Short rally possible: Friday Closing Report

Nifty should close above 5,400 over the next few days for the gains to continue

Better-than-expected response to the Greek bond swap deal led to a rally in the Asian markets, India included. Today’s gain on the Nifty almost wiped off the losses seen in the past three trading days. We had mentioned on Wednesday that the market may resume its uptrend if the Nifty closes above the resistance of 5,245 and 5,285. Today the index broke these levels at the beginning of the session itself. However, the benchmark should close above 5,400 over the next few days to maintain those gains. The National Stock Exchange (NSE) saw a volume of 70.47 crore shares.

Refreshed after a day’s holiday, the market opened on a firm note tracking positive global cues. The US markets closed higher overnight on hopes that Greece would be able to finalise a bond swap deal with its creditors in order to save itself from a default. The development also rubbed off on the Asian markets, which were in the positive in morning trade today. Back home, the Nifty opened 74 points up at 5,294 and the Sensex resumed trade at 17,326, a gain of 180 points over its close on Wednesday.

Across-the-board buying saw the indices in a buoyant mood. The momentum also resulted in all sectoral gauges trading higher. The market continued its northward journey in subsequent trade on strong institutional support.

However, lacklustre opening of the key European indices saw the local market paring some of its gains in post-noon trade to touch its intraday low. At the lows, the Nifty fell to 5,292 and the Sensex went down to 17,326.

The fall was temporary as the indices soon resumed their upmove taking the benchmarks to the day’s high around 3.00pm. At the day’s highs, the Nifty rose to 5,342 and the Sensex scaled 17,532.

The market snapped its three-session losing streak and closed higher on across-the-board buying support and news of better-than-expected support to the Greek bond swap offer. The Nifty closed 113 points (2.17%) higher at 5,334 and the Sensex jumped 358 points (2.09%) at 17,503.

The advance-decline ratio on the NSE was 1242:463.

Among the broader indices, the BSE Mid-cap index surged 2.16% and the BSE Small-cap index climbed 1.35%.

Barring the BSE Fast Moving Consumer Goods index (down 0.12%), all other sectoral gauges settled higher. They were led by BSE Metal (up 4.69%); BSE Capital Goods (up 3.75%); BSE Bankex (up 3.66%); BSE Consumer Durables (up 2.92%) and BSE Realty (up 2.73%).

Jindal Steel (up 6.83%); Tata Steel (up 6.74%); ICICI Bank (up 6.22%); Larsen & Toubro (up 5.27%) and Sterlite Industries (up 4.66%) were the top gainers on the Sensex. The main losers were Wipro (down 1.63%); ITC (down 0.74%); Infosys (down 0.69%); Hindustan Lever (down 0.59%) and GAIL India (down 0.34%).

The index toppers on the Nifty were Jindal Steel (up 8.05%); Tata Steel (up 7.50%); ICICI Bank (up 6.48%); IDFC (up 5.77%) and L&T (up 5.29%). The laggards were led by Wipro (down 2.22%); Reliance Power (down 1.84%); Infosys (down 0.95%); Siemens (up 0.87%) and ITC (down 0.81%).

Markets in Asia, with the exception of Straits Times, closed higher on hopes that Greece would reach an agreement with its creditors, easing worries of possible default. Meanwhile, China’s annual consumer inflation eased to a 20-month low of 3.2% in February while factory output growth slowed to its lowest level since July 2009.

The Shanghai Composite advanced 0.79%; the Hang Seng gained 0.89%; the Jakarta Composite rose 0.60%; the KLSE Composite added 0.04%; the Nikkei 225 surged 1.65%; the Seoul Composite climbed 0.88% and the Taiwan Weighted was up 0.39%. Bucking the trend, the Straits Times declined 0.24%. At the time of writing, the key European indices were mixed while the US stock futures were in the negative.

Back home, institutional investors—foreign as well as domestic—were net sellers in the equities segment on Wednesday. While foreign institutional investors pulled out funds worth Rs504.59 crore, domestic institutional investors withdrew Rs129.91 crores from the equities markets.

With its cash flow under stress, engineering and construction firm HCC today said its board has approved corporate debt restructuring proposal. The decision for CDR comes in the wake of Hindustan Construction Company failing to see expected cash flow primarily because of delays in outstanding payments, the company said. The stock gained 3.20% to close at Rs27.45% on the NSE.

