Wednesday Closing Report: Sideways, with a downward bias

The local indices ended below their psychological levels with sharp cuts on profit booking by institutional investors. The decline was led by Sterlite Industries, which lost over 8% after the Madras High Court ordered the closure of its Tuticorin plant on environmental issues.

Reacting positively to global cues, the Indian market opened in the green and touched its intraday high in initial trade. Profit booking in key heavyweights led the indices lower in the mid-morning session to the day's lows. Sideways movement in the negative terrain with a high degree of choppiness was seen despite the European markets opening higher. There was a gradual and volatile southward movement with the key indices settling near the day's lows.

The Sensex closed below the 20,000 mark at 19,956, down 148.52 points (0.74%). The bellwether index rose to an initial high of 20,234 and tumbled 311 points to a low of 19,923 in today's session. The Nifty breached its crucial 6,000 level to close 38.20 points (0.63%) lower at 5,991. The index swung between an intraday high-low of 6,071 and 5,979, respectively.

The overall market breadth was negative today. The Sensex had 23 declining stocks against seven in the advancing list. The Nifty ended with 36 stocks in the red, 13 in the positive zone and one stock remained unchanged. Among the broader indices, the BSE Mid-cap index shed 0.67% and the BSE Small-cap index fell 0.48%.

The top performers on the Sensex were Tata Motors (up 2.51%), Infosys Technologies (up 0.42%) and Hero Honda (up 0.34%). The losers included Sterlite Industries (down 8.50%), ITC (down 2.66%), Bharti Airtel (down 2.51%), Maruti Suzuki (down 2.50%) and ONGC (down 2.35%).

BSE IT (up 0.24%), BSE Auto (up 0.08%) and BSE Healthcare (HC) (up 0.02%) were the only gainers in the sectoral space today. The sectoral losers were led by BSE Metal (down 1.92%), BSE Fast Moving Consumer Goods (FMCG) (down 1.42%) and BSE Consumer Durables (CD) (down 1.16%).

Two amendments moved by a US senator on restricted hiring of foreign workers and another aimed at preventing fraud and abuse of H-1B and L1 visa could not pass the Senate floor as they were blocked by the Democratic Party.

The two amendments moved along with the Creating American Jobs and End Offshoring Act, were blocked by the Democratic Party, senator Chuck Grassley, its author said on Tuesday. Incidentally, the offshoring act in itself was blocked by the opposition Republican party.

Markets in Asia ended on a firm note supported by a rise in HSBC's China Purchasing Managers' Index to a five-month high in September. However, the Shanghai Composite ended lower, despite the positive economic data. The gains in the region were also supported by speculations that the Bank of Japan will take new steps to boost the economic recovery.

The Hang Seng settled 1.22% higher, Jakarta Composite was up 0.66%, KLSE Composite was up 0.15% higher, Nikkei 225 surged 0.67%, Straits Times rose 0.28%, Seoul Composite was up 0.56% and Taiwan Weighted ended 0.63% higher. On the other hand, the Shanghai Composite was down 0.03%, shedding all its earlier gains.

The Centre today refused to accept the alternative model of Goods and Services Tax (GST), mooted by state GST panel head Asim Dasgupta and a couple of BJP-ruled states.

"We have regretted our ability to accept either the suggestion of Madhya Pradesh, Gujarat or the chairman of the Empowered Committee because they do not, in our opinion, allow the essential features of GST to operate," revenue secretary Sunil Mitra told reporters on the sidelines of a CII seminar.

The US markets ended with small gains overnight as a fall in the dollar on speculations that the Federal Reserve will purchase US Treasury securities in a bid to boost the economic recovery, propped up investors' appetite for riskier assets. The gains came despite a decline in consumer confidence and a fall in home prices. The Conference Board's sentiment index declined to 48.5 this month, the weakest level since February. Another report showed home prices cooled, hurt by a slump in sales following the end of a government tax incentive.

The Dow gained 46.10 points (0.43%) at 10,858. The S&P 500 rose 5.54 points (0.49%) to 1,147. The Nasdaq gained 9.82 points (0.41%) to 2,379.

On the global front, a rise in HSBC's China Purchasing Managers' Index to a five-month high in September pointed to renewed momentum in the industrial sector, the backbone of China's economy.

The index, which is designed to provide an early indication of conditions, rose to 52.9 from 51.9 in August, mainly reflecting stronger gains in output and new business. A reading above 50 indicates expansion on the month; a figure below 50 denotes contraction.

Foreign institutional investors were buyers of Rs573 crore worth of shares on Tuesday. Domestic institutional investors were sellers of stocks worth Rs905 crore on the same day.

The Madras High Court on Tuesday ordered closure of Vedanta group company Sterlite Industries' (down 8.50%) copper smelting plant at Tuticorin after noting that the company has failed to comply with environmental issues.

The court held that the plant was within 25km of an ecologically fragile area and the company has failed to develop a green belt of 250metre width around the plant.

State-owned Oil and Natural Gas Corporation (ONGC) (down 2.35%) has sought legal opinion from the Solicitor General of India on its rights in the $9.6 billion Cairn-Vedanta deal.

ONGC sought opinion from the second highest law officer of the country after its partner Cairn Energy Plc stated that the UK firm's sale of majority stake in Cairn India to Vedanta Resources will not trigger pre-emption rights of the state- owned firm, a top oil ministry official said.

Anil Dhirubhai Ambani Group (ADAG) company Reliance Capital (down 2.09%) has acquired a 4.98% stake in an infrastructure developer Trinethra Infra through an open-market transaction.

