The current upmove is building, but buy only the dips
The market closed the week with a gain of over 4% on positive global cues and the government’s bold initiative to implement economic reforms, which were stalled earlier due to resistance from within the ruling UPA alliance as well from the opposition. In another courageous development on Friday, the government approved foreign direct investment (FDI) in multi-brand retail, aviation and broadcast services.
The Sensex closed the week at 18,464, up 781 points (4.41%) and the Nifty gained 236 points (4.41%) to settle at 5,578. We see the uptrend in the market continuing, and one should use the dips as opportunities to buy.
On Monday the market was range-bound and settled with minor gains as investors adopted a “wait-and-watch” attitude ahead of the release of domestic economic numbers. The benchmarks picked momentum in the second half and settled higher on Tuesday on buying in blue chips. Optimism from the German Constitutional Court ruling on the Eurozone bailout fund helped the domestic market close higher on Wednesday.
The volatile market pared all its gains on Thursday but ended in the green following a report that the Inter-Ministerial Group recommended de-allocation of four mines to private companies and encashing of bank guarantees of three companies for non-development of the mines allotted to them in the stipulated time-frame. Domestic and global events saw the market closing around 2.5% higher on Friday and in the positive for the eighth day in succession.
All sectoral indices settled higher with the BSE Metal and BSE Realty, both up 6%, emerging as the top gainers.
The top gainers among the Sensex stocks were Hindalco Industries (up 12%), Tata Motors (up 11%), Tata Steel, Larsen & Toubro (up 9% each) and ICICI Bank (up 7%). The losers were Cipla (down 3%) and NTPC (down 2%).
The Nifty was led by Hindalco Ind (up 13%), Tata Motors (up 11%); IDFC, Tata Steel and L&T (up 9% each). Major losers on the benchmark were Cipla (down 3%), NTPC, Power Grid Corporation (down 2% each), Ranbaxy Laboratories and Siemens (down 1%).
India's industrial production growth rate slowed to just 0.1% in July due to poor show by manufacturing, mining and capital goods sectors, reflecting weak economic activity. Industrial output, as measured by the Index of Industrial Production (IIP), in the April-July period of this fiscal has thus contracted by 0.1%, according to the official data released on Wednesday.
Headline inflation rose to 7.55% in August as prices of potato, wheat and pulses as well as manufactured items soared. Inflation, as measured by the wholesale price index (WPI), was 6.87% in July.
Biting the bullet, the government on Thursday hiked diesel prices by a steep Rs5.62 per litre and restricted the supply of subsidised cooking gas to six cylinders per household in a year to fetch an additional Rs20,300 crore. It, however, left kerosene rates untouched and spared an increase in petrol price by cutting excise duty by Rs5.30 per litre.
The Inter-Ministerial Group (IMG) on coal blocks allocation has recommended de-allocation of four mines allotted to private firms and encashment of bank guarantee of three others on the ground of non-development of mines within a prescribed time. This is the first recommendation by the IMG ever since controversy broke out over the allocation of coal blocks after the recent Comptroller and Auditor General report that criticised the government for allotting them in a non-transparency.
In international news, global markets rallied after the US Federal Reserve on Thursday said it would start a third programme of purchasing $40 billion per month in mortgage-backed bonds, known as quantitative easing (QE3). The Fed added that it would continue with the scheme until it saw substantial improvement in the jobs market. The US central bank also pledged to keep its benchmark interest rate at ultra-low levels until at least mid-2015.
This apart, the German Constitutional Court earlier this week cleared the path for the creation of a 500 billion euro rescue fund to tackle the Eurozone’s debt crisis after a huge popular petition to block it was rejected. The decision allows Germany to ratify the treaty to establish the European Stability Mechanism (ESM) and will enable it to become effective next month. But an important condition attached to the ruling means that Germany's liabilities will be capped at 190 billion, unless parliament rules otherwise.
Profit booking should be resorted to around the resistance level of 5,742
S&P Nifty close: 5,577.65
Short Term: Up Medium Term: Sideways Long Term: Down
The bulls finally succeeded in pushing the Nifty above the resistance line in black. The volumes, too, improved significantly after the drop witnessed last week. The week’s roller coaster saw the Nifty gain 219 points (4.09%) on higher volumes, thus removing the doubts regarding this rise, at least to a certain extent. The histogram MACD, which is above the median level, moved higher indicating that the bulls remain in control.
The rise was broad-based as all the sectoral indices, barring pharma, ended in the green. The sectoral indices which outperformed were CNX Realty (+5.53%), CNX Metal (+5.42%), CNX Finance (+4.95%) and CNX Auto (+4.41%) while the underperformers were CNX Pharma (-2.01%), CNX Media (+0.77%), CNX FMCG (+1.09%), and CNX Consumption (+1.54%).
