The Indian market opened with marginal gains on mixed global cues. The steep rise in the weekly food inflation numbers put the indices under pressure and kept them in a narrow range on both sides of the neutral line till the end of the session.
The market opened with meagre gains, tracking its Asian peers that were mixed this morning. Early gains came in from the broader markets and realty, banking and healthcare stocks. The indices slipped into the red after touching the day's high and were range-bound. However, a sharp rise in the weekly food inflation data put pressure on the market, dragging the indices down.
The post-noon session saw the key indices trading sideways on both sides of the neutral line. The market closed flat with a negative bias, down for the second day in a row.
The Sensex ended at 19,982.88, below its psychological level of 20,000 and down by 32.92 points (0.16%) over its previous close. The index touched a high of 20,076.08 and a low of 19,939.30, intraday. The Nifty settled 4.40 points (0.07%) lower at 5,980. The benchmark touched a high of 6,006.45 and a low of 5,964.60 today.
The market breadth was in favour of the losers today. The Sensex had 20 declining stocks and 10 advancers. The Nifty closed with 34 losers and 16 gainers. Among the broader indices, the BSE Mid-cap index declined 0.23%, while the BSE Small-cap index was down 0.13%.
The top Sensex performers were NTPC (up 1.50%), Sterlite Industries (up 0.95%) and Infosys Technologies (up 0.77%). The top losers on the index were Hindalco Industries (down 1.81%), Tata Steel (down 1.61%) and DLF (down 1.26%).
BSE Healthcare (up 0.69%), BSE IT (up 0.27%) and BSE TECk (up 0.18%) were the noteworthy gainers in the sectoral space. BSE Consumer Durables (down 1.11%), BSE Metal (down 0.97%) and BSE Realty (down 0.89%) were among the sectoral losers today.
Markets in Asia ended mostly lower as China enhanced scrutiny of foreign fund inflows into its realty sector in a bid to curb spiralling property prices. This apart, the recent hike in gasoline and diesel prices by the Chinese government, also weighed on investor sentiments.
The Shanghai Composite tanked 0.79%, the Hang Seng declined 0.62%, the Jakarta Composite slid 0.25%, the KLSE Composite shed 0.04% and the Seoul Composite lost 0.03%. Bucking the trend, the Taiwan Weighted gained 0.43%.
Returning to double digits, food inflation rose to 12.13% for the week ended 11th December, the third successive weekly increase, with finance minister Pranab Mukherjee attributing high onion prices as one of the reasons.
The official data released today showed that for the week ended 11th December, food inflation rose by 2.67 percentage points from 9.46%, touching a six-week high.
The US markets continued to make fresh two-year highs on Wednesday, with banking stocks leading the gains on deal news. However, lower-than-expected economic data put a cap on gains. Sales of existing homes rose 5.6% from the previous month to a 4.68 million annual rate, the National Association of Realtors said in Washington. Economists projected sales would rise to a 4.75 million pace. Another report showed the US economy grew at a 2.6% annual rate in the third quarter, more than the previously calculated 2.5% gain and up from a 1.7% rise in the second quarter. The growth was below expectations.
The Dow gained 26.33 points (0.23%) to 11,559.49. The S&P 500 added 4.24 points (0.34%) to 1,258.84. The index climbed above 1,255.08 where it closed just days after Lehman filed for bankruptcy in September 2008. The Nasdaq surged 3.87 points (0.15%) at 2,671.48.
Concerned over the possibility of repayment defaults by microfinance institutions (MFIs) to banks, the Reserve Bank of India (RBI) has asked lenders to maintain funding lines to MFIs to prevent the problem from spreading out of Andhra Pradesh.
The bankers informed the RBI that collections by MFIs in Andhra Pradesh have deteriorated considerably and there were some incipient signs of the problem spreading to other states.
Participation by institutional investors in the equities segment on Wednesday was meagre. While foreign institutional investors were net sellers of stocks worth Rs67.57 crore, domestic institutional investors were net buyers totalling Rs98.93 crore.
Pipavav Shipyard (up 1.35%) has signed a memorandum of understanding (MoU) with Sweden-based SAAB Dynamics AB, part of the Wallenberg Group, for developing products in the defence and aerospace sectors.
