The domestic market is likely to see a flat-to-opening today on mixed global cues. The weekly food inflation data will also provide some direction to the market. The US markets closed higher as signs of optimism in the country’s economy spurred investors to make fresh moves. The Asian pack was mixed in early trade ahead of economic data to be announced by China and the meeting of Group of Twenty (G20) leaders, which gets underway in Seoul Korea today. The SGX Nifty was down 24.50 points at 6,285.50 against its previous close of 6,310 on Wednesday.
The market opened lower yesterday, tracking unsupportive global cues. Volatility continued with the indices moving on both sides of the neutral line on quite a few occasions. Every move into the green was followed by a dip into the negative territory. However, the broader indices stood firm trading with good gains. The see-saw continued unabated in the post-noon session with the indices touching the day’s lows towards the close of trade but the market managed to end the session just above that figure.
The Sensex ended 56.77 points (0.27%) down at 20,875, struggling hard to regain the highs seen last week. The Nifty settled at 6,275, down 25.85 points (0.41%).
Wall Street settled higher on Wednesday on positive economic data and as the dollar took a breather after four sessions of gains. Meanwhile, the Federal Reserve will conduct 18 open-market operations from 12th November through 9th December. The central bank is buying an additional $600 billion of Treasuries through June and expects to reinvest $250 billion to $300 billion of proceeds from mortgage-backed debt and agency securities into Treasuries. Besides, the number of workers filing for initial jobless claims fell by a greater-than-expected 24,000 to 435,000, the lowest level in four months.
The Dow added 10.29 points (0.09%) to close at 11,357. The S&P 500 rose 5.31 points (0.44%) to 1,218. The Nasdaq gained 15.80 points (0.62%) to close at 2,578.
Markets in Asia were mixed in early trade ahead of the announcement of economic data by the Chinese government. The two-day G20 meet, which gets underway in Seoul, will also provide cues to the regional bourses, especially in terms of currency and banking regulations.
The Hang Seng gained 0.53%, the Nikkei 225 was up 0.29% and Straits Times rose 0.23%. On the other hand, the Shanghai Composite declined 0.14%, the KLSE Composite shed 0.44%, the Seoul Composite fell by 0.03% and he Taiwan Weighted was down 0.03% in early trade. The SGX Nifty was down 24.50 points at 6,285.50 against its previous close of 6,310 on Wednesday.
Buoyed by robust tax collections so far, the government has exuded optimism that it will surpass tax collection target of Rs7.45 lakh crore this fiscal.
“Revenue target for this year is Rs7.45 lakh crore and I see no reason why we should not achieve it... As a matter of fact if things go as they are, we expect to make a modest increase over the targets,” revenue secretary Sunil Mitra told reporters on Wednesday.
He, however, refused to give any revised figures and said no new numbers have been fixed as of now. Mr Mitra said that during April-October, the government has collected over 50% of the budgeted target.
Besides being a 'trusted lieutenant' of the Gandhi family, Prithviraj Chavan’s 'clean' image and Maratha caste tilted the balance in his favour. Surprisingly the NCP also changed its stance on caste-equation and opted to appoint party chief Sharad Pawar's nephew as new deputy CM
As correctly predicted by Moneylife (http://www.moneylife.in/article/78/11026.html), Congress chief Sonia Gandhi has selected 'trusted lieutenant' Prithviraj Chavan as the next chief minister (CM) for Maharashtra. He will take over as the 23rd CM of the state after incumbent Ashok Chavan was asked to resign due to alleged involvement in the Adarsh housing society scam. Taking a cue from the Congress, its partner the Nationalist Congress Party (NCP) also decided to rope in Ajit Pawar as deputy CM, replacing Chhagan Bhujbal.
Following the ouster of Ashok Chavan, the names that were doing the rounds were those of Prithviraj Chavan, Sushilkumar Shinde, Vilasrao Deshmukh, Mukul Wasnik, Balasaheb Thorat as well as the father-son duo of Balasaheb Vikhe Patil and Radhakrishna Vikhe Patil. Congress general secretary Rahul Gandhi, who was supposed to have supported Ashok Chavan earlier, said that the party wants someone "who is clean and can deliver". This shut the doors for Vilasrao Deshmukh.
Although Mr Shinde is a 'tried and tested' lieutenant of the Gandhi family, he was also named in the Adarsh housing scam and hence was sidelined for the CM's post.
Earlier in 1998, the Vikhe Patil father-son duo shifted their alliance to the National Democratic Alliance (NDA) to become Union and state ministers, respectively. In addition, it is alleged that a firm related with the Vikhe Patil family owes state power distribution company (Mahavitaran) about Rs1,800 crore. Both these factors went against them.
Mr Wasnik shares good relations with Rahul Gandhi, but is seen more as the party's man in Delhi and has no real mass base in Maharashtra. He and Mr Thorat were the lightweight candidates in the fray and would have been easy prey for the Nationalist Congress Party (NCP), which shares power with the Congress in Maharashtra.
Over the years, the NCP has increased its base in the state and is very eager to root out the Congress from many constituencies.
Therefore, the question remains, what tilted the balance in favour of Prithviraj Chavan? His family shares a very good equation with the Gandhi family and his mother Premalakaki Chavan was the state Congress chief of Maharashtra. Besides being a trusted lieutenant of the Gandhi family, Mr Chavan comes with a clean image and belongs to the Maratha caste.
