BSE, NSE defer advancing trading hours till 4th Jan

Based on market feedback, BSE and NSE have jointly decided that the revision of market opening time to 9am will be effective from 4 January 2010

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Thursday postponed the advancement of market opening time to 9am till 4 January 2010.

On Wednesday, the two exchanges said that the market would open at 9am effective from 18th December, an advancement of nearly an hour from the current practice of market opening at 9:55am.

"Trading will start in the equity segments of the BSE & NSE at 9am with effect from Monday, 4 January 2010," an NSE official told PTI.

In a statement, BSE said, "Based on the market feedback, it has been jointly decided by BSE and NSE that the revision of market opening time to 9am shall be effective from 4 January 2010. In the interim, the current market open timing of 9:55am shall continue."

The market closing time would continue to remain unchanged at 3:30pm.

Speaking about the change in trading timings, Deena Mehta, former president of the BSE and managing director of Asit C Mehta Investment Intermediaries Ltd, said, "It will put a lot of pressure on the system and I am not sure it will benefit anybody. People directly or indirectly associated with the markets will be pressurised to start work early, actually we are taking away a part of their personal time.”

“A lot more homework is required before we move ahead with this. Even the banks are not promising that they would have the Real Time Gross Settlement (RTGS) system running before 9.45am. So in the event of a big movement in prices, there is an issue of how will we be able to make payments," Ms Mehta added.

Some market players believe the extension in timings would help in reducing volatility, improve trading volumes and help catch up with trading in the Hong Kong and Singapore markets.

India Infoline Ltd, in a note said, "Gurus of markets have spoken about the time in the market which is important rather than timing the market. Investors sure will benefit with the extended trading hours. Those directly and indirectly linked to the stock market will start early as trading begins at 9am."

Dinesh Thakkar, chairman and managing director, Angel Broking, said, “While many large brokers are geared up for the additional trading hour, we believe that it is necessary that the whole market should be geared up for the same. The postponement will give the market participants time to put the infrastructure in place and manage the extended trading hours with full planning and preparation.”

Some brokers believe that the trade time extension would solve no purpose as Indian markets would still be behind the Singapore-based bourses.

According to a PTI report, Arun Kejriwal, director, Kejriwal Research and Investment Services (KRIS) said, "It will make life miserable for all those who are trading as there is no way we can catch (up) with Singapore markets as we cannot eliminate the two-and-a-half hour time gap."

During November, BSE has clocked a total equity turnover of Rs1,04,998.70 crore. The total average daily turnover of the BSE is estimated at Rs5,257.10 crore in November. On the other hand, the NSE has registered an average daily traded value of Rs15,170.60 crore with nearly 1,317 securities traded in November 2009. Its market capitalisation stood at Rs50,24,830 crore in October 2009.

Currently, almost all of the Rs80,000 crore worth of derivatives volumes take place on the NSE. In the cash market too, the NSE accounts for 75% of the trading volumes.

SEBI allowed bourses to set their trading hours between 9am and 5pm in October on condition that appropriate risk management systems and infrastructure are put in place. NSE was seen as the big beneficiary of this move, because it was openly concerned over losing Nifty volumes to the Singapore Stock Exchange (SGX), which opens earlier.

The Singapore International Monetary Exchange (SIMEX) trades an NSE-licensed derivatives product on the NSE's Nifty index, named SGX CNX Nifty. Its volumes are driven by foreign institutional investors (FIIs) who trade on the futures before the Indian markets open.

Foreign investors, constrained by the limited ability to participate directly in the Indian equities market after the ban on participatory notes, flock to the SGX Nifty futures product to catch some of the action in Indian markets. Domestic investors in Singapore subsequently take positions on cues from these FIIs. SGX has somewhat stolen NSE’s thunder due to its impressive track record in derivatives and high ethical standards.

With a new team in place at the BSE, the competition is bound to heat up on several fronts. Already, there are open differences between the two bourses on the software for algorithm based trading—the NSE has allegedly refused to grant permission for those algorithm trades, where one of the legs involved transactions on the BSE as well. Interestingly, although James Shapiro of the BSE has made this allegation in public, SEBI, which is seen as being pro-NSE, has made no public attempt to intervene or ensure a level-playing field between the bourses.

The NSE is already at war with the MCX group with litigation in the Bombay High Court (over broker front office software) and before the Competition Commission over transaction charges in the currency market.

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    Patel Engineering wins $1-billion road order in Djibouti

    While the Consulate General of the Republic of Djibouti confirmed the news report, Patel Engineering, on the other hand, said that it is in an advanced stage of negotiation for this infrastructure project

    According to reports, Indian construction company Patel Engineering Works Ltd has won an order for building a 350-km highway connecting Djibouti’s border to Ethiopia, worth nearly $1 billion (about Rs4,600 crore).

    "Patel Engineering Works has bagged the order worth nearly $1 billion. The work which commenced six months ago is being carried out on a Build-Operate-Transfer basis," consulate general of the Republic of Djibouti in India, Mohamed Idris Saban, told reporters in Bengaluru.

    When contacted, company officials said Patel Engineering Works was in “advanced talks” and a formal agreement is “yet to be reached”. According to a filing to the Bombay Stock Exchange, Patel Engineering said that it is in an advanced stage of negotiation with the ministry of transport, Djibouti, for infrastructure works.