This is the first major defence co-production initiative undertaken by the Wallenberg Group in India, which will help it gain a foothold in the Indian Army and Airforce segments.
Anil Dhirubhai Ambani Group company Reliance MediaWorks (down 0.42%) has inked a deal with Russian World Studios (RWS) to outsource film restoration, image processing and enhancement work.
A memorandum of understanding (MOU) was signed by the Indian company with the private film company RWS and the Obyedinennaya Gosudarstvennaya Kinokollektsia (OGK) during the visit of Russian President Dmitri Medvedev.
RWS is one of the largest private film companies in the Russian market and has produced several projects, both for TV and the big screen, while OGK is Russia's federal state unitary enterprise that preserves and manages Russian film archives.
Adani Enterprise run Adani Power (APL) (up 1.45%) said that it has synchronised the country's first supercritical unit of 660MW power plant, taking its coal power generation capacity to 1,980MW. APL is setting up a 4620MW coal-fired power plant at Mundra, in Kutch district of Gujarat, consisting of four units of 330MW and five units of 660MW.
Knocked repeatedly by the regulator and investors during the past year, mutual funds will be hoping that the pain will yield positive results soon
The stock market climb this year was quite amazing. But strange as it may seem, it prompted investors to exit equity mutual funds in hordes, hurting fund companies. The pain was aggravated by a basket of confused measures by the regulators, which complicated matters for investors and distributors. It's been a difficult year for mutual funds and hardly anybody will speculate how long it could take to get better.
So difficult, that the friendly neighbourhood distributor has virtually cut out mutual funds from his bouquet of financial services. Many have all but closed shop to look for better pastures. Those who are still doing business are struggling and hoping that the situation will improve sooner than later.
Distributors shift business
A large section of distributors have been left to fend for themselves after stripping their fees. Last year, while attempting to justify its fatwa against entry loads, the regulator cried itself hoarse saying that "investors must pay for advice". But, investors haven't taken too kindly to this yet. Now, some distributors are offering free advice, while others have simply switched to selling commission-friendly unit-linked insurance plans (ULIPs) and company fixed deposits.
In March, the Securities and Exchange Board of India (SEBI) unwittingly triggered a war among large distributors who began to grab customers from one another, by allowing investors to change distributors without a no-objection certificate. It decided that in case of any change in the broker code, no trail commission would be paid to both-the one who loses a customer, as well as the one who gains a customer. Several national distributors and large intermediaries immediately swooped in on the clients of other smaller distributors, surreptitiously getting customers to switch allegiances.
Perhaps nothing irked the distributor community more than the intrusive and tedious know your distributor (KYD) norms. While distributors were amenable to the KYD concept, they were unhappy about the biometric verification part. This measure was seemingly taken to counter a few distributors who have been misguiding investors, exploiting them for their own benefit. Therefore, many of them wondered why the same rule was not being applied to other entities that are known to defraud investors.
SEBI tightened the noose on distributors further, when it tweaked the existing guidelines for procuring certification by mandating distributors to get certification from the National Institute of Securities Management (NISM), instead of the usual AMFI registration number (ARN).
Collecting customer details
This flurry of regulatory changes resulted in headaches on the administrative side too. The regulator's insistence on compliance with know your customer (KYC) norms, meant that old and inadequate customer data in the records of older funds such as UTI Mutual Fund, had to be obtained afresh, with proper identification (photo, phone and address) proof and in a standard format, for easy access.
A misinterpretation of the trail commission rule meant that registrar and transfer agents (R&TAs) were burdened with requests for change of broker code and massive trading in customer data. The volumes subsided only after the Association of Mutual Funds in India (AMFI) issued a clarification.
In August 2010, SEBI asked fund houses to facilitate smoother shift of mutual fund units between two demat accounts. This not only meant that fund companies would have to shoulder additional costs, but this would also increase activity at the R&TAs. Similarly, in order to check fraudulent activities by some distributors, SEBI asked fund houses not to accept third party cheques for mutual fund subscriptions. Consequently, fund branches had to track investor applications with investor cheques to corroborate the investment.
