Small correction imminent: Tuesday Closing Report

But the uptrend is strong for now

Global cues and a positive set of earnings reports helped the market close with gains for the third consecutive day. The Nifty recorded a huge gain of 93 points on a high volume of 75.10 crore shares on the National Stock Exchange (NSE).

The index today broke its resistance of 4,960 and closed above it. The benchmark closed at its best in the past 30 days (including today). From here we may see the benchmark reaching the level of 5,045 if it holds itself above the day’s low. Otherwise we may see some correction with the first support at 4,845.  
The market opened in the positive, tracking the positive trend in the Asian region. Easing of the headline inflation to 7.47% in December and China’s better-than-expected 8.9% growth in the December quarter supported the gains. The Nifty started the day with gain of 31 points at 4,905 and the Sensex resumed trade at 16,271, up 82 points over its previous close. The opening figures on both benchmarks were their intraday lows.

The market continued its northbound journey on across-the-board buying as the day progressed. Upbeat performance by IT major HCL Technologies in the December quarter also supported investor confidence. The company reported a 43.3% jump in net profit to Rs572.70 crore for the quarter ended 31 December 2011 compared to Rs 399.70 crore in the October-December quarter of 2010. TCS is expected to announce its earnings numbers after the market closes for the day.

A firm opening of the European markets, brushing aside concerns about the recent ratings downgrades, added more support to the local market in the noon trade. The benchmarks hit their intraday high in post-noon trade with the Nifty rising to 4,976 and the Sensex scaling 16,501.

Buying support in heavyweights ensured a positive close for the third day in a row. At the close, the Nifty jumped 93 points to 4,967 and the Sensex surged 277 points to settle at 16,466.

The advance-decline ratio on the NSE was in favour of the decliners at 1289:519.

Although the broader indices also ended higher, they underperformed the Sensex today. The BSE Mid-cap index gained 1.34% and the BSE Small-cap index rose 1.07%.

Among the sectoral indices, BSE Capital Goods (up 3.73%); BSE Metal (up 3.66%); BSE Realty (up 3.46%); BSE Oil & Gas (up 2.79%) and BSE Auto (up 2.62%) were the top gainers. There were no losers today.

The Sensex toppers were Maruti Suzuki (up 10.48%); Hindalco Industries (up 6.04%); Larsen & Toubro (up 5.23%); Tata Steel (up 5%) and Reliance Industries (up 3.78%). Tata Power (down 0.82%); ICICI Bank (down 0.75%); GAIL India (down 0.44%); ITC (down 0.38%) and TCS (down 0.28%) settled lower.

The top performers on the Nifty were Maruti Suzuki (up 10.11%); Hindalco Ind (up 5.47%); Jaiprakash Associates (up 5.40%); L&T (up 5.10%) and Tata Steel (up 4.98%). The laggards were led by Ranbaxy (down 0.92); ICICI Bank (down 0.83%); GAIL India (down 0.52%); TCS (down 0.37%) and Dr Reddy’s (down 0.19%).

The Asian pack settled in the positive on better-than-expected GDP numbers for the December quarter. The optimism led the Chinese benchmark close 4.18% higher, its highest closing level since December 2011. Good demand at a French short-term treasury bill auction on Monday, the first one after the country’s rating downgrade, also supported investor sentiment.

The Shanghai Composite jumped 4.18%; the Hang Seng climbed 3.24%; The Jakarta Composite advanced 1.15%; the KLSE Composite gained 0.68%; the Nikkei 225 rose 1.05%; the Straits Times surged 2.15%; the Seoul Composite gained 1.80% and the Taiwan Weighted finished 1.65% higher. At the time of writing, key European markets were trading with gains of over 1% and US stocks futures were in the positive.

Back home, foreign institutional investors were net buyers of equities amounting to Rs357.68 crore on Monday while domestic institutional investors were net sellers of shares totalling Rs229.55 crore.

State-run explorer and refining major Oil and Natural Gas Corporation (ONGC) is in talks with US energy firm ConocoPhillips to explore possibilities of joining hands for exploration of oil and gas in Indian deepsea and shale gas in North America. The company had approached 12 companies working in South East Asia including ConocoPhillips for potential farm-in and a deep water flyer for east-coast blocks was sent to them. ONGC gained 2.34% to close at Rs262.25 on the NSE.

IT service provider Mahindra Satyam today signed a memorandum of understanding (MoU) with Intertek to collaborate on 'Smart Grid', a power grid using technology to enhance monitoring and management of power flow. The MoU outlines plans to jointly improve advisory, inspection and certification services for end-to-end engineering solutions to smart grid clients of Mahindra Satyam. Satyam Computer Services closed 0.98% higher at Rs72.20 on the NSE.

