Wednesday Closing Report: Bulls make one more attempt

After ending flat for two days in a row, the market ended on a higher note today. It witnessed a firm opening on the back of supportive global cues. The upmove was aided by stocks from the healthcare, auto and fast moving consumer goods sectors. There was some selling pressure and the indices gave up some of their gains by noon. The weak opening of the European markets pulled the market further down but later value-picking in select scrips resulted in the indices closing off their intraday highs.

The Sensex ended 208 points (1.1%) higher at 18,257. The index swung between a high-low range of 18,286 and 18,067, respectively. The Nifty was up 65 points (1.2%) at 5,479, conquering the psychological level of 5,400 once again. The benchmark rose to a high of 5,488 and touched a low of 5,416 during the trading session.

The market breadth was supportive today. Of the Sensex stocks, 22 advanced while eight declined. A total of 35 stocks on the Nifty ended in the green while 15 ended lower. The BSE Mid-cap index advanced 0.8% and the BSE Small-cap index surged 0.7%.

The top performers on the Sensex were led by Hindalco Industries (up 4.5%), Tata Motors (up 4.2%), HDFC and HDFC Bank (up 3.1% each) and Oil & Natural Gas Corporation (ONGC) (up 2.1%). The Sensex losers were Reliance Communications (RCom) (down 1.1%), Reliance Industries (RIL) and Mahindra & Mahindra (M&M) (down 0.6% each).

BSE Consumer Durables (CD) index was the lone loser in the sectoral space, down 0.2%. The sectoral gainers included Information Technology (IT) (up 2%), Fast Moving Consumer Goods (FMCG) and Metal (up 1.4% each), Technology (TECk) (up 1.3%) and Auto (up 1.2%).

Asian markets ended mixed for yet another day as new worries about the global economic recovery were brought to the fore. Besides, the lacklustre opening by influential bourses also played on investors' sentiments. Jakarta Composite ended 0.6% higher, KLSE Composite was up 0.5%, Nikkei 225 gained 0.8% and Seoul Composite was up 0.4%. On the other hand, Shanghai Composite was down 0.2%, Hang Seng was down 0.5%, Straits Times and Taiwan Weighted were down 0.1% each.

Personal computer sales in India touched 23.7 lakh units during April-June 2010, recording a 34% year-on-year growth, consulting firm IDC India said. Sale of PCs during the period increased by 5.8% quarter-on-quarter.

Desktop PC sales accounted for nearly two-thirds of total PC sales at 15.6 lakh units, representing a 24% increase year-on-year. Sales of notebook computers grew at 61% year-on-year, recording 8.05 lakh shipments.

The US market closed firm on Tuesday on positive earnings reports that overshadowed mixed economic data. Earning reports from Wal-Mart and Home Depot indicate that consumer spending is slowing retuning. Economic data was mixed. Industrial production rose and wholesale prices rose but housing starts suggested that the sector remains weak. The Dow gained 103 points (1%) at 10,405. The S&P 500 gained 13 points (1.2%) at 1,092. The Nasdaq gained 27 points (1.2%) at 2,209.

Foreign institutional investors were net buyers of Rs404 crore in the equities market on Tuesday. Domestic institutional investors were net sellers of Rs 400 crore on the same day.

Satyam Computer Services' (Satyam) (down 0.5%) tainted founder B Ramalinga Raju today secured bail from the Andhra Pradesh High Court, over 17 months after his arrest on charges of allegedly fudging the IT company's accounts.

Mr Raju, who was arrested on 7th January last year and is currently undergoing treatment in a city hospital, was granted bail on the condition he stay in Hyderabad and provision of on two sureties of Rs20 lakh each. With Mr Raju getting bail, all the 10 accused in the Rs14,000 crore Satyam accounting fraud case have been granted bail by various courts.

Anil Dhirubhai Ambani Group (ADAG) firm Reliance Broadcast Network (RBN) today said it has completed its final negotiations with US media conglomerate CBS Corp to form a JV to own and operate TV channels.

RBN, previously known as Reliance Media World (up 5%), will form a 50:50 joint venture with CBS Studios, a division of CBS Corp. The JV will own and /or, operate, market and promote a portfolio of television channels in India, Nepal, Bhutan, Sri Lanka, Bangladesh, the Maldives and Pakistan.

