Markets extend gains led by bank shares
Benchmark share indices extended gains in noon trades led by bank shares after the RBI at its second Quarter Review of Monetary Policy 2013-14 today announced a hike in repo rate by 25 bps which was on expected lines.
At 12:50PM the Sensex was up 213 points at 20,784 and the Nifty was up 74 points at 6,175.
RBI in its monetary policy review today hiked the repo rate by 25 bps to 7.75%. The MSF rate was cut by 25 bps to 9.25%. CRR was left unchanged at 4%. The central bank cuts the FY14 GDP growth forecast to 5% from 5.5%. Giving a CPI forecast for the first time, the RBI said retail inflation will remain above 9%, adding that both WPI and CPI will remain elevated in the months ahead.
Asian shares were trading mixed as investors turned cautious and booked profit ahead of the outcome of the U.S. Federal Reserve's nifty buy sell signals policy meet this week, at which it is widely expected to stay the course on stimulus.
Japan's Nikkei stock average was down 0.5% after rising sharply on Monday. The benchmark index was trading firm in early trades bolstered by data showing consumer spending in Japan jumped in September as shoppers frontloaded purchases before a sales tax increase next year. Shanghai Composite was down 0.6%. However, Straits Times and Hang Seng were trading marginally higher.
The rupee was trading stable while government bond yields fell after the Reserve Bank of India's (RBI) monetary policy announcement. The rupee firmed up in noon nifty buy sell chart trades against the US dollar and was quoting at Rs 61.44 compared with previous close of Rs 61.53 per dollar.
“Bond yields fell because the hike in the repo rate was on expected lines and there was also a cut in the MSF rate. Besides that the increase in liquidity was provided through term repos of 7-days and 14-days tenure to 0.50% of banks NDTL from 0.25% earlier," said S Srinivasaraghanva, head of treasury at Dhanlaxmi Bank.
Bankex was the top gainer among the sectoral indices on the BSE up 2.4% followed by Realty, Consumer Durables, Metal, Auto, Power, Healthcare, Oil and Gas indices up 1-2% each.
In the banking segment, ICICI Bank, HDFC Bank and SBI were up 1-.38% each.
Maruti Suzuki was up 6% after reporting a better than expected net profit at Rs 670 crore for the quarter ended September 2013 (Q2FY2014), driven by strong growth in exports, favorable exchange rate and cost control measures. Analyst on an average had expected profit of Rs 551 crore for the quarter. The company had reported profit of Rs 227 crore in year ago quarter.
Sun Pharma was up 1.3% after the company said it has addressed the United States Food and Drug Administration’s (USFDA) concerns about quality control breaches at a U.S. subsidiary that was shut down by the regulator for three years because of manufacturing flaws.
Other Sensex gainers include, Reliance Ind, Tata Motors, Hindustan Unilever among others.
Among other commodity charts shares, Ceat is trading higher by 3% at Rs 175, extending its previous day’s 6% rally, after reporting twenty-fold jump in consolidated net profit at Rs 77 crore for the quarter ended September 2013 (Q2) on back of strong volume growth and lower raw material cost. The company engaged in auto tyres and rubber products had profit of Rs 3.8 crore in a year ago quarter.
The broader markets are nifty buy sell chart trading higher with the BSE Midcap up 0.8% and Smallcap index up 0.2%.
The market breadth in BSE was neutral with 1,017 shares advancing and 1,041 shares declining.
One cannot be a pessimist knowing that most shocks have been managed with speedy action by policy makers, Akshay Gupta, MD & CEO, Peerless Fund Management, tells Puneet Wadhwa.Lower GDP (gross domestic product) and more recently lower industrial growth have highlighted the issue of having lower interest rates. One needs to address the credit growth without fuelling inflation, which is a larger concern at the domestic level. Thus, RBI would not have much leeway unless the sticky inflation comes down. For FY13, we can expect a 50-100-basis point reduction in reserve ratios and a similar cut in repo, if inflation falls further.
The markets have been challenging in such an uncertain global and domestic scenario. We believe in companies which can endure all cycles with high return on equities. Reversal of the rate cycle has begun. Short-term interest rates have fallen over three per cent from the highs reached in March. We are higher-weight on rate-sensitives and believe domestic themes like consumption and investments would give decent opportunities over the long run. Apart from banking and finance, we like sectors which relate to capital goods, technology, FMCG and automobiles.
News flow from the Euro zone is critical for the mcx charts markets. Currently, the key concern is of contagion spreading to countries not in the consideration list. Add to that the extent of unknown damage in the financial systems of the existing names, which will make the markets jittery.
