Stocks
Upmove ahead: Wednesday Closing Report

If Nifty holds to today’s gains, it may move to 5,460

We had mentioned in the past two days that any close above previous day’s high may signal a change in trend. Today the Nifty not only closed above its previous day high, it has also closed above its 20-day moving average of 5,346. If the index manages making higher high, we may see it reaching the level of 5,460. The National Stock Exchange NSE saw a volume of 77.03 crore shares.      

The market opened almost unchanged from its previous close on the back of the Asian bourses trading mixed in morning trade. US stocks settled lower overnight on concerns about China’s economic outlook. The Nifty opened eight points lower at 5,267 and the Sensex opened 15 points down at 17,301.

The market touched its intraday lows in early trade as the indices drifted lower on selling pressure in metals, power, realty and auto sectors. At the lows, the Nifty fell to 5256 and the Sensex went down to 17,276. However, the market gained momentum at round 10.20am and began its gradual upmove.

Across-the-board buying from mid-morning trade onwards saw all sectoral indices trade higher. The gains continued in the second half of trade, supported by the key European markets trading with gains of around 0.50%.

Sustained institutional buying saw the market hitting its intraday high towards the fag end of the session with the Nifty touching 5,372 and the Sensex at 17,623. The market closed a tad below those levels.

The Nifty finished 90 points higher at 5,365 and the Sensex surged 286 points to close at 17,602.

The advance-decline ratio on the NSE was in favour of the gainers at 1161:489.

Among the broader indices, the BSE Mid-cap index surged 1.95% and the BSE Small-cap index climbed 1.23%.

All sectoral indices settled higher. They were led by BSE Capital Goods (up 3.59%); BSE Realty (up 3.54%); BSE Bankex (up 2.44%); BSE Power (up 1.86%) and BSE TECk (up 1.82%).

The top five scrips on the Sensex were Larsen & Toubro (up 4.46%); DLF (up 4.01%); Tata Steel (up 4%); TCS (up 3.25%) and ICICI Bank (up 3.07%). The main losers on the index were Hindalco Industries (down 1.01%); ONGC (down 0.35%); ITC (down 1.08%); Sun Pharma (down 0.17%) and Hero MotoCorp (down 0.07%).

Jaiprakash Associates (up 5.18%); Reliance Infrastructure (up 5.13%); Ranbaxy (up 4.81%); Axis Bank (up 4.66%) and L&T (up 4.42%) led the gainers on the Nifty. Cairn India (down 1.03%); Hindalco Ind (down 0.87%); Sun Pharma (down 0.68%); ONGC (down 0.48%) and Wipro (down 0.43%) were the key laggards on the index.

Concerns about the slowing growth in China resulted in the Asian bourses closing mixed for another day. The outlook led Australia cut its commodity sales forecast. However, Zhu Min, deputy managing director of the International Monetary Fund opined that the slowdown in China would enable the country to bring in a new economic model that would be “more sustainable and equitable”.

The Shanghai Composite added 0.06%; the Jakarta Composite rose 0.35%; the KLSE Composite gained 0.31%; the Straits Times was up 0.10% and the Taiwan Weighted settled 0.12% higher. On the other hand, the Hang Seng dipped 0.15%; the Nikkei 225 declined 0.55% and the Seoul Composite dropped 0.73%. At the time of writing, the major European bourses were up with modest gains, after opening higher. Also, the US stock futures were in the positive, ahead of the release of existing home sales data.

Back home, foreign institutional investors were net buyers of shares totalling Rs111.09 crore on Tuesday while domestic institutional investors were net sellers of stocks amounting to Rs120.35 crore.

Gitanjali Gems, India’s largest integrated branded jewellery manufacturer and retailer has revived talks with L Capital, the private equity arm of the world’s largest luxury group LVMH, for a strategic investment. Both the companies were in talks a year ago but had not progressed over the structure of the business. In the last one year, Gitanjali has been working on restructuring its businesses, which is close to completion. The restructuring investment is expected to as high as $100 million. The stock settled 0.07% higher at Rs370 on the NSE.