Here are some key levels to watch out for this week
• As long as the S&P Nifty stays above 5,498 points (pivot) the bulls will be in control.
• Support levels in declines are pegged at 5,411 and 5,244 points.
• Resistance levels on the upside are pegged at 5,665 and 5,753 points.
The Nifty broke above crucial resistance levels, thus removing any ambiguity as to who is in control. Unless and until the 5,350 points (support in blue) is broken the overall trend continues to be up. From a trading perspective the support is pegged at 5,498 points this week and should be used as a SL on longs. The direction is firmly up and profit booking should be resorted to around the resistance levels for this week, mentioned above.
(Vidur Pendharkar works as a consultant technical analyst & chief strategist at www.trend4casting.com.)
There are several institutions or officials, including the Election Commission and District Collectors who perform quasi-judicial functions. But it was never felt that they cannot function without someone with a judicial background. Why then it is being made mandatory for the Information Commission under the RTI? Hope the Supreme Court finds a way which does not result in the kiss of death for this cherished right, says Shailesh Gandhi, former CIC
I remember a story I had heard as a child. A very beautiful princess had a curse upon her. If she kissed anybody, the person would die in a few years. She was virtuous and good, but whenever she fell in love with a handsome prince and kissed him, the prince would wither away and die. The Supreme Court has pronounced a verdict on 13th September about the Constitution and selection of Information Commissioners which could have a similar effect on the Right to Information (RTI) Act. In the judgement in Namit Sharma Vs Union in WP(C) 210 of 2012 the Supreme Court has ruled that the RTI Act is not unconstitutional, but has then said that since the work of the Commission is quasi-judicial, at least 50% of all commissioners must be judges. All benches must be of two members, out of which one member should be a judicial member. It further directs that First Appellate Authorities should be legally equipped.
There are many quasi-judicial functions performed in our country. The Election Commission is certainly performing a quasi-judicial function. Yet, for years it was not felt that it could not function without retired judges, and has delivered its duty in a time-bound manner. Every collector performs quasi-judicial functions, but they need not be legally qualified. However, for understanding and implementing the Right to Information, people with judicial experience are required.
One of the grounds for this direction by the apex court is Section 22 of the Act. The section expressly provides that the provisions of the RTI Act shall have effect notwithstanding anything inconsistent therewith contained in the Official Secrets Act, 1923, and any other law for the time being in force or in any instrument having effect by virtue of any law other than the RTI Act. In other words, where there is any inconsistency in a law as regards furnishing of information, such law shall be superseded by the RTI Act. Insertion of a non- obstante clause in Section 22 of the RTI Act was a conscious choice of the Parliament to safeguard the citizens’ fundamental right to information from convoluted interpretations of other laws adopted by public authorities to deny information. The presence of Section 22 of the RTI Act simplifies the process of implementing the right to information both for citizens as well the Public Information Officer (PIO); citizens may seek to enforce their fundamental right to information by simply invoking the provisions of the RTI Act.
Given the above, two scenarios may be envisaged:
Parliament had consciously inserted this clause to ensure that the RTI Act is simple to use and can be accessed by ordinary citizens, without the trappings of a legally perfect process, which does not deliver to the poorest citizen. The apex court has ruled that “The Information Commissions at the respective levels shall henceforth work in benches of two members each. One of them being a “judicial member”, while the other an “expert member”. Immediately, most Information Commissions will stop functioning since most of them do not have judicial members. Even when they do manage to get these, they will have to function as two-member benches, reducing their disposal to about 50% of the current disposal.
In the Central Commission—at the present rate of disposal—it appeared that there would be over three year’s backlog in the next five years. With the disposal dropping to half, the backlog will be over five years in the same period. The same position will prevail in most of state commissions.
Have we forgotten Justice Mathew’s clarion call in State of Uttar Pradesh Vs Raj Narain (1975) 4 SCC 428—“In a government of responsibility like ours, where all the agents of the public must be responsible for their conduct, there can be but few secrets. The people of this country have a right to know every public act, everything that is done in a public way by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. Their right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary when secrecy is claimed for transactions which can at any rate have no repercussion on public security”.
We might retain the process of following the Constitution and the legitimacy of various Institutions, but if we do not deliver to the citizens, we fail as a nation. In this case the fundamental right of citizens is at stake. Citizens have great respect and hope from the Right to Information Act. This is a request to the Supreme Court to find a way which does not result in the kiss of death for this cherished right.
(Shailesh Gandhi served as Central Information Commissioner under the RTI Act, 2005, during 18 September 2008 to 6 July 2012. He is a graduate in Civil Engineering from IIT-Bombay. Before becoming a full time RTI activist in 2003, he sold his packaging business, Clear Plastics. In 2008, he was conferred the Nani Palkhivala Memorial Award for civil liberties.)