Traditionally, the Maratha lobby has ruled Maharashtra most of the times and the same lobby is still dominant in state-level politics. Thus, the Congress high command replaced Ashok Chavan, a Maratha, with another Maratha, in order to keep the equations in the state-level politics intact.
According to a PTI report, Ajit Pawar, nephew of NCP chief, is likely to hold Home portfolio, besides Energy. NCP leader and civial aviation minister Praful Patel said, "After the meeting began, the first proposal was by Bhujbal that Ajit Pawar be named new legislature party leader. That made our job easy. Everyone applauded and welcomed the announcement."
Congress-NCP leaders will meet Maharashtra Governor K Sankaranarayanan on Wednesday night to stake claim to form the new government.
Prithviraj Chavan: A brief profile
Born on 17 March 1946, Prithviraj Chavan has a BE (Hons) from BITS, Pilani and an MS from the University of California, Berkeley (USA). He pursued higher studies at the University of California and spent some time working in the field of aircraft instrumentation and designing audio recorders for anti-submarine warfare in the US before returning to India and entering Indian politics. He is married to Satvasheela and has one daughter and one son.
MAHARASHTRA AT A GLANCE
Since 1 May 1960, Maharashtra has seen 19 chief ministers and except Vasantrao Naik, no other CM was able to complete his five-year term in office. Vasantrao Naik, from the Vidarbha region, was also the longest serving (about 12 years from December 1963 to February 1975) CM of Maharashtra. Vilasrao Deshmukh who was CM for two terms of about four years each follows him. NCP chief Sharad Pawar became CM for three times, but was unable to complete his full term in office.
With the exception of the Sharad Pawar-led Progressive Democratic Front (PDA) regime of about two years and the Shiv Sena-BJP combine's term of four-and-a-half years, Maharashtra has been ruled by the Congress since 1960.
At present, the Congress has 82 and the NCP has 62 members in the 288-member house.
PFRDA has given up on distributors of NPS and wants to get fund managers to push NPS. This makes no sense especially since fund companies are not able to sell even a tried and tested product like equity mutual funds after a slew of SEBI’s regulatory changes
The Pension Fund Regulatory and Development Authority (PFRDA) chairperson and former IDBI Bank chairman Yogesh Agarwal told reporters at the sidelines of a FICCI conference yesterday that point of presence (POP) service providers like banks have failed to make the New Pension System (NPS) work.
He does not think POPs will push NPS and the idea of using existing channels may not work. According to him, pension fund managers (PFMs) are the real stakeholders who should push the NPS because they are the ones who will enjoy investor funds for 30 to 40 years. He is in favour of additional incentives to PFMs that may have their own distribution channel to market NPS. Will PFMs be able to deliver, considering the fund companies' track record for selling mutual funds?
Interestingly, there are 40 financial institutions that have over 50,000 POPs. According to the regulator, only 4,000 locations are active for NPS sales. It means over 90% is still untapped. No wonder only 5,000-odd accounts have been opened in the non-government sector. The incentive for POPs in the first year is Rs100 and Rs80 thereafter. PFRDA is now giving a lump sum of Rs50 for each new account.
Like POPs, the PFMs also suffer from low incentives. They have bid for a fund management fee of a ridiculous 0.009% but the regulator seems convinced PFMs are the major stakeholders who will market NPS and hence should need additional incentive.
The price PFMs will have to pay for getting additional incentive is opening up of competition for PFMs that are currently only six. The consensus among the conference attendees was that there is no single ownership of NPS for customer service. There are entities like PFRDA, PFM, POP, and CRA (Central Recordkeeping Agency), but none as a single point of contact.
The regulator agrees that it was a mistake to assume that there will be instant demand for NPS. The realisation now is that it needs sustained marketing. The electronic poll taken at the conference showed that attendees felt equally strong about increasing incentives for POPs as well as PFMs. Let's hope the GN Bajpai Committee takes a balanced approach to address the issues with NPS.
The mutual fund industry has learnt this lesson the hard way. The ramifications of SEBI's ban on entry load last year is clearly visible today, where distributors have been virtually sidelined, leaving the industry in tatters. Since last August, there has been heavy mutual fund redemption across Asset Management Companies (AMCs).
In such a scenario, it is unthinkable that the PFRDA is trying to put the onus of selling on fund managers rather than incentivising POPs, who provide the interface between the customers and the product. Essentially, the PFRDA is asking PFMs to adopt the same broken business model that SEBI has been trying to implement, for the pension industry. Worse, PFRDA seems completely unaware of the huge fundamental difference between a pension product and other financial products like mutual funds and insurance.
A pension fund company can neither offer any product differentiation nor 'innovate' and bombard investors with a flurry of fanciful products, with matching advertisements, as insurance companies and mutual funds can do. It is difficult to comprehend how one can expect the pension fund managers to deliver results, when their investment choices are straitjacketed.
Industry experts strongly feel that the PFRDA is taking a wrong turn, saying that by shifting the responsibility of sales on to the fund managers, the PFRDA will dilute the role of these entities and can create a possible conflict of interest.
"The POP is not getting any brokerage. If there is no brokerage then why should even POPs promote this product; they have 30 products to sell today. It should be promoted by the government itself by advertising massively," said a sales head of a private fund house.
"I don't see how they (pension fund managers) will take this additional burden of pushing NPS. Pension fund managers are very keen on equity, which is a small portion in NPS. Incentive should be based on performance rather than selling the product. A third party should sell the products, otherwise all fund managers will claim that they are the best and try to push their products," said a Mumbai-based certified financial planner (CFP). "That will destroy the pension product."