The indices have to stay above today’s low to continue the uptrend
The Asian indices had a mixed opening, while the indices at home opened in the positive. The Sensex opened at 17,856 while the Nifty opened at 5,426. Speculation that central banks in the US and China will ease monetary policies amid signs slowing growth helped indices to remain in the positive. Yesterday we had mentioned that we may now see a cautious upmove ahead and a change in trend may happen if the Nifty closes below the previous day’s low. We continue to maintain the stance. The National Stock Exchange (NSE) saw a higher volume of 59.01 crore shares.
Back home, the government on Wednesday eased rules governing overseas borrowing, a move that will help local companies and spur capital inflows.
On the Asian front, China's factory activity in August shrank at its fastest pace in nine months as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter. The HSBC Flash China manufacturing purchasing managers index (PMI) fell to 47.8 in August, its lowest level since November, from 49.5 in July. Asian stocks rose amid hope weak Chinese manufacturing data could lead to fresh monetary easing from Beijing
On the opening of the European market the indices back home hit their intraday high after which they started their downward move. Both the indices hit a higher high, the Sensex climbed to 17,973 while the Nifty rose to 5,449.
Eurozone manufacturing activity contracted for a seventh month in a row in August, according to preliminary survey data released today. An initial calculation of the PMI, a survey of 3,000 Eurozone manufacturers, came in at 45.3 in August, up from 44 in July. A score below the neutral 50 mark indicates contraction.
Weak data from the Eurozone dragged the local indices into the negative and thereon to their intraday low, which was almost at the same level as yesterday. The Sensex hit a low of 17,793 while Nifty fell to 5,394.
However, during the closing hour the indices managed to pull themselves up and end marginally in the positive. The Sensex and the Nifty closed up three each at 17,850 and 5,415, respectively.
The advance-decline ratio on the NSE was in negative at 769:992.
The broader indices underperformed the Sensex today. The BSE Mid-cap index fell 0.08% and the BSE Small-cap index slipped 0.12%.
The sectoral gainers were BSE IT (up 1.80%); BSE TECk (up 1.36%); BSE Fast Moving Consumer Goods (up 0.88%); BSE Healthcare (up 0.51%) and BSE Metal (up 0.50%). The main losers were BSE Oil & Gas (down 1.05%); BSE Auto (down 0.83%); BSE Capital Goods (down 0.76%); BSE Power (down 0.41%) and BSE Consumer Durables (down 0.37%).
The top gainers on the Sensex were Wipro (up 2.61%); TCS (up 2.25%); Infosys (up 1.73%); Tata Steel (up 1.53%) and Hindustan Unilever (up 1.45%). The losers were led by Reliance Industries (down 1.68%); Larsen & Toubro (down 1.63%); ONGC (down 1.59%); Mahindra & Mahindra (down 1.55%) and Tata Motors (down 1.09%).
The top two A Group gainers on the BSE were—Voltas (up 4.49%) and Gujarat State Petronet (up 4.20%).
The top two A Group losers on the BSE were—Opto Circuits (down 012.27%) and Adani Ports (down 4.92%).
The top two B Group gainers on the BSE were—Autolite India (up 20%) and Suven Lifesciences (up 19.98%).
The top two B Group losers on the BSE were—Shelter Infraprojects (down 16.79%) and Fintech Communications (down 16.67%).
Cairn India (up 3.36%); Ranbaxy Laboratories (up 2.68%); TCS (up 2.57%); Wipro (up 2.5%) and HUL (up 2.15%) were the Sensex toppers today. The losers were led by Reliance Infrastructure (down 2.10%); RIL (down 1.73%); M&M (down 1.72%); L&T (down 1.60%) and Power Grid Corporation (down 1.51%).
All the Asian indices ended up in the positive except for KLSE Composite which fell 0.04%. The highest gainer among the Asian indices was Hang Seng which closed 1.23% up.
At the time of writing, the European indices and the US Futures both were trading in the red.