Auto and utility vehicles major Mahindra & Mahindra (M&M) (down 0.6%) today revealed its plans to launch new models to augment its presence in the automobile market in Sri Lanka. The company was also studying the possibility of introducing an electric car, the Mahindra Reva, in Sri Lanka in future.

Mahindra has already established a base in the island nation where it has been selling its range of tractors and utility vehicles for over a decade.


RBI likely to hike policy rates in Sept review: D&B

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) today proposed to double the investment limit for retail investors to Rs2 lakh in public issues, a move that will enable individuals to aggressively participate in primary issues of companies, reports PTI.

"It is proposed to ... enhance the limit prescribed for defining a retail individual investor in a public issue from the existing Rs1 lakh to Rs2 lakh," SEBI said in a draft regulation on which it invited comments from stakeholders by 3rd September.

The current limit of Rs1 lakh for retail investors was fixed over five years ago in March, 2005.

Giving justification for its proposal, SEBI said the limit for retail investors needed to be enhanced in view of the increase in inflation rate from 4% in 2005 to around 12% currently and rise in the BSE Sensex from 8,000 points to about 18,000 points during the same period.

"This means that the retail individual investors now buy a lesser number of securities with Rs1 lakh than they would buy with the same amount in 2005," it added.

"It is a very timely and logical step. The lukewarm public response to some recent offers may also have made SEBI put the proposal," SMC Capitals equity head Jagannadham Thunuguntla said.

"The proposal will also increase competition among retail investors as we will see pressure on small retailers who put in Rs10,000 or Rs20,000 and more participation of those in the Rs 1.10 lakh-Rs 2 lakh category," Mr Thunuguntla added.

Currently most of the applications from retail individual investors have come in the size of Rs75,000 to Rs1 lakh, SEBI said, pointing out that the segment seemingly has the capacity to contribute more.

As about 35,000 to 70,000 retail investors participate in an issue, it becomes difficult for companies coming out with large issues to seek adequate subscription for quota meant for individual investors.

Under Issue of Capital and Disclosure Requirements (ICDR) Regulations, 35% of the public issue has to be allocated to retail individual investors.

SEBI said that for an issue size of Rs4,000 crore to Rs6,000 crore, the limit of Rs1 lakh would mean that it must receive a minimum of 1.5 lakh to 2 lakh applications from retail individual investors to fill in the 35% allocation.

This could be a "daunting task" even in case of well oversubscribed issues, SEBI said, while making a case for doubling the investment limit to Rs2 lakh.

The limit for retail investors was Rs50,000 before it was raised to Rs1 lakh in 2005.


Infrastructure funds throw up mixed returns

Asset management companies (AMCs) have optimistically launched infrastructure funds aiming to gain from India's ambitious infrastructure plans. However, the returns have not been very encouraging. Currently there are 17 infrastructure funds in the market. We analysed the performance of these 17 open-ended funds since inception. Out of these 17 funds, 10 have outperformed their respective benchmarks while seven have failed to beat their benchmarks. 

Tata Infrastructure Fund, launched in January 2005, has been the top performer. It posted a net asset value (NAV) return of 26% since its inception while its benchmark BSE 100 yielded 21.20% during the same period. Birla Sun Life Infrastructure Fund has been the runner-up. The fund launched in June 2009, had NAV return of 25% while its benchmark S&P Nifty rose 15.98% during the same period. ICICI Prudential Infrastructure Fund, Franklin Build India Fund, and UTI Infrastructure Fund are among the top five funds which gave NAV return between 22%-24%, racing ahead of their benchmarks.

Among the poor performers, AIG Infrastructure and Economic Reform Fund was the worst; its NAV plunged by 2% while its benchmark BSE 100 inched up 1.17%. The fund was launched in February 2008. The NAV of Baroda Pioneer Infrastructure Fund has remained flat from its launch on July 2010 to 16 August 2010 at a time when its benchmark CNX 100 gained 17.58%.

SBI Infrastructure Fund Series I - Growth plan, which was launched in July 2007, has yielded a paltry 2% NAV return since the fund's inception when its benchmark BSE 100 climbed 7.31% over the same period.


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