Essar Oil (EOL) today said it has signed an agreement with Indraprastha Gas (IGL) to set up CNG dispensing facilities at the former’s petrol pumps in the national capital region. The agreement provides for EOL using IGL’s CNG pumping facilities at the outlets, the company said in a press statement here. Essar Oil surged 3.61% to close at Rs57.45 on the NSE.

INOX Leisure has raised its stake to 68.30% in Fame India after subscribing to a rights issue.  INOX had picked up 36.5% stake in Fame by acquiring 2.02 crore shares at Rs 44 per share. INOX settled at Rs48.20 on the NSE, up 0.42% over its previous close.


SEBI to bring changes in consent order norms soon

SEBI has decided to consider a revamp of its consent settlement procedure as under the current framework there is no consistency and any clear-cut uniformity in the way such cases are handled

Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) today said it will soon come out new norms for consent orders under which the regulator settles ongoing probe against the listed companies on payment of fine, reports PTI.

“It (the new consent order norm) may out in three weeks,” SEBI chairman U K Sinha told reporters here.

In consent settlement, in vogue since 2007, the entity facing probe is subjected to certain fees and restrictions without admission or denial of alleged irregularities and SEBI thereafter drops its charges and the investigations.

The system was introduced with a view to cutting down on its costs, time and efforts in taking up the enforcement actions. So far, the regulator has passed more than 1,000 consent orders,

Sources said SEBI has decided to consider a revamp of its consent settlement procedure as under the current framework there is no consistency and any clear-cut uniformity in the way such cases are handled.

Mr Sinha further said that SEBI could consider tweaking the threshold limit of 25% under the takeover code amid apprehensions that this could act as obstacle for merger and acquisition (M&A) activity in India.

“There is some kind of apprehension that the threshold limits will work as obstacles for M&A activity in India, but we are looking at this. If some concrete suggestions come out... We will consider,” he added.

In September 2011, Sebi notified new takeover rule under which an entity buying 25% stake in a listed firm will have to mandatorily make an open offer to buy an additional 26% shares from public.

The new norms mark an increase in the open offer size for public shareholders from 20% currently. Also the trigger for making such an offer has been raised from 15% under the existing regulations.


Cotton ban not to affect orders till 4th March: DGFT

Explaining the reasons behind export ban, the textiles ministry had said that the country has already shipped 10 lakh bales more than the exportable surplus, reducing the domestic availability. The meeting of the GoM, headed by finance minister Pranab Mukherjee, is scheduled to meet later today to decide on the ban

New Delhi: The commerce ministry today issued a clarification on the cotton export ban, stating that the consignments for which export orders have been issued till 4th March would not be affected by the move, reports PTI.

The Directorate General of Foreign Trade (DGFT), which is under the commerce ministry, had issued a notification on 5th March banning cotton exports. It had also prohibited export against registration certificates already issued.

“...consignments for which Let Export Orders (LEOs) have been issued till 2400 hours on Sunday, 4 March 2012 will be outside the purview of” the notification dated 5th March regarding ban on cotton exports, DGFT said in a circular.

The ban was imposed on cotton exports apprehending shortfall in the domestic market and hoarding in warehouses.

On 7th March, prime minister Manmohan Singh asked a group of ministers to ‘urgently’ review on 9th March the decision to ban cotton exports, which agriculture minister Sharad Pawar said was taken without his approval.

The meeting of the GoM, headed by finance minister Pranab Mukherjee, is scheduled to meet later today.

The ruling Congress party’s Maharashtra and Gujarat units opposed the move when they met the prime minister on 7th March.

Gujarat chief minister Narendra Modi had written to the prime minister seeking revocation of ban.

On Monday, the textile ministry had said the ban was imposed after taking into account “the trend of domestic consumption and depletion of domestic availability”.

Explaining the reasons behind export ban, the ministry had said that the country has already shipped 10 lakh bales more than the exportable surplus, reducing the domestic availability.

“Almost 94 lakh bales (170 kg each) have already shipped out, against an estimated export surplus of 84 lakh bales,” the ministry had said, fearing that the exports could have reached 100 lakh bales by mid-March with registration of export contracts touching 120 lakh bales so far.


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