Back home, foreign institutional investors were net buyers of shares amounting to Rs96.64 crore on Wednesday whereas domestic institutional investors were net sellers of equities aggregating Rs230.14 crore.
Software firm Ramco Systems, focused on the cloud computing platform, today said it has set up a wholly-owned subsidiary in Australia to drive growth in new markets. The company will be called Ramco Systems Australia Pty. The stock declined 2.97% to settle at Rs133.75 on the NSE.
Somany Ceramics on Thursday said it would invest Rs200 crore over the next five years in Gujarat and Karnataka for expanding capacities. The company is also exploring to acquire a tile-making firm at Morbi in Rajkot district of Gujarat this year. The stock tumbled 7.89% to close at Rs42 on the NSE.
A consortium in which the wholly-owned subsidiaries of Videocon Industries and Bharat Petroleum Corporation are members have completed the drilling of a second well in a block off Brazilian coast. The discovery of hydrocarbons has been made in a block named BM-SEAL-11 in the sea where the water depth is close to 2.5 km, about 100 km off the coast of the city of Aracaju — in what is known as the Sergipe Basin — which was first announced in September 2011.
Videocon declined 0.29% to Rs174.25 while BPCL gained 0.72% to settle at Rs351.40 on the NSE.
As many as 246 companies have pledged more than 50% of their holdings, which includes United Spirits, Pantaloons Retail, Wockhardt and Unitech. The value of pledges has fallen this quarter
According to Morgan Stanley’s analysis a third of 767 companies have pledged more than 50% of their holdings. This is a high figure in corporate India and an indicator that promoters and their companies are in need for cash. Also, share pledging as percentage of market capitalisation has increased the latest quarter (June 2012) over the previous quarter (March 2012) by 11% while the value of the shares has fell by 9%. The report said, “The pledged value as a percentage of the market cap of these companies is marginally above its March 2012 lows—at 9.8% (up 11bps Q-o-Q). Its share in India’s market cap increased a tad from 2.05% in March 2012 to 2.08% in June 2012.”
As many as 17 companies have pledged their entire promoter holdings. The include Thomas Cook (India), Essar Shipping, Tuticorin Alkali, Asian Hotels. Some of the prominent companies to have pledged almost their entire promoter holding are United Spirits (98% & $439 million), Pipavav Defence (97% & $439 million), Wockhardt (87% & $1,176 million), Essar Oil (86% & $194 million), Unitech (72% & $360 million), Pantaloon Retail (67% & $222 million). Those which have increased their share pledging this quarter were V2 Retail, Hotel Leela Ventures, Pantaloon DVR, KS Oils and BL Kashyap, to name a few.
Share pledging is the act of obtaining a loan by a company promoter in lieu of shares owned. It shows that the company is struggling and needs cash. It may have no other collateral other than its own shares.
Furthermore, with regard to the value of the shares, the report titled “Tracking Promoter Pledging: What’s at Stake?” said, “Marked to market, as per the previous day’s close (20th August), the pledged value of shares was roughly $22 billion, down 9% Q-o-Q without accounting for any subsequent changes that may have happened to the number of shares pledged. In rupee terms marked to market, the pledged value of shares was roughly Rs1.27 trillion, down 0.5% Q-o-Q. As share value goes down, banks will ask promoters to pony up more shares or ask them to put other form of collateral or cash.
The sector which has the maximum amount of share pledged is consumer discretionary ($4,273 million; 197 companies) followed by Materials ($3,597 million; 205 companies). Consumer discretionary also takes the title for being the sector with the largest amount of share pledged (19%) as portion of total share pledged. The least is energy, with just 2% of the total amount pledged (and seven companies only). The financial sector formed the largest group, in terms of value of shares pledged as a percentage of market capitalisation (20.8%; 77 companies), and Information Technology being the lowest (4.5%). As percentage of promoter holding, as much as 70% of the energy sector shares were pledged.
The India Kindle Store features a vast selection of titles, new releases, bestsellers, and works from a range of Indian authors. Amazon has also launched its bestselling e-reader Kindle at an introductory price of Rs6,999