Stocks
Small correction possible: Weekly Market Report

The Nifty may see a sideways movement between 5,290 and 5,425
 

Global events and dismal domestic factory output numbers for December 2011 weighed on the market this week. The international scene was dominated by the impasse in Greece over the agreement with its creditors. Even though the beleaguered nation managed to clinch a deal on reforms and austerity measures, policymakers are concerned about Greece keeping its commitments. However, despite pressures, the market managed to close with a gain of 1%, making it the sixth positive weekly close.

The market closed higher on positive global cues on Monday. However, on Tuesday the market fell on concerns that Greece may be unable to avoid the default as it struggled to reach terms on a new bailout package. The market managed to register gains on Wednesday on hopes that Greece would find a way to end its debt problems. The benchmarks extended their gains on Thursday even as Greece failed to sew a deal to avoid a debt default. Dismal IIP data for December and a weak performance of the global markets saw the market closing lower on Friday.

The Sensex added 144 points to close the week at 17,749 and the Nifty ended 56 points up at 5,382. We may now see the Nifty moving sideways between 5,290 and 5,425.

The BSE Realty index and the BSE Consumer Durables index both closed 6% higher, while the BSE Healthcare index ended 1% lower.

Jindal Steel & Power (up 9%), Bajaj Auto (up 8%), TCS, Wipro and Sterlite Industries (up 5% each) were the top Sensex gainers whereas Bharti Airtel (down 10%), Hindustan Unilever, Mahindra & Mahindra, Sun Pharmaceuticals (down 3% each) and BHEL (down 1%) settled as top losers in the week.

The Nifty toppers were Jindal Steel & Power (up 9%), Cairn India, SAIL, Bajaj Auto (up 8% each) and ACC (up 6%). The main decliners were Bharti Airtel (down 10%), HUL, IDFC, Dr Reddy’s Laboratories and M&M (down 3% each).

Industrial production grew just 1.8% in December 2011 compared to 8.1% in the corresponding period last year, due to contraction in mining and capital goods sectors and a lower manufacturing sector growth. The decline in IIP numbers will make a good case for further rate cuts by the RBI, experts opine.

India’s exports growth rate recorded a marginal increase of in January with the overseas shipments expanding by 10.1% year-on-year to $25.4 billion despite weak demand in the western markets. Imports grew at a faster rate of 20.3% to $40.1 billion, leaving a trade deficit of $14.7 billion, commerce secretary Rahul Khullar said on Thursday.

According to Mr Khullar, the problems in the US and Europe are clearly weighing down on the country’s exports. From a peak of 82% in July 2011, export growth has slipped to 44.25% in August 2011, 36.36% in September 2011 and 10.8% in October last year.

On the international front, after many days of flip-flops, Greek leaders Thursday said they had reached a deal on economic reforms and austerity measures needed to secure a second bailout, however, Eurozone finance ministers demanded more measures and a parliamentary nod before providing the aid.

In the US, the country’s trade deficit widened more-than-expected to $48.8 billion in December, rising to the highest level since July 2008. Meanwhile, weekly jobless claims dropped by 15,000 to 358,000, the second-lowest level in nearly four years, according to a government report Thursday.

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MF assets rose 8% to Rs6.59 trillion by January end: Crisil

According to Crisil Research, the 8% rise last month over December was on higher inflows in money market funds and mark-to-market gains in equity funds. Money market funds witnessed inflows of Rs264 billion in January, taking the total assets under this category to Rs1.48 trillion compared with Rs1.21 trillion in December

New Delhi: The Indian mutual fund industry’s assets increased to Rs6.59 trillion in January, registering an increase of Rs477 billion on a month-on-month basis, reports PTI.

According to Crisil Research, the 8% rise last month over December was on higher inflows in money market funds and mark-to-market gains in equity funds.

Money market funds witnessed inflows of Rs264 billion in January, taking the total assets under this category to Rs1.48 trillion compared with Rs1.21 trillion in December.

Meanwhile, as a result of the uptick in the equity market, assets under equity funds surged by Rs184 billion or 11% to Rs1.80 trillion.

The equity market represented by the benchmark S&P CNX Nifty rose around 12% in January spurred by positive global and domestic cues, the first monthly gain for the market since October 2011.

Gilt funds recorded highest inflows since September 2010 of over Rs5.21 billion in January, the second consecutive month of inflows.

“Sentiments for gilt funds have risen on views of peaking of interest rates and easing of monetary policy going forward.

This is expected to benefit long-term debt funds including gilt funds,” the report said.

Meanwhile, income funds (including ultra short-term debt funds) saw outflows of Rs29 billion in January, the third consecutive month of outflows, primarily because, investors preferred “long-term debt avenues on views of peaking of interest rates in the domestic economy” the report said.

Fixed Maturity Plans (FMPs) continued to garner majority of the new fund offers (NFOs) during the month.

In January, 49 FMPs were launched garnering Rs78.44 billion compared with three other NFOs launched, which in total garnered only Rs6.57 billion.

An analysis of month-on-month mutual fund flows and AUM distribution, shows that Money Market Funds, Gilt Funds and Gold ETF funds were the three categories which witnessed a net inflow of Rs264.29 billion, Rs5.21 billion and Rs0.82 billion respectively.

In January, income funds witnessed a net outflow of Rs29.26 billion, followed by equity funds which saw outflow of Rs3.80 billion and, balanced funds—Rs1.01 billion, Crisil said.

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DoT may send licence termination letters to new 2G players

The Department of Telecom’s (DoT) internal meeting discussed various issues including sending communication to licencees for termination of licence agreement and refund of licence fee in respect of 85 licences which were declared ineligible, among others

New Delhi: Following Supreme Court order that cancelled 122 second generation (2G) licences terming them as illegal, the telecom ministry is likely to send letters to new operators for termination of their licences, reports PTI.

This was discussed in the Department of Telecom’s (DoT) internal meeting to discuss the implications of the Supreme Court order and way forward in this regard.

The members discussed various issues including sending communication to licencees for termination of licence agreement, refund of licence fee in respect of 85 licences which were declared ineligible, and similarly for remaining 37 licences, a source close to the development said.

Further an internal committee of DoT discussed about the show-cause notices for imposition of penalty on International Mobile Equipment Identity (IMEI) violation cases of all licencees.

The committee is also understood to have discussed whether liquidated damages for delay in compliance of second phase of roll-out obligations needs to be imposed or not.

The government in the first phase had collected over Rs300 crore from new telecom operators as liquidating damages for failing to roll-out networks within stipulated period.

The new operators have asked the government to secure their investments. Telenor of Norway, Sistema of Russia are the most aggressive players among the new operators and have set up infrastructure across the country.

Telenor, a majority shareholder in Uninor, claims to have invested over Rs14,000 crore in Indian operations while Sistem, a majority joint venture partner in Shyam-Sistems, has pumped in over $2.5 billion (about Rs12,000 crore).

Both are likely to participate in the forthcoming auction of 2G spectrum to continue their operations and secure investments.

The Telecom Regulatory Authority of India (TRAI) has already issued a consultation paper in this regard seeking industry and other stakeholders' views before finalising recommendations.

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