Uptrend on Sensex, Nifty wavering: Wednesday Closing Report

If the Nifty closes below 5,630, the index may go sideways

The range-bound market closed marginally in the negative a day ahead of the F&O derivative expiry in the absence of any triggers and fresh concerns from Europe. After making a lower high and a lower low the Nifty ended marginally lower today. If the benchmark closes below 5,630 we may see sideways movement setting in. The National Stock Exchange (NSE) saw a volume of 93.68 crore shares and an advance-decline ratio of 865:896. 
The market opened in the red on unsupportive global cues and cautiousness ahead of the F&O expiry on Thursday. On the global front, the US benchmarks were down nearly 1% overnight on corporate concerns while the Asian markets were trading lower in morning trade today on reports of protests in Spain over the government’s austerity measures.
The Nifty opened 21 points down at 5653 and the Sensex started the day at 18,645, a cut of 49 points from its close on Tuesday. Selling pressure in power, capital goods, metal, banking and auto sectors pushed the benchmarks lower in early trade. 
Bargain hunting soon provided support, which pushed the indices higher in subsequent trade, albeit still in the negative. The market was range-bound in the negative till noon trade in the absence of any triggers.
Another round of selling—this time of metal, capital goods and banking stocks—pushed the market lower. The benchmarks fell to their lows around 1.30pm with the Nifty at 5,639 and the Sensex at 18,573. 
While the Nifty hit its intraday high in mid-morning trade at 5,673, the Sensex went up to 18,670 in the last hour of trade.
The rang-bound market closed marginally lower. The Nifty lost 10 points to 5,663 and the Sensex fell 62 points to finish at 18,632. 
The broader markets outperformed the Sensex today. The BSE Mid-cap index gained 0.27% and the BSE Small-cap index climbed 0.65%.
The main sectoral gainers were BSE Fast Moving Consumer Goods (up 0.65%); BSE Healthcare (up 0.57%); BSE Realty (up 0.29%); BSE Oil & Gas (up 0.14%) and BSE Consumer Durables (up 0.06%). The major losers were BSE Metal (down 1.17%); BSE TECk (down 0.68%); BSE PSU (down 0.57%); BSE Capital Goods (down 0.51%) and BSE Power (down 0.40%).
Eleven of the 30 stocks on the Sensex closed in the positive. The key gainers were Cipla (up 2.66%); Hero MotoCorp (up 1.59%); State Bank of India (up 1.41%); ITC (up 1.04%) and Wipro (up 0.70%). The top losers were Bharti Airtel (down 3.93%); Coal India (down 2.81%); Hindalco Industries (down 2.22%); Tata Motors (down 2.14%) and Dr Reddy’s Laboratories (down 1.57%).
The top two A Group gainers on the BSE were—Voltas (up 5.98%) and IPCA Laboratories (up 5.21%).
The top two A Group losers on the BSE were—IFCI (down 5.76%) and Power Finance Corporation (down 4.43%).
The top two B Group gainers on the BSE were—Binani Industries (up 20%) and Mukta Arts (up 20%).
The top two B Group losers on the BSE were—Warren Tea (down 20%) and Cranex (down 13.56%).
Out of the 50 stocks listed on the Nifty, 17 stocks settled in the positive. The top gainers were ACC (up 3.8%); Ambuja Cement (up 3.87%); Cipla (up 2.62%); Axis Bank (up 2.16%) and SBI (up 1.37%). Bharti Airtel (down 3.83%); IDFC (down 3.31%); Coal India (down 3.15%); Hindalco Ind (down 2.63%) and Tata Motors (down 2.26%) were the top losers on the index.
Markets across closed, with the exception of the KLSE Composite, closed with deep cuts on fresh concerns from Europe. Spain and Greece witnessed violent protests against the governments’ austerity measures. Fears of the continuing slowdown saw the Chinese benchmark Shanghai Composite falling to its lowest level since February 2009.
The Shanghai Composite tanked 1.24%; the Hang Seng declined 0.83%; the Jakarta Composite dropped 1.11%; the Nikkei 225 tumbled 2.03%; the Straits Times fell 0.67%; the Seoul Composite slipped 0.55% and the Taiwan Weighted settled 0.83% down. Bucking the trend, the KLSE Composite added 0.04%.
At the time of writing, the key European indices were reeling with losses of 1% to 2% and the US stock futures were trading lower.
Back home, foreign institutional investors were net buyers of shares totalling Rs5845.58 crore on Tuesday while domestic institutional investors were net sellers of stocks amounting to Rs1,374.11 crore.
Siemens, a leading technology enabled solutions provider, has signed a Rs146.86 crore contract with Power Grid Corporation of India (PGCIL) to build a 765kV test laboratory, at Bina, Madhya Pradesh for National High Power Test Laboratory (NHPTL). Thee company has bagged this order on a turnkey basis and will be executing the project as an end-to-end solution provider, the company said in a press statement. The stock rose 0.31% to settle at Rs701.45 on the NSE.
Tulip Telecom, provider of enterprise data services, today said it has bagged a deal worth over Rs74 crore from the Tamil Nadu government for providing end-to-end connectivity to 2,000 offices in the state. Through this e-Governance initiative awarded by from Electronics Corporation of Tamil Nadu (ELCOT), Tulip will provide network infrastructure to connect 2,000 government offices in Tamil Nadu over a period of two years, the company said in a statement. The stock tumbled 4.99% to close at Rs45.70 on the NSE.