FMCG firm Marico on Tuesday said it is looking at acquisitions worth up to Rs1,000 crore both in the domestic and overseas markets as part of its strategy to maintain a growth of 26%-27% in the coming years. The stock settled at Rs153.65, up 1.42% on the NSE.


Gold, silver to become costlier, govt changes duty structure

As per the changes, customs and excise duty will now be levied on the value of the precious metals instead of a fixed amount, meaning that the incidence of duty will move up with the rise in prices of the goods, thereby making them more expensive

New Delhi: Gold and silver are set to become more expensive as the government has changed the duty structure on precious metals from specific to value-linked, which will enable the exchequer to rake in an additional Rs600 crore during the remaining months of the fiscal, reports PTI.

The ad-valorem rates of excise and customs on precious metals like gold, silver and platinum have come into effect from Tuesday, said a government notification. Diamonds, too, will now attract an import duty of 2%.

As per the changes, customs and excise duty will now be levied on the value of the precious metals instead of a fixed amount, meaning that the incidence of duty will move up with the rise in prices of the goods, thereby making them more expensive.

According to the notification, the import duty on gold has been fixed at 2% of the value, instead of the earlier rate of Rs300 per 10 grams. On silver, the import duty has been pegged at 6%, as against Rs1,500 per kg earlier.

With respect to excise, the duty on gold has been fixed at 1.5% of the value, as against the earlier fixed rate of Rs200 per 10 grams. Silver will attract excise of 4%, as compared to a fixed duty earlier of Rs1,000 per kg.

“The old rates were fixed 4-5 years ago. In the last few years, prices have increased substantially so the change has been made to bring duties in line with market prices,” said Central Board of Excise and Customs (CBEC) chairman S K Goel.

According to finance ministry estimates, “The increase in the duty is expected to fetch additional Rs500-Rs600 crore for the balance fiscal year.”

Gold prices firmed up by Rs35 to Rs27,925 per 10 grams in the bullion market today, while silver gained Rs575 to Rs52,725 per kg today.


Indian currency most undervalued: Big Mac Index

As per the latest index, prepared on basis of market exchange rate as on 11th January, the price of a Big Mac is the highest at $6.81 in Switzerland, while the same is sold in India for just $1.62—the lowest in the world

New Delhi: If a Big Mac burger from local McDonald's outlet is taken as a benchmark, India is the place to get it cheapest in the US dollar terms, but this analogy also makes rupee the world’s most undervalued currency, reports PTI.

As per the latest Big Mac index, compiled by the Economist magazine to analyse purchasing-power parity of various global currencies, the Swiss franc is the most overvalued in the world, while rupee is most undervalued.

India was included in the index in July last year and has continued to rank the lowest on the list, which is compiled on the basis of the US dollar equivalent of the price of one Big Mac burger, priced $4.20 apiece in the US.

As per the latest index, prepared on basis of market exchange rate as on 11th January, its price is the highest at $6.81 in Switzerland, while the same is sold in India for just $1.62—the lowest in the world.

The rupee had depreciated sharply by about 19% last year and even fell to a record low of 54.30 against the US dollar on 15 December 2011. The current exchange rates peg the Indian currency at about Rs51 against the US dollar.

The price of Big Mac burgers of McDonald’s is considered for the index for the reason of the presence of fast-food chain across most of the countries and the magazine calls this theory 'burgernomics'.

This index was first compiled in September 1986 and new currencies, including Indian rupee, were added to the list last year to mark its silver jubilee year.

“According to burgernomics, the Swiss franc is a meaty 62% overvalued. The exchange rate that would equalise the price of a Swiss Big Mac with an American one is Swiss franc 1.55 to the dollar,” as per the latest index.

“The cheapest burger is found in India, costing just $1.62. Though because Big Macs are not sold in India, we take the price of a Maharaja Mac, which is made with chicken instead of beef,” it added.

Maharaja Mac is the closest Indian equivalent of Big Mac burgers at the Indian outlets of McDonald’s.

“Nonetheless, our index suggests the rupee is 60% undercooked. The euro, which recently fell to a 16-month low against the dollar, is now trading at less than euro 1.30 to the greenback,” the Economist noted.

Switzerland is followed by Norway, Sweden, Brazil, Australia, Argentina, Canada, Uruguay and Euro area among the countries with the top most overvalued currencies against the US dollar.

Among the places with most undervalued currencies, India is followed by Ukraine, Hong Kong, Malaysia, China, South Africa, Thailand, Indonesia, Taiwan, Sri Lanka and Russia.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)