Tuesday Closing Report: Stuck in a sideways logjam

Breaking its two-day winning steak, the Indian market ended flat with a negative bias. A high degree of choppiness, ahead of the expiry of the September futures and options (F&O) contract, was the characteristic of today's session. 

The local market opened steady on unsupportive cues from the global arena. A high degree of volatility was seen ahead of the expiry of the September futures and options (F&O) contract, due on Thursday.  The indices dipped into the red in early trades but recovered in the mid-morning session. However, selling pressure in the realty, fast moving consumer goods (FMCG) and oil & gas sectors led the decline in noon trade. The market made an attempt at recovery after touching a trough in the post-noon session but it ended marginally lower after inching above the neutral line.

Finally the Sensex settled down 12.52 points (0.06%) at 20,105, managing to retain the crucial level of 20,100. The barometer touched a high of 20,157 and a low of 19,982, intraday. The Nifty declined 6.15 points (0.10%) at 6,029, this too above the crucial 6,000 mark. The index touched a high of 6,050 and a low of 5,991, mid-session.

The overall market breadth was equated. The Sensex ended with 15 stocks on the advancing side and a similar number on the declining side. The Nifty had 26 gainers, 23 losers and one stock returned unchanged.

The top Sensex gainers were Mahindra & Mahindra (M&M) (up 2.54%), Reliance Infrastructure (R-Infra) (up 2.52%), DLF (up 2.37%), NTPC (up 2.31%) and Jindal Steel (up 1.33%). The laggards on the index were HDFC (down 1.96%), Reliance Industries (RIL) (down 1.12%) and Hindustan Unilever (HUL) (down 0.83%).

The sectoral gainers were BSE Power (up 1.15%), BSE Capital Goods (CG) (up 0.93%) and BSE Realty (up 0.48%). The notable losers in the sectoral space were BSE Oil & Gas (down 0.74%) and BSE IT (down 0.46%).

The Asian Development Bank (ADB) today raised India's growth forecast for the current fiscal to 8.5% from 8.2% but expressed concern over persistent high inflation and the rising value of the rupee, which could undermine future economic expansion.

The multilateral lending agency had projected a growth rate of 8.2% for 2010-11 in April. For the next financial year (2011-12), ADB has retained its earlier projection of 8.7%.

Markets in Asia ended lower as lingering concerns about the financial crisis in Europe kept investors on the sidelines. Speculation about the Chinese government initiating measures to rein in real estate prices also played on investors' minds.

The Shanghai Composite was down 0.63%, Hang Seng was down 1.03%, KLSE Composite was down 0.35%, Nikkei 225 was down 1.12%, Straits Times was down 0.52%, Seoul Composite was down 0.26% and Taiwan Weighted was down 0.03%. On the other hand, Jakarta Composite bucked the trend, ending 0.13% higher.

The US markets closed lower on Monday as concerns about a sustainable economic growth made investors jittery after the recent gains. While stocks gained following announcements of mergers and acquisitions, a dip in financial stocks led to the decline in the market after Moody's downgraded the debt of Anglo Irish Bank by three notches. The Dow was down 48.22 points (0.44%) at 10,812. The S&P 500 was down 6.51 points (0.57%) at 1,142. The Nasdaq was down 11.45 points (0.48%) at 2,369.

Hinting at a major overhaul in the regulations for insurance sector, the Insurance Regulatory and Development Agency (IRDA) today said it will soon come out with merger and acquisition (M&A) norms for insurers and initial public offer (IPO) guidelines are already on the way.

At the same time, IRDA also favoured portability in the health insurance space, a move that will pave the way for consumers to switch from one insurer to the other for their mediclaim policies.

Foreign institutional investors were net buyers of Rs1,137 crore in the equities segment on Monday. Domestic institutional investors were net sellers of Rs1,054 crore worth stocks on the same day.

Anil Dhirubhai Ambani Group (ADAG) group firm Reliance Power (R-Power) (up 1.68%) today said it aims to become the country's largest private sector power generating company by 2015.

The company will also have an operational capacity of 5,000 megawatts (MW) by 2012 and will commission another 20,000MW over the next three years, chairman of the Reliance Anil Dhirubhai Ambani Group Anil Ambani said at the company's annual general meeting (AGM) in Mumbai.

Pharma major Venus Remedies (up 4.19%) today said it has bagged a contract from Thailand for an anti-cancer drug, Docetaxel, under the government policy.

The company has received the contract from the Government Pharmaceutical Organisation (GPO) under the Ministry of Health, Thailand, for supplying Docetaxel for one year as per the Thai government's strategy of providing quality products at affordable prices, Venus Remedies said in a filing to the Bombay Stock Exchange (BSE).

Tata Steel (up 0.95%) would finalise plans to refinance $5.4 billion loans for its British unit Corus this week, a top company official today said.

Tata Steel vice-chairman B Muthuraman told reporters that "yes, the refinance plan for Corus is happening this week". He, however, declined to name the banks with which the company is negotiating.
The Indian multinational steel major had taken the loans to fund its $12.9 billion acquisition of Corus in 2007.




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Bank union alleges corruption in Agriculture Finance Corp

MSBEF has demanded an enquiry into alleged corruption and financial irregularities by a senior official at the Agricultural Finance Corporation

The Maharashtra State Bank Employees Federation (MSBEF), an umbrella organisation of bank unions, has demanded an enquiry into alleged corruption and financial irregularities by senior officials at the Agricultural Finance Corporation Ltd (AFCL). The union has also asked the government to explore whether AFCL can be merged with the National Bank for Agriculture and Rural Development (NABARD).

Agricultural Finance Corporation, owned by public sector banks, NABARD and Exim Bank, is a 40-year-old organisation mainly involved in providing consultancy services in the field of agriculture and social sectors.

According to the bank union, senior officials of AFCL are diverting consultancy contracts the entity receives from various government authorities to private firms. AFCL sub-contracted two consultancy projects, together worth Rs41.6 crore, which it had received from the Uttar Pradesh government to a New Delhi-based private consultancy firm, International Traceability Systems (ITS), the union said in a release.

ITS completed one of the projects to prepare a comprehensive agricultural development plan (CADP) in 66 districts of Uttar Pradesh under the 'Rastriya Krishi Vikas Yojana' (RKVY) in just three months. These reports were submitted without field information and serious study by ITS and AFCL accepted it without any scrutiny. Subsequently the UP government released payment to AFCL, which passed on the same to ITS, the union said.

MSBEF said it is important to note that a major chunk of AFCL's consultancy projects have been outsourced to private parties after AK Garg took over as its managing director. This outsourcing, while AFCL officers are sitting idle, is obviously intended to benefit him by engaging in unethical business practices with private parties, the union alleged.

Mr Garg, while denying the allegations said, "There is some restructuring going on in our organisation since its inception. We are reshuffling work assigned to some people, which may have caused these allegations."

He said, "In the 40-year history of AFCL, for the first time we have earned operating profit for the year that ended on 31 March 2010. The Union government and the ministry of agriculture are highly satisfied with our work and as a result we are receiving more projects. We are also using services of business associates for some projects."


Man Infraconstruction wins 3 construction orders

Man Infraconstruction Ltd said it has won three orders from new clients in Mumbai. No financials were provided.

The scope of order work includes construction of office building for investment banker Enam, residential tower for developers Wadhwa Group and Rohan Developers. The execution is expected to be completed within 18 months, said the company in a regulatory filing.

On Tuesday, Man Infraconstruction shares gained 0.9% to Rs364 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.1% to 20,104 points.


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