Index heavyweight Bharti Airtel’s decline, surge in inflation and China’s surprise move to restrict bank lending weighed heavily on Indian markets
Indian markets remained highly volatile during the day following index heavyweight Bharti Airtel’s massive slump and a jump in inflation. China’s surprise move to restrict bank lending to cool its surging economy weighed on market sentiments as worries rose about the impact of monetary tightening on global growth. The Sensex declined 114 points from Thursday’s (11th February) close, ending the day at 16,038 while the Nifty declined 25 points to close at 4,802.
Currently, Indian bourses are struggling to continue their uptrend and are likely to hover between the 15,900–16,200 levels. The Sensex from here on has to breach the 16,200 level to see a serious upward movement.
At 12:00 hrs IST, the Sensex was trading at 16,057, down 96 points from Thursday’s close, but at 14:00 hrs IST, the Sensex was trading down 66 points at 16,086.
At the end of the day, Bharti Airtel fell 9% on reports that the company is in talks to buy the African assets of Kuwaiti telecom player Zain for $10.70 billion. Bharti said in a statement that it has entered into exclusive talks with Zain over the assets, which exclude operations in Morocco and Sudan.
Hitachi Home & Life Solutions (India) rose 3% on reports that the company is reducing prices of air-conditioners to boost its market share.
Transgene Biotek shot up 5% after the company recently said that a novel drug for liver cancer developed by its scientists has cleared some latest tests.
Castrol India rose 3%, on reports that the company board will meet on 18 February 2010 to consider issue of bonus shares.
Tube Investments of India has acquired a controlling stake in Sedis Group, France, through acquisition of 77% equity in its holding company, Financiere C10. The stock was up 4%.
MBL Infrastructures Ltd has bagged orders worth Rs100 crore from Reliance Infrastructure Limited for its 6x660 MW Ultra Mega Power Project. The stock was up 2%.
Ruchi Soya Industries Ltd has acquired Palm Tech India Ltd, the largest palm oil unit in Andhra Pradesh, which is engaged in the business of development and extraction of palm oil. The stock plunged 3%.
During trading hours, government data showed that the wholesale price index (WPI) rose 8.56% in January 2010 from a year earlier, driven by higher food prices. The latest WPI reading was the highest since November 2008. It was higher than an annual 7.3% rise in December 2009. The rise was driven by a 17.4% jump in food prices, which rose on weak monsoon rains and flooding from last year. Inflation in manufacturing picked up to 6.55% from about 5% in December 2009, a sign that inflationary pressures were spreading to other sectors of the economy. Meanwhile, the government revised upwards WPI inflation for November 2009 to 5.55% from 4.78% earlier.
Meanwhile, D Subbarao, Reserve Bank of India (RBI) governor, said over the weekend that large government borrowing influences monetary policy. The government completed its market borrowing of Rs4.51 lakh crore ($97 billion) for the current fiscal year to end-March early this month and the RBI expects its gross market borrowing next year to be slightly higher than this year. As per the data released on Friday, 12 February 2010, industrial output grew 16.8% in December from a year earlier, up from a revised annual rise of 11.8% in November. The RBI has already started to unwind stimulus, and is widely expected to tighten rates at its April meeting.
As per media reports, finance minister Pranab Mukherjee will not present any major tax reform to bring down corporate tax and simplify income-tax rules this month. The Direct Taxes Code bill was expected to be presented in the budget session of Parliament beginning on 22 February 2010, with the aim of coming into effect from April next year. There are several complications in the Direct Taxes Code in its present form, and it required further scrutiny. The reports also added that the government may delay the major tax reform bill to the next session of Parliament, which starts in July.
EPFR Global, the Massachusetts-based research firm that tracks global fund flows said that investors took $2.90 billion out of all emerging-market equity funds in the first week of February 2010, the highest weekly decline since 9 July 2008. EPFR further added that global funds in particular were hurt as investors pulled out $1.76 billion, a 60-week high.
During the day, Asia’s key benchmark indices in Japan and Indonesia fell 0.64% and 0.78% respectively. Most Asian markets will remain closed today and tomorrow for the Lunar New Year holidays.
As per reports, Japan’s economic growth accelerated at an annual 4.6% in the three months ended 31 December 2010 as a global trade revival fuelled demand for the nation’s exports. China ordered banks on 12 February 2010 to set aside more deposits as reserves for the second time in a month, as loan growth quickened and property prices surged. The reserve requirement will increase 50 basis points effective 25 February 2010.