Man Infraconstruction has secured work orders aggregating nearly Rs 113 crore for construction of residential towers in Mumbai and Pune respectively from Tata Housing Development Company and Flagship Infrastructure. The stock ended 3.46% up at Rs169 on the NSE.

Tilaknagar Industries’ board has approved the conversion of convertible warrants held by Amit Dahanukar—promoter of the company. The company’s board approved the allotment of 42,84,236 equity shares against conversion of warrants held at a premium of Rs63 per share (each warrant convertible into one equity share of face value of Rs10 each). The stock rose 1.36% to close at Rs59.75 on the NSE.

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Govt may reduce lock-in for Rajiv Gandhi equity scheme

Finance minister Pranab Mukherjee in his 2012-13 Budget had announced Rajiv Gandhi Equity Scheme, under which 50% tax deduction would be allowed to retail investors with annual income less than Rs10 lakh, for investment up to Rs50,000, with a lock-in period of three years

New Delhi: The finance ministry is considering reducing the lock-in period for Rajiv Gandhi Equity Savings Scheme to one year from the proposed three years to make it more attractive to retail investors, reports PTI.

“The investors can put money in top 100 companies listed in BSE and NSE (under the scheme). We are looking at reducing the lock-in period requirement,” said an official source.

Sources said, however, that investors will not be allowed to shuffle the equity portfolio before the end of the year of investment.

In order to encourage savings and improve investment in capital markets, finance minister Pranab Mukherjee in his 2012-13 Budget had announced Rajiv Gandhi Equity Scheme, under which 50% tax deduction would be allowed to retail investors with annual income less than Rs10 lakh, for investment up to Rs50,000, with a lock-in period of three years.

Sources said this type of scheme was first introduced in Belgium, followed by France and some Eastern European nations.

“The scheme was highly successful in France and had helped in increasing retail participation in Equity market from 7% to 17%,” a source said, adding it was also appreciated by International Monetary Fund (IMF) chief Christine Lagarde in her recent meeting with Mr Mukherjee.

Finance secretary RS Gujral had earlier said that a formal guideline on the scheme, aimed at channelizing savings into the stock markets, will be issued within a month.

Besides introducing this scheme, the government has also proposed to make stock market investment more attractive by lowering the securities transaction tax (STT) by 20% from 0.125% to 0.1% on cash delivery transactions.

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RBI extends deadline for MFI provisioning norms to April 2013

“Taking into account the difficulties faced by MFI sector and the representation received by the bank from them, it has been decided to defer the implementation of asset classification and provisioning norms for NBFC-MFIs to 1 April 2013,” the RBI said in a notification

“Taking into account the difficulties faced by MFI sector and the representation received by the bank from them, it has been decided to defer the implementation of asset classification and provisioning norms for NBFC-MFIs to 1 April 2013,” the RBI said in a notification

New Delhi: The Reserve Bank of India (RBI) has deferred the deadline on implementation of asset classification and provisioning norms for non-banking financial company-micro finance institutions (NBFC-MFIs) to 1 April 2013 from April this year, reports PTI.

“Taking into account the difficulties faced by MFI sector and the representation received by the bank from them, it has been decided to defer the implementation of asset classification and provisioning norms for NBFC-MFIs to 1 April 2013,” the RBI said in a notification.

NBFC-MFIs was introduced as a new category on 2 December 2011, which also contained guidelines on asset classification and provisioning norms to be adhered to by the microfinance institutions (MFIs) with effect from 1 April 2012.

“The NBFC-MFIs are, however, required to comply with the other regulations laid down in December 2011,” it said.

In the second quarter review of monetary policy in November 2010, a sub-committee of the Central Board of the RBI, chaired by YH Malegam, was constituted to study issues and concerns in the MFI sector.

“However, the committee submitted its report in January 2011. Thereafter, the broad framework of regulations recommended by the panel has been accepted by the bank,” RBI had said earlier.

In October 2010, the MFI sector faced problems in which a spate of suicides by borrowers in Andhra Pradesh due to alleged pressure from recovery agents appointed by the MFIs.

The Andhra government then passed a law which gave overarching powers to the state and imposed a slew of measures to control MFIs' activities, including capping their lending rates.

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