Wednesday Closing Report: Bull in the India shop

It was a day of the heavyweights, surging on buying interest, after a lull seen on Tuesday. Early support came from the global front, indicating that steps taken by various governments are yielding results albeit at a slow pace. The indices finally ended with gains of over 1.3% today.

The local market opened higher on cues from its Asian peers that were trading with good gains today. Overcoming minor hiccups, when the indices touched their lows, the market set off on its northward journey on buying in blue-chip stocks. The gains were reinforced by the European markets opening firm. The market settled near the highpoint of the day.

At close of trade, the Sensex stood at 20,688, a jump of 484.54 points (2.40%). The bellwether index touched a high of 20,704 and a low of 20,211 during the day. The Nifty ended at 6,234, surging 143 points (2.35%) today. The barometer swung between a high-low of 6,240 and a low of 6,089, intraday.

The gainers overpowered the losers today. The 30-stock Sensex list had 28 gainers, one loser and one stock ended unchanged. The Nifty had 46 advancing stocks, two stocks ended lower while two ended flat. Among the broader indices, the BSE Mid-cap index was up 0.99% and the BSE Small-cap index advanced 1.06%.

The star performers on the Sensex were HDFC (up 4.60%), TCS (up 4.56%), Wipro (up 4.48%), Larsen & Toubro (L&T) (up 4.04%) and Jaiprakash Associates (up 4.01%). NTPC was the lone loser, down 1.26%.

The gainers in the sectoral space were BSE IT (up 3.15%), BSE TECk (up 2.72%), BSE Capital Goods (up 2.68%), BSE Realty (up 2.51%) and BSE Fast Moving Consumer Goods (up 2.29%). There were no red ticks in the sectoral space today.

The finance ministry today said it will provide equity support of about Rs8,700 crore to public sector banks, a move that will enable lenders to raise funds from the capital market without diluting the government holding to below 51%.

In the first tranche the government has approved capital infusion of Rs6,211 crore in the five public sector banks announced in June this year. As much as Rs8,789 crore would be part of second tranche.

Asian markets closed trade in the green on positive economic data from the region. Japanese core machinery orders rose more-than-expected in August while the Chinese government asserted that it would take steps to enhance rural housing through affordable construction material.

The Shanghai Composite was up 0.70%, Hang Seng jumped 1.45%, Jakarta Composite surged 1.82%, KLSE Composite rose 0.70%, Nikkei 225 added 0.16%, Straits Times was up 1.68%, Seoul Composite advanced 0.43% and Taiwan Weighted closed 0.20% higher.

The US market closed in the positive terrain on Tuesday as minutes of the 21st September Federal Reserve meeting that were released indicated that the central bank will take new steps to boost the economy as unemployment continued to be a major concern. Investors hope the Fed will unveil additional stimulus measures at its November meeting.

The Dow rose 10.06 points (0.09%) to 11,020. The S&P 500 rose 4.45 points (0.38%) to 1,169. The Nasdaq rose 15.59 points (0.65%) 2,417.

The Adani Group has started talks with Coal India Ltd (CIL) to take on board the state-owned company as a partner for developing the Australian mines that it recently bought in a Rs12,600 crore deal.

"Talks have opened up between an Adani Group firm and Coal India Ltd. Adani Group is seeking to rope in CIL for development of coal assets it recently bought in Australia for Rs12,600 crore. There could be an equity partnership as well," a market source privy to the development said.

Buying by foreign institutional investors was negated by selling by domestic institutional investors on Tuesday. The former were net buyers of stocks worth Rs455 crore while the latter sold equities worth 454 crore on the same day.
FMCG major Dabur (down 2.05%) has concluded the acquisition of Turkey-based personal care products maker Hobi Kozmetik Group, worth Rs324 crore. With the completion of this transaction, the Hobi Group has become a wholly-owned subsidiary of Dabur International, which in turn is the subsidiary of Dabur India.

This acquisition will further enable consolidating and expanding Dabur's presence in the Middle East and North Africa. Further, the acquisition will offer the company an entry into an attractive new market like Turkey, and add to its portfolio a host of popular international brands that enjoy pole position in their respective categories.

India's largest lender, State Bank of India (SBI) (up 2.26%) has entered into a mobile service agreement with Western Union under which SBI accountholders will be able to receive cross-border money transfers in their bank accounts using their mobile phones.

The new service will enable SBI customers to send money from one of Western Union's 3,80,000 agent locations globally to an SBI account anywhere and at anytime.