Reliance Capital has acquired 16,08,000 equity shares of Trinethra Infra Ventures Ltd, equivalent to 4.98% of capital by secondary market purchase, the Hyderabad-based infra firm said in a filing to the Bombay Stock Exchange.


Personal finance Wednesday

HDFC Mutual Fund floats HDFC FMP 370D September 2010 (2); DSP BlackRock MF launches DSP BlackRock FMP-12M-Series 8; SBI to introduce combo cards; Indiabulls Securities launches Tradelite

HDFC Mutual Fund floats HDFC FMP 370D September 2010 (2)

HDFC Mutual Fund has launched a new fixed term fund called HDFC FMP 370D September 2010 (2), under HDFC Fixed Maturity Plans-Series XV, a close-ended income scheme. The investment objective of the Plan is to generate regular income through investments in debt/money-market instruments and government securities maturing on or before the maturity date of the Plan. The Plan will invest 60%-100% of assets in debt and money-market instruments and the remaining in government securities.

The Scheme will offer growth and dividend option. The Plan will have the maturity period of 370 days. During the new fund offer (NFO), the units will be offered at face value of Rs10 per unit. The new issue will open for subscription from 30th September and close on 14th October. The minimum investment amount is Rs5,000. The Plan seeks to collect a minimum target amount of Rs1 crore under the Scheme. Exit load for the Plan will be nil.

CRISIL Short Term Bond Fund Index will be the benchmark index. Shobhit Mehrotra and Miten Lathia are the fund managers.

DSP BlackRock MF launches DSP BlackRock FMP-12M-Series 8

DSP BlackRock Mutual Fund launches DSP BlackRock FMP-12M-Series 8, a close-ended income scheme. The investment objective of the Schemes is to seek capital appreciation by investing in debt and money-market securities. It is envisaged that the Scheme will invest only in such securities which mature on or before the date of maturity of the Schemes. The Schemes may also use fixed-income derivatives for hedging and portfolio balancing. The Schemes will allocate 100% of its assets in debt securities and money-market instruments.

The Scheme offers two options-growth and dividend (payout). The term of the Scheme is 12 months from the date of allotment. During the new fund offer (NFO), the units will be offered at face value of Rs10 per unit. The Scheme opens on 29th September and closes on 5th October. The minimum investment amount is Rs10,000.

The exit load for the Scheme is nil. Dhawal Dalal is the fund manager. CRISIL Short Term Bond Fund Index is the benchmark index.

Dhawal Dalal, senior vice president & head-Fixed Income, DSP BlackRock Investment Managers, says, "The FMPs with 12 months maturity are typically targeted towards investors who prefer bank fixed deposits over an FMP. The 12-month FMP not only provides investors with returns comparable with prevalent bank fixed deposits rates, but also looks better from post-tax returns perspective."

SBI to introduce combo cards

State Bank of India is planning to convert all its debit and credit cards to combo cards. These combo cards can then be used for both - banking and travel. In case of travelling, combo cards will be used in Metro rail. If things materialise as per planning, then these cards will be first used in Bengaluru. Bangalore Metro Rail Corporation (BMRC) has collaborated with SBI for such cards. At present, SBI and Bangalore Metro are finalising the design, plan and execution of these cards.
The cards are likely to be available to people before the first metro train starts operating in the city in December.

Indiabulls Securities launches Tradelite

Indiabulls Securities Ltd has launched its mobile trading platform 'Tradelite' for trading on the Bombay Stock Exchange. Using Tradelite, customers can place market orders or sell stocks through their mobile phones - anytime and from anywhere. This user friendly application has features of a normal trading platform like market rates, order book, order entry screen, order modification/deletion, and account reports on a smaller interface.

Indiabulls customers will be able to access Tradelite through GPRS (general packet radio service) enabled mobile phone by entering a dedicated URL. All communication on this trading platform is 128 bit encrypted and certified by Verisign. Along with their username and password the users will also be required to provide their second level transaction password through a secure ID token.


FMC gives nod to ADAG to buy 26% stake in ICEX

New Delhi: Commodity markets regulator Forward Markets Commission (FMC) today said it has given approval to the Anil Dhirubhai Ambani Group (ADAG) to acquire 26% stake in Indian Commodity Exchange (ICEX) from one of its promoters — Indiabulls group, reports PTI.

"We have given permission to (the) Anil Ambani Group to buy 26% stake in ICEX from Indiabulls," FMC chairman B C Khatua told PTI.

Consumer affairs ministry, which frames policies for commodity futures markets, gave its assent to the ICEX' proposal last week, he said.

FMC functions under the aegis of this ministry and oversees the functioning of four national and 19 regional commodity bourses.

At present, Indiabulls holds 40% in ICEX, of which it wants to sell 26% stake in the bourse to ADAG.

MMTC has 26% stake in ICEX, which is the country's fourth national commodity exchange launched late last year.

"We entered the exchange business in late 2009. We have already started a spot exchange and have a 26% stake in a commodities exchange," ADAG Group chairman Anil Ambani had said yesterday at the AGM of group firm Reliance Capital.

The group had also announced its intention to enter all segments of the exchange business. Reliance Capital is already in the spot commodity space.

Another group firm Reliance Money also has stake in the national commodity exchange NMCE.

ICEX, a national-level commodity bourse, offers futures trading in 18 commodities, including bullion, metals and agricultural items. The exchange clocked a business of Rs13,009 crore in the first fortnight of September.


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