After putting up a brave face on these changes through most of the year, fund companies showed signs of frustration towards the end of the year as business continued to fall. Faced with a sharp reduction in profit amid continuing reduction in the assets under management (AUM), asset management companies (AMCs) began to voice their concerns. The regulator, however, maintained that companies were coping well with the news regulations.
Gold ETFs, debt funds pick up
It was a particularly bad period for equity mutual funds as investors pulled out relentlessly. The haemorrhage that began in August last year continued through 2010. Net outflows since January are up to a startling Rs28,000 crore. Only in May did investors put in more funds than what they took out. The explanation offered by fund companies for this massive exodus was that investors were looking to exit after the markets had sufficiently run up, so as to offset the losses they incurred in 2008.
However, gold and debt funds acquired a new sheen. Gold exchange-traded funds (ETFs) have emerged as a new favourite among retail investors, who were bowled over by the relentless rise in gold prices. The popularity of gold ETFs can be gauged from the sharp 143% rise in the corpus of gold ETFs from Rs1,425 crore to Rs3,464 crore in the year.
Debt funds also witnessed record inflows, as investors hoped to benefit from rising interest rates. Investors parked a total of Rs5,24,332 crore in debt funds during the year, and net inflows amounted to Rs1,80,200 crore. Balanced funds, which provide a combination of debt and equity, saw a 10% jump in retail AUM at Rs18,871 crore.
Cheer for investors
Mutual fund investors did have a little reason to smile. Karvy and CAMS, both top R&TAs, introduced a facility giving a consolidated account statement on a monthly basis. This will help investors to track their mutual fund investments across fund houses at one source. They will be able to get information about their holdings, fund returns, recent transactions, and more.
Another benefit for investors was the decision by SEBI reducing the window for listing of new fund offers (NFOs) to 15 days from the previous 30 days, as also reducing the allotment period to five days from the earlier 30 days. It also crunches the processing time for completion of NFOs to an astounding 20 days only from the earlier 60 days. To address investors' concerns over submission of applications on time, CAMS introduced 'eNFO', an online service that ensures hassle-free submission of NFO applications.
It has been a period of painful transformation for the mutual fund industry, with various participants at loggerheads with the regulator, while struggling for their very survival. As we enter the new year, fund companies will be hoping that the alarming outflow from equity funds subsides, and that investors come back. Distributors will be looking for the tide to turn in their favour. And the systems and processes that intermediaries and AMCs have invested in to conform to the changed regulatory climate should bear fruit. Perhaps, a fresh face at the helm of the regulator may usher in much-needed stability for the industry.
Tata Motors Ltd's Jaguar Land Rover is celebrating a successful 2010 having received more than 80 international awards for its vehicles during the year.
The tally of awards was shared almost equally between the two brands. Leading the charge for Land Rover was Discovery 4 with over 28 global awards this year bringing its total to 144 since launch in 2004. Commenting on the awards Land Rover's Global Brand Director John Edwards said: "The Discovery 4 offers an exceptional breadth of capability. It is now one of the most highly-decorated vehicles ever and we are thrilled that it continues to receive such great recognition across the industry."
Other Land Rover nameplates also had a tremendous year with the Range Rover being voted the 'Car of the Decade' by readers of autocar.co.uk, the Range Rover Sport voted 'Best 4x4' by Auto Bild (Germany) and the Freelander 2 was voted 'Best Compact SUV' at the Auto Express Car of the Year Awards.
Jaguar's new XJ which went on sale earlier this year and got off to a flying start receiving more than 20 international honours including 'Best Luxury Car' from China's Auto News, 'Annual Limousine King' from Quattroroute (Italy), 'Luxury Car of the Year' from Top Gear (UK), Automobile Magazine's '2011 Design of the Year' and 'Best Executive Sedan' at the Bloomberg Awards (US).
And it was not just production cars that caught the eye of the auto industry elite. The C-X75 concept car was named 'car of the show' at this year's Paris Automobile Show.
On Thursday, Tata Motors ended 1.23% down at Rs1,348.80 on the Bombay Stock Exchange, while the benchmark Sensex closed 0.16% down at 19,982.88 points.