On Friday, 12 February 2010, the Dow Jones Industrial Average fell 45 points whereas the Nasdaq Composite was up 6 points. US markets are closed on Monday for the Presidents’ Day holiday.
One of the reasons for the dwindling investor population in India is the complicated and drawn-out KYC procedure, say industry experts
The Indian government’s efforts towards strengthening identification norms have had an adverse impact in the most unexpected quarters. Apparently, the much talked about know your customer (KYC) norms are proving quite a deterrent for the population to put its money into various investment channels. The hassles of KYC documentation are creating obstacles in the path of investors and advisors alike.
Industry sources reveal that they have been having problems mobilising savings of individuals only because of the complications created by the necessity to adhere to KYC norms. An independent financial advisor (IFA) disclosed to Moneylife, “I have a customer who wants to invest Rs50,000 each in five different funds. For this, I have to give five different KYC documents for him and his wife, which is absurd. The issue here is, if you know the person’s surname and father’s name, date of birth and PAN card, there can only be one person whose details match. So why is the need for this unnecessary repetitive work?”
Another IFA questioned the need for advisors to have their own KYC when the banks already have their own KYC procedures in place. This amounts to unnecessary and repetitive work, which delays the operationalisation of the customer’s account.
Pointing to one particular case where a non-resident Indian (NRI) wished to invest money into the Indian stock markets, the IFA revealed, “The NRI has to have not only his passport, but an account which mentions his local address and his American address. On top of that, he is required to show his driving license, which of course he does not carry to India. So even though he comes with a cheque of Rs50 lakh, he can’t complete his KYC and ultimately the country ends up losing the investment.”
In 2002, KYC norms were introduced in India with the RBI directing all banks and financial institutions to put in place a policy framework to know their customers before opening any account. The basic purpose of KYC was to prevent identity theft, money laundering, terrorist financing, etc. This involves verifying customers\' identity and address by asking them to submit documents that are accepted as relevant proof.
However, in most cases, KYC has only served to complicate procedures; requiring huge paperwork on part of service providers and making customers run from pillar to post for filing necessary or sometime irrelevant documents.
The mutual fund (MF) industry has been most hit as a result of this. Already, the MF industry is under a lot of strain post the scrapping of entry load by the market watchdog, Securities and Exchange Board of India (SEBI). Moneylife has been regularly updating you through various articles on the agony faced by distributors and advisors in maintaining a steady stream of revenues. Hidden until now was the role of KYC in further alienating an already miniscule investor population in mutual funds.
It remains to be seen whether the government wakes up to this menace and simplifies KYC requirements before these norms threaten to disrupt investments into and within the country.
The 'MeeGo' software platform will run on high-performance devices and deliver a range of Internet, computing and communication experiences, with visually rich graphics, multitasking and multimedia capabilities and the best application performance
Computer processor manufacturer Intel Corp and mobile handset maker Nokia Oyj have said that both the companies will merge their Moblin and Maemo software platforms to create a unified Linux-based platform called ‘MeeGo’.
"Our vision for seamlessly communicating between computing devices from the home, auto, office or your pocket is taking a big step forward today with the introduction of MeeGo," said Intel president and chief executive Paul Otellini.
Olli-Pekka Kallasvuo, chief executive, Nokia said, "Through open innovation, MeeGo will create an ecosystem that is second to none, drawing in players from different industries. It will support a range of business models across the value chain, building on the experience and expertise of Nokia, Intel and all those who will join us. Simply put, MeeGo heralds a new era of mobile computing."
In a release, Intel and Nokia said that MeeGo will run on multiple hardware platforms across a wide range of computing devices, including pocketable mobile computers, netbooks, tablets, mediaphones, connected TVs and in-vehicle infotainment systems.
MeeGo also unites the robust worldwide Maemo and Moblin applications ecosystems and open source communities. For developers, MeeGo extends the range of target device segments for their applications. Using Qt for application development means that they can write applications once and easily deploy them on MeeGo and across other platforms, for example, on Symbian, the release said.
Nokia's Ovi Store will be the channel to the market for apps and content for all Nokia devices, including MeeGo and Symbian-based, with Forum Nokia providing developer support across all Nokia device platforms.
Since MeeGo runs on multiple device types, people can keep their favourite applications when they change devices, so they are not locked into one kind of device or those from any individual manufacturer, the release added.