The Greek election over the weekend will decide whether the austerity plan suggested by the European Union is an acceptable proposition for Greece. The expected Chinese slowdown is adding fears to lower global growth. Moreover, the below-normal domestic macro numbers has led S&P to make a statement about India facing the risk of losing Investment-grade rating. While these concerns are for real, too much of negativity is built around it. One cannot be a pessimist knowing well that most recent shocks have been skillfully managed by speedy action by influential nifty signalspolicy makers. Disintegration of the Euro zone or a crisis in the financial system can hardly be afforded by any country, however strong.
Market valuations are not expensive anymore and this definitely gives us some margin of safety. However, the point to be noted is that valuations nifty buy sell signals statistics play an important role only if the earnings visibility is intact and that there is no crisis-like situation.
One needs to keep realistic growth commodity chartstargets factoring moderation in earnings on account of these macro headwinds before arriving at valuations.
Recent corporate results indicate that although moderation of revenues is still on, margins seem to be reviving on a sequential basis. Lower commodity prices and softening of rates should further help the bottom-line.
Strengthening dollar is improving export competitiveness but making imports costlier. Hence, highly leveraged companies, which have a higher reliance on imports will continue to be in pain for some more time example - metal companies, which have over-leveraged themselves.
MF industry, like any other, has had its share of pain for the past five years on account of stagnancy in mcx commodity charts markets, viability of business models, and poor rate of acquisition of customers vis-a-vis other products like insurance and fixed return/tax -free nifty signalsbonds, frequent regulatory changes and the very nature of variable return product.
We see a fair number of acquisitions and stake-mcx charts sales continuing to happen. That said, we feel that the worst for the industry is behind us and the steps taken by the industry to increase focus on retail participation have started paying off.
Retail customer has started believing in other less volatile asset classes (fixed income and gold) beside equity and that is healthy for the industry.
The forensic auditor appointed by Forward nifty buy sell signals Markets Commission (FMC) has thrown more light on the mysterious disappearance of National Spot Exchange Ltd (NSEL)’s Rs 800-crore settlement guarantee fund (SGF).
After examining the affairs of the exchange since June 30, the auditor said the SGF was depleted, as it was used to meet pay-in shortages of paired contracts.
“We observed pay-in shortages on a daily basis, with regard to the settlement-related payment obligations from various members. All these shortages were substantially in relation to paired contracts," auditor Grant Thornton said in a supplementary report last week.
The report pointed out how several members had shortages running into crores. At Rs 207.84 crore, NK Proteins, NSEL’s Gujarat-based borrower, accounted for one of the steepest shortfalls. PD Agroprocessors, Lotus Refineries, Topworth Steel and Power and ARK Imports were among those with high shortages. Delhi-based Mohan India didn’t have any shortfall on July 30, the report said.
“The exchange made the pay-out obligations against the pay-in shortage of paired contracts out of the available SGF cash balances. This resulted in depletion of the SGF cash balances," it added.
After the SGF was exhausted, the exchange started using its own resources to pay claims. After a period, this, too, was exhausted. “On July 26, 2013, all the cash in the SGF was utilised and to facilitate further settlements, the exchange started funding shortages from its own resources. On July 30, 2013, the exchange exhausted all its own resources, too, resulting in a payment crisis," Grant Thornton said.
The report followed FMC seeking additional clarifications to the forensic report submitted by Grant Thornton in September.
In the early days of the Rs 5,600-crore payment crisis at the exchange, NSEL’s SGF became a matter of much curiosity and speculation, as then NSEL chief Anjani Sinha had given three different figures for this fund.
At a meeting with FMC on August 1, Sinha said NSEL had an SGF of about Rs 850 crore. In his written reply to a mail by FMC, he said the SGF was Rs 738.55 crore. At a meeting with investors and borrowers on August 4, he said the SGF was only Rs 62 crore.
All three figures are incorrect, if one goes by the latest forensic audit report. The report said while the designated SGF, under Section 12.1 of NSEL by-laws, had four fixed deposits, amounting to Rs 88.27 lakh.
“To clarify, the small balance by the exchange in the form of fixed deposits, approximately Rs 88 lakh, was ostensibly also called the ‘settlement guarantee fund’. However, in actual practice, the mcx commodity charts terminology of settlement guarantee fund refers to client monies received and maintained by the exchange," the report said.
An NSEL spokesperson said the report was confidential and couldn’t be commented upon.