    HRD and Co, another Mumbai-based company, has been given an order for a geo-thermal energy project in Djibouti. The deal was a power purchase agreement, said Mr Saban.

    "We are also looking at tie-ups with Indian computer education firms like NIIT and Aptech to start such institutes in Djibouti and are looking at student-exchange programmes. We have almost 750 students in India from Djibouti," he added.

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    Sensex sheds 19 points, ends at 16,894

    Dollar hits a new three-month high; Indian markets continue on their volatile trend

    Indian markets continued to remain in the red on weak global cues. The Sensex declined 19 points from the previous day’s close, ending the day at 16,894, while the Nifty remained flat at 5,042.

    During the day, Tata Steel rose 1%. As per media reports, the company’s European unit Corus has secured a €350-million contract to supply rail tracks to French railway operator SNCF.

    Ennore Coke rose 3% on reports that the company plans to buy a 90% stake in an Australian mining firm.

    Titagarh Steel shot up 10% after the Calcutta High Court approved the amalgamation plan of the company and unlisted Titagarh Biotec with group firm Titagarh Wagons.

    Diamant Investment & Finance was locked at 5% after the company said its board will meet on 24 December 2009 to consider issue of bonus shares and raising funds.

    The Gemini-PointRed combo outbid various multinational companies to win another major mobile WiMAX deal from BSNL worth Rs435 crore. Gemini Communication was up 5%.

    Patel Engineering shot up 2% on reports that the company had bagged an order worth $1 billion in Djibouti.

    Pratibha Industries secured a contract worth Rs129.89 crore from the Haryana Urban Development Authority. The project is in joint venture with SMS Paryavaran Pvt Ltd. The stock was up 2%.

    Usha Martin Infotech has signed a non-binding, non-exclusive Memorandum of Understanding with Pearson Education India for foraying into school management. The stock was up 5%.

    Tanla Solutions gained 6% on reports that Tanla Mobile Pvt Ltd (TMPL), a subsidiary of Tanla Solutions (TSL), had commenced operations from DLF Cyber City in the Special Economic Zone at Hyderabad.

    KEC International has won major orders in Algeria and Abu Dhabi worth Rs474 crore and Rs76 crore respectively. The stock was up 3%.

    As per data released by the government, the food price index rose 19.95% in the year to 5 December 2009. The fuel price index rose 3.95% and primary articles index rose 14.98%.

    Moody’s Investors Service upgraded the long-term foreign currency (FC) deposit ratings of 14 Indian banks to ‘Ba1’ from ‘Ba2’, following the rating agency's recent upgrade of India’s FC deposit ceiling.

    Meanwhile, the two main bourses, Bombay Stock Exchange and National Stock Exchange have reportedly postponed by more than two weeks their move to bring forward the start of trading by 55 minutes, after strong protests from brokers. Extended trading on the two stock exchanges will now begin on 4 January 2010, instead of the earlier planned date of 18 December 2009. The two exchanges had announced late on Wednesday the extension of trade timings in equity and derivatives segments by almost one hour to 9:00am IST effective from Friday, 18 December 2009. The move was to align their timings with major Asian markets.

    Today, the dollar rose to a three-month-high against the euro in Asia due to concerns over European bond markets and the US Federal Open Market Committee’s slightly hawkish statement overnight. The US currency is expected to post further gains if December’s Philadelphia Fed Manufacturing Index due later in the day beats market forecasts, highlighting the recovery in the American economy. Economists expect the index to drop to 16.40, a slight deterioration from the index’s previous result of 16.70.

    Standard & Poor’s Ratings Services announced that it has revised its ratings criteria for covered bond programs, placed €1.46 trillion worth of such programs on CreditWatch, and signalled these programs may be downgraded in the next few months. This announcement made the markets more bearish over the euro. European banks often raise funds using covered bonds because of their low cost. A ratings cut possibility in bonds means European financial institutions may face difficulty raising funds in the near future, which may spur risk aversion.

    Further, Standard & Poor’s announcement on Wednesday that it had cut Greece’s credit rating, as it has the widest budget deficit among the European Union nations, added further pressure on the euro.

    During the day, Asia’s key benchmark indices in China, Japan, Indonesia, Singapore, Hong Kong and South Korea fell by between 0.14%-2.34% despite the US Federal Reserve saying that the US economy was improving.

    On Wednesday, 16 December 2009, the Dow Jones Industrial Average was down 11 points while the S&P 500 and the Nasdaq Composite were up 1 point and 6 points respectively after the Fed offered no surprises in its latest statement.

    The Federal Reserve kept its target range for its bank lending rate at zero to 0.25%, the same level since last December 2008, and it repeated its pledge to keep rates at exceptionally low levels for an extended period.

    The Fed also said that the economy had continued to pick up and that deterioration in the labour market was abating. However, the Fed still predicts unemployment to remain high. The Fed statement said that household spending appears to be expanding at a moderate pace. The central bank said that the economic conditions, including low rates of resource utilisation, subdued inflation trends and stable inflation expectations are likely to warrant exceptionally low levels of the Federal funds rate for an extended period. Taking note of the improving conditions for banks, the Fed said that it would shutter most of its emergency lending facilities on 1 February 2010.

    In premarket trading, the Dow was trading 45 points higher.

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