State-run Shipping Corporation of India (SCI) (down 0.21%) today said it has filed the draft prospectus with the Securities and Exchange Board of India (SEBI) for its follow-on public offer (FPO).

The issue comprises a fresh issue of 42,345,365 shares by the company and an offer for sale of 42,345,365 shares by the Government of India.


Govt to provide equity support of Rs8,700 crore to PSU banks

New Delhi: The finance ministry today said it will provide equity support of about Rs8,700 crore to the public sector banks, a move that will enable lenders to raise funds from the capital market without diluting the government holding to below 51%, reports PTI.

"Next tranche of the capital infusion in the banks will be to raise government's holding in the public sector banks to certain level, which is being worked out," Department of Financial Services secretary R Gopalan said on the sidelines of Orient Grameen Swarojgar Card launch by Oriental Bank of Commerce here.

"So that at time when we are not in a position to fund them through budgetary resources they will be in position to go to the market and raise resources to beef up their Tier I position," he said.

The government is also conscious of Basel III requirement where addition Tier I capital has been prescribed, he added.

The government will look at those banks where government's holding is at minimum at 51%.

In the first tranche the government has approved capital infusion of Rs6,211 crore in the five public sector banks announced in June this year.

Finance minister Pranab Mukherjee in his budget speech this year announced that the government planned a capital support of Rs15,000 crore to public sector banks during the current fiscal to ensure that these entities could attain a minimum 8% tier-I capital by 31 March 2011.

As much as Rs8,789 crore would be part of second tranche.

There are six public sector banks - Bank of Baroda, Oriental Bank of Commerce, Andhra Bank, Dena Bank, IDBI Bank and Vijaya Bank - where the government holding is less than 55%.

The Centre's holding in Bank of Baroda stands at 53.8%, Oriental Bank of Commerce at 51.1% while in case of Andhra Bank, it is 51.6%. In IDBI Bank, Dena Bank and Vijaya Bank, the government holding is 52.7%, 51.2% and 53.9% respectively.

When asked if the government had taken any decision on the State Bank of India's proposal of Rs20,000 crore rights issue, Mr Gopalan said, "we are still examining. We have not finalised the assessment."

On the operations of microfinance institutions in the country, Mr Gopalan said, "It is not possible for any one to control interest rates. It is just not feasible."

He added," As far as we are concerned Microfinance Institutions Regulation Bill is in the offing, which is under consultation with number of stakeholders. In that Bill we will never have a provision of control of interest rate, as it is not feasible."

When asked if the Bill was likely to be tabled in the upcoming winter session of Parliament, Mr Gopalan said, "It depends on number of legislative agenda there. We have finished consultation with stakeholders and we will have to look at taking it forward."


Bajaj Holdings and Investment to pick up 12.82% stake in NMCE

New Delhi: The National Multi Commodity Exchange of India (NMCE) today said it will raise Rs25 crore by selling its 12.82% stake to Bajaj Group arm - Bajaj Holdings and Investment Ltd, reports PTI.

"This investment will help NMCE to meet its regulatory capital requirement and strengthen its balance sheet for investment in exchange infrastructure," NMCE said in a statement.

Both companies today jointly announced that they have signed a definitive agreement under which Bajaj holdings has agreed to invest Rs25 crore in the commodity exchange, the statement added.

Equirus Capital acted as the exclusive financial advisor to NMCE for the transaction.

NMCE would also utilise the raised capital for strengthening of the exchange IT infrastructure, business development and human resources, the exchange said.

Commenting on the development NMCE vice chairman Kailash Gupta said, "We are pleased to partner with a reputed business house like Bajaj Group in our next stage of growth. We believe this association would further diversify our investor base and facilitate in strengthening the exchange infrastructure and ecosystem."

Bajaj Holdings and Investment Limited is the parent company of Bajaj Auto Limited (BAL) and Bajaj Finserv Limited (BFL) and is a part of the Bajaj Group.

"We are excited to invest into NMCE. They lead in select agri commodities. We are hopeful that the impending regulatory changes and the robust growth envisaged in the physical economy would boost the commodity exchange volumes in India," Bajaj Holdings director Sanjiv Bajaj said.

Other shareholders in NMCE include National Agricultural Cooperative Marketing Federation of India, Gujarat Agro-Industries Corporation Limited, Punjab National Bank and Reliance Money and the bourse is promoted by Central Warehousing Corporation and Neptune Overseas Limited.


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