Mutual Funds Seminar: How will SEBI's new rules affect your investment?

At a Moneylife Foundation seminar on SEBI’s new mutual fund regulations, participants were taken through the import aspects of the new rules and how the increase in expenses would impact their mutual fund investments

From 1st October 2012, the expense ratio of mutual funds may increase by as much as 45 basis points (bps). The new regulations will penalise existing investors. Many investors are unaware what impact an increase in 0.45% in the expense ratio would have on their mutual fund portfolio in the long run. Therefore Moneylife Foundation held and exclusive seminar on ‘How will SEBI’s new rules will affect your investment?’ conducted by Debashis Basu, Editor and Publisher of Moneylife magazine, who has also served as a member of the Mutual Fund Advisory Committee of the Securities and Exchange Board of India (SEBI) in the past. The response was overwhelming. 
Mr Basu demonstrated that the new regulations are geared to enrich asset management companies by allowing a higher expense ratio of up to an additional 45 bps. Mr Basu took the participants through the recent history of the fund industry and the reasons why SEBI took these drastic steps to “re-energise mutual fund industry.”
Mr Basu explained that following SEBI’s moves, long-term investors would be penalised and fund companies would be the only ones benefiting. AMCs would have to ensure the new inflows from beyond top 15 cities are at least 30% of gross new inflows in the scheme or 15% of the average assets under management (year-to-date) of the scheme, whichever is higher. Mr Basu highlighted the fact that even if AMCs bring in a lower percentage of inflows from beyond the top 15 cities they would be able to charge an additional TER depending on the new inflows from beyond top 15 cities. However, if the new investments from these cities are redeemed before one year the additional TER will be clawed back. But who would keep a track of the latter as SEBI has not demanded any disclosure of the same? In effect, fund companies have a got a licence to charge you more with low accountability, Mr Basu pointed out.
The new circular also allows AMCs to charge service tax on investment and advisory fees to the scheme, in addition to the maximum limit of TER. This would take the total additional TER up to 45 bps. 
The redeeming feature of the new rules is that from 1 January 2013, fund houses would have to provide a separate plan for direct investments, “such separate plan shall have a lower expense ratio excluding distribution expenses, commission, etc, and no commission shall be paid from such plans. The plan shall also have a separate NAV.” Investors of these plans can expect a lower expense ratio of up to 1% which is the sub-limit for marketing and selling expenses including agents” commission and statutory advertisement. 
The topic sparked a lively discussion among the participants about the merits and demerits of the new plan. Investors who opt for the direct plan would see substantial benefits in the long run but they would have to put in that extra effort to earn that extra return. Mr Basu explained that the disadvantages of the direct plan is that investors get no advice, so they must have the ability to research and evaluate if a scheme is good deal or not. And buying direct is not as quick and simple as making a phone call to your agent. You have to get equipped with the process and this is usually not static and would change over time, therefore, you would have to keep yourself updated as well, he added. Many aspects of the mutual fund industry and equity investment were also discussed during the course of the discussion.




4 years ago

There are several issues that need to be addressed by SEBI.

1. Will the existing direct investors be moved to the direct plan? If not then this can act as a double whammy. Either the investors will have to pay the TER for the time they stay with the fund. Or else, if they plan to move to the direct plan, they will have to worry about exit loads (esp in case of SIPs) and short term capital gain if any.

2. Will the TER be applicable to direct plan? A reader had also shared concern on how the advertising expenses.

3. The timing of launch of direct plan is bit inconvenient - at least to me. My SIPs run from Jan to Dec every year. Not sure if other investors are also in the same category. The problem here is that if I have to renew my SIPs then I have to do them in November or December (2 month window). At this time the direct plan might not be available. Either I can wait till Jan and start my SIPS by Feb or March. However I doubt if AMC's will be able to dispatch the necessary documents to their branches in time or not. Or else I can continue with the normal plan. In this case I will have to pay the extra expense ratio. I can then later transfer my units back to the direct plan. But then again I have to worry about exit load and short term capital gains.

