidence over austerity measures supported the Indian bourses as well. The Nifty opened 15 points higher at 5,615 and the Sensex gained 47 points to resume trade at 18,741. Fast moving consumer goods, capital goods and banking sectors reported buying interest in early trade.

The market pared some of its early gains and continued to be range-bound till the post-noon session. Even the sharp fall in the weekly food inflation numbers did not have any major impact on the market. The indices touched the day's lows around 2.20pm, with the Nifty falling to 5,606 and the Sensex slipping to 18,723.

However, a fresh bout of buying in select stocks lifted the indices to their day's highs. At the intra-day high, the Nifty rose to 5,658 and the Sensex touched 18,873. The market closed a tad lower with the Nifty adding 47 points to close at 5,647 and the Sensex finished 152 points higher at 18,846.

The advance-decline ratio on the National Stock Exchange was 992:781.

Among the broader indices, the BSE Mid-cap index rose 0.32% and the BSE Small-cap index advanced 0.57%.

Barring the BSE Healthcare index (down 0.03%), all other sectoral gauges ended higher. BSE Fast Moving Consumer Goods (up 1.83%) led the sectoral gainers for the second day today. It was followed by BSE Realty, Consumer Durables (up 1.19% each), BSE IT (up 0.69%) and BSE Capital Goods (up 0.65%).

Jaiprakash Associates (up 3.79%), Hindustan Unilever (up 3.18%), Jindal Steel (up 3.13%), Tata Power (up 1.68%) and Hero Honda (up 1.63%) were the major gainers on the Sensex. The top losers on the index were ONGC (down 1.62%), Maruti Suzuki (down 1.54%), Bharti Airtel (down 1.52%), Wipro (down 1.52%) and Hindalco Industries (down 0.58%).

The top Nifty gainers were JP Associates (up 3.85%), Kotak Bank (up 3.36%), Jindal Steel (up 2.51%), Cairn India (up 2.49%) and HUL (up 2.39%). The laggards on the index were Sesa Goa (down 2.67%), Bharti Airtel (down 2.01%), ONGC (down1.84%), Maruti Suzuki (down 1.78%) and ACC (down 1.56%).

Food inflation fell to a one-and-a-half month low of 7.78% for the week ended 18th June on the back of cheaper vegetables, pulses and potatoes. Food inflation, as measured by the Wholesale Price Index (WPI), stood at 9.13% during the previous week. It was over 20% during the comparable period of June 2010.

The latest numbers on price rise of food items are the lowest since the week ended 7th May, when it stood at 7.47%.

Markets in Asia settled mostly higher on easing of the debt issues in Greece. The development is seen as a morale booster for the export-oriented economies in the region. However, concerns about Italy and Spain continue to disturb investors.

The Shanghai Composite climbed 1.23%, the Hang Seng surged 1.53%, the Jakarta Composite gained 1.52%, the KLSE Composite rose 0.26%, the Nikkei 225 added 0.19%, the Straits Times advanced 1.32%, the Seoul Composite was up 0.30% and the Taiwan Weighted settled 0.92% higher.

Back home, foreign institutional investors were net buyers of stocks worth Rs669.35 crore on Wednesday, whereas domestic institutional investors were net sellers of equities worth Rs240.59 crore.

Bangalore-headquartered MindTree, a global IT and product engineering services company, today announced the expansion of its strategic partnership with Getronics in the area of remote IT infrastructure management, telecom and application support services. The stock jumped 8.77% to close at Rs392.65 apiece on the Bombay Stock Exchange (BSE).

Pharma major Cipla has received an order from a US district court that the sale of its animal healthcare product, 'PetArmor Plus', has infringed on the patent held by Merial. Future sales of PetArmor Plus have been suspended in the United States, the company said.

The district court has stayed the above order for 60 days in order to enable the company to appeal. The company said that it is in the process of filing an appeal against the order. The stock fell 0.47% to Rs330.35 per share on the Bombay Stock Exchange (BSE).

Alstom in partnership with Hindustan Construction Company (HCC) has won a contract worth over 285 million euros from Tehri Hydro Development Corporation to install 1,000MW hydro power plant in Uttarakhand.

Alstom's share of the contract is around 180 million euros. The French power and train infrastructure company will supply four 250MW variable speed turbine and generator units and other equipment for the hydro power plant. Alstom Projects India fell 2.15% to Rs513 on the BSE, despite the order.


Infrastructure sectors growth slows down to 5.3% in May

With addition of two sectors-fertilisers and natural gas-the number of key infrastructure sectors has now gone to eight. While six sectors showed positive growth, the pace of expansion declined in the case of refinery products and steel

New Delhi: With natural gas and cement showing decline in production, the growth of eight core infrastructure industries slowed down to 5.3% in May against 7.4% a year ago, reports PTI.

The core industries-crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel-have a weight of 37.90% in the overall index of industrial production, according to the provisional data released today.

With addition of two sectors-fertilisers and natural gas-the number of key infrastructure sectors, picked up separately for measuring performance has now gone to eight.

While six sectors showed positive growth, the pace of expansion declined in the case of refinery products and steel.

Natural gas and cement showed a negative growth of 9.6% and 2.3%, respectively.

However, sectors like crude oil, electricity, fertilisers and coal showed an improvement in growth.

During April-May 2011, these sectors grew at a lesser pace by 4.9% compared to 7.9% in the same period last year.


Disinvestment fiasco: The ‘aam aadmi’ government failed to take public into account

Despite an extremely favourable market situation in 2010-11, this government’s ambitious disinvestment programme did not succeed because a government of the ‘aam aadmi’ behaved like any other private sector issuer

The government had fixed itself a disinvestment target of Rs40,000 crore for FY2010-11 but it achieved only Rs22,763 crore. Nobody is talking of this year's disinvestment programme. The smart disinvestment secretary who was leading the effort last year has moved on to greener pastures. If anybody has to take the blame for the poor performance of the disinvestment plan of last year-and also the fact that no plan exists now-it should be the disinvestment ministry. This is because after many decades, the climate was unusually favourable for the government in 2009 and 2010 to make rapid-fire disinvestment. Too much money was chasing too few stocks and it was a rare window of opportunity to make the best of it, by issuing shares at a cheap rate to the public, with a large retail quota.

This would have meant returning people's wealth back to them and creating permanent goodwill for the government, so that when the markets were down, the government could still continue with its disinvestment programme. It was also a rare chance to bring back the confidence of retail investors who were averse to investing in the stock market.

It was a historic opportunity, but the government blew it. The Centre was too confident about its plans, and priced its issues too high.

Indeed, a government which claimed to represent the aam aadmi, acted like a private-sector player in trying to extract as much value as possible for the government kitty, instead of acting like the custodian of public wealth, which it was sharing through the disinvestment process. This process had a hard commercial edge. No wonder that a majority of issues are quoting below the offer price and therefore the disinvestment plan has no takers among investors.

In 2010, when the market was all set to reach new highs, out of the nine companies which came for raising capital, six have underperformed. Shipping Corporation of India's issue priced at Rs140 is currently at Rs102.85 (down 27%). An issue like that of NHPC Ltd has failed miserably, with its stock quoting at 33% below its issue price. The reason? The disinvestment of assets was dominated by policies that would motivate the private sector players—extract as much as possible from investors at the peak of a bull market.

That is a pity because, unlike the previous governments, which tried to disinvest but floundered on issues like lack of internal consensus, bad market conditions and political opposition, disinvestment for this government was a cakewalk. When the current government came to power, the conditions for raising capital were perfect. The market had just begun a long upward ascent. The international situation was favourable, interest rates and inflation were low and the opposition to selling public sector assets was non-existent.

But instead of tailoring the programme to what would benefit the public, the pricing was designed to extract as much value as possible for the government.

There was another problem with the disinvestment plan—government officials who are bright, but had no truck with the capital markets, were taking vital decisions whose implications they could not visualise. They believed in their own pitch, in the so-called 'India story' and listened to voices which told them in late 2010 that all is well. Moneylife pointed out to disinvestment secretary Sumit Bose in late October 2010 that market intermediaries as well as big investors privately admit to being seriously worried about the sharply-rising indices and ridiculously high valuations. The government would have to be unusually quick to exploit the current window of opportunity.

Mr Bose told Moneylife that in a recent trip to the US, he found that investors were not too worried about Indian markets being overvalued or overheated. This is what he had gathered from his interactions with top institutional investors in the US, whom he had met individually. Unfortunately, this turned out to be wrong as Moneylife had suspected. The Indian markets were indeed overvalued and the Sensex peaked out on 5 November 2010 at 21,108.64 (intraday high). The market went into a tailspin, multiple scams broke out, inflation reared its head, interest rates went up and the disinvestment plan fell apart. Another lesson learnt? No chance.



C M Kumar

5 years ago

It is a matter of great shock and pain that intellectuals like MDT team with renowned editor are also pressing for
"aam aadmi " led disinvt ...

i fail to understand : Why ?

who is aam aadmi .. are they representing whole of India . The so called aam admi are well concentrated in metro's ...

Is any one pitching for quotas in PSU for Defence men who are serving our nation !!

We compare everything with China , Or is there any nation which tries to sell its imp assets like the one done in India in last 2 decades ...look @ China !

Pl inform "aam admi " that Govt has already offered them Maruti , ONGC ,
Powergrid , and host of PSU at a steep discount those days ..

Hind Zinc's , CMC's , VSNL's were also sold for the benefit of " Aam admi "

So , the moot question is that any need for selling golden assets of PSU.

If Delhi Metro , an arm of Govt can do fine execution , why not others also, that is the moot point

So , it is a humble appeal to so called
Aam Admi not to seek PSU disinvt and need to be more patriotic towards Nation as these assets would be key to future generations...

alok churiwala

5 years ago

Most of the follow up offers of Govt. co's have their stock on the FNO segment, where there is rampant short selling just before an FPO issue is announced. This also influences the price at which the share is finally issued. The only ppl who make a killing are the FII's and the country is short changed. One way to overcome this is to suspend trading of FPO scrips in the FNO segment prior to an issue being announced.


5 years ago

all psu fpo are in discount than the offer price such as nhpc,sjvn,nmdc and ntpc only two psu ipo done very good coal india and oil india.

Nagesh KiniFCA

5 years ago

The MDT has researched extremely well. The PSU Maharatnas can compare with any private big player, both in terms of ROI and valuations. The babus are being manipulated by private sector speculators. It is time the Disinvestment Department is freed from the shackles of bubugiri and adopts a purely business like market approach. It should be converted into an autonomous setup like SCOPE. The ONGC issue that is held up ought to come out.

Ram Ohri

5 years ago

Keep in Indian economy file

Govind Gopal Shanbhag

5 years ago

Boss - what is the duty of govt it is only to govern and not to run industry, hotels etc. Except for public utility services rest should be privatised offering the share to retail investors. Let Govt. have a controlling interest by way of adequate share holding (not majority) but adequate so that their nominee is in the board leave the running to pvt sectors.

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