I have lodged a grievance at SEBI's SCORES. Lets see what they do about this.

NCP to continue support Congress says Sharad Pawar

Following the so-called political crisis in Maharashtra, Sharad Pawar made it clear that his party would remain partner with Congress, even as party MLAs unanimously passed a resolution asking Ajit Pawar to call back his resignation as deputy chief minister


Kolkata/Mumbai: Sharad Pawar, chief of Nationalist Congress Party (NCP) on Wednesday reaffirmed his party's support to Congress at the Centre and at Maharashtra, where a crisis has erupted in the wake of Deputy Chief Minister Ajit Pawar's resignation, reports PTI.

"We continue to support the government in Maharashtra and Delhi, we do not want de-stability," Pawar told reporters in Kolkata.

Asked whether Chief Minister Prithviraj Chavan should go back to Delhi, where he was earlier a powerful minister in the PMO, Pawar said, "Whether Chavan should be there (as chief minister of Maharashtra) in Mumbai or Delhi is the internal issue of Congress, it is a prerogative of Congress and we have no view."

Asked whether the resignation of Ajit Pawar, a senior NCP leader, was to create pressure on Congress, he said, "(There is) no question of pressure creating."

Earlier in Mumbai, a crucial meeting of NCP legislators called to discuss the situation in the aftermath of the resignation of Ajit Pawar wound up within 20 minutes with a call to him to take back his papers.

The meeting, expected to be stormy due to the widening rift with 13-year-old ally Congress, ended rather tamely with the legislators unanimously adopting a resolution requesting Pawar to withdraw his resignation.

It was decided that state NCP president Madhukar Pichad would convey the sentiments of the legislators to party chief Sharad Pawar who would take a final call on the resignation by the Deputy Chief Minister.

Chief Minister Prithviraj Chavan it yet to accept the resignation of Pawar.

"A resolution was adopted requesting Pawar to take back his resignation," Pichad told reporters after the meeting at Vidhan Bhawan which was attended by all its 61 MLAs, nine independents supporting the party, besides half-a-dozen MLCs.

According to Pichad, only a resolution asking Pawar to withdraw the resignation was moved and adopted and there was no political discussion due to the passing away of veteran NCP leader and former state assembly speaker Babasaheb Kupekar.

Pawar had resigned yesterday following media reports about his alleged involvement in irrigation scam during his decade-long stint as water resources minister between 1999 and 2009.

All other 19 NCP ministers in the Prithviraj Chavan government offered to quit and even submitted their resignations to Pichad, plunging the state's coalition government into a crisis.

The NCP leaders, including some ministers accused of financial irregularities, suspected a Congress hand behind media reports targeting them.

Sharad Pawar and his trusted lieutenant and Union Minister Praful Patel, however, hastened to dispel the impression of the Congress-NCP dispensation in the state having been caught in the throes of a crisis, saying the party would not pull out of the government.

Ajit Pawar avoided the media at today's NCP legislature party meeting.

Meanwhile, Prithviraj Chavan stayed put at 'Varsha', the Chief Minister's official residence, confabulating with senior party leaders and ministers.

He has called an "informal" meeting of Congress legislators tomorrow.

"This will not be a formal meeting but the Chief Minister would be meeting party legislators to mull over the present political situation," a state Congress functionary said.

Tomorrow's meeting, according to sources who did not want to be named, has been called to express solidarity with Chavan, whom those in the NCP see as somebody who leaked the information intended to damage Pawar's reputation to the Opposition.

At a time when RTI Act is in force, information is easily available, they said.

On the issue of bringing a white paper on the status of irrigation projects, sources said it was the job of the concerned department and not the Chief Minister.

"The department can bring a cabinet note on the issue and put the information on the government's website," they said.

Chief Minister Chavan's announcement to bring a white paper on irrigation projects after state's economic survey revealed that only 0.1% additional area was brought under irrigation in a decade despite a whopping Rs72,000 crore being spent during the period, had also reportedly riled the NCP.

Pawar had yesterday resented delay in bringing the white paper.

The irrigation portfolio has been with the NCP since the coalition came into existence in 1999.

Noting that Pawar's resignation and the situation created in its aftermath was an "internal matter of the NCP", sources said they were following a policy of "wait and watch".


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