Posts Tagged ‘F&O’

Sensex Tumbles 216 Points on Weak Global Cues

Stocks dropped on Wednesday, triggered mainly by weak sentiments in Asian markets  on concern over rising dollar, ahead of the expiry of October series of futures and option contracts.

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European markets saw a gap-down opening, but recovered later, helping the market to gain some ground in the last half-an-hour of trade. The BSE Sensex trimmed 216.02 points, or 1.07 per cent, to close at 20,005.37. Nifty index declined 69.35 points, or 1.14 per cent, to 6,012.65.

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“Strengthening of the dollar against a basket of major world currencies dragged the market on Wednesday. The Dollar Index, which has an inverse relationship with different assets classes, is rebounding these days. Due to which, investors have turned cautious on equities markets,” said Jagannadham Thunuguntla, head of research at SMC Global Securities.

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The Dollar Index on Wednesday rose to 77.92 against 76.64 on October 14. Before this, the index was falling continuously from the middle of July.

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There was also speculation that US Federal Reserve’s asset purchase plan may be a disappointing one, said Alex Mathews of Geojit BNP Paribas.

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“Nifty has a major support at 5,963 while on the upside, it faces resistance at 6,089 level. On Thursday, we are going to see the October F&O expiry. The rollovers at the end of Wednesday’s session was around 45 per cent,” he said.

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Banking stocks continued to weigh heavy while disappointing results of heavyweight NTPC hurt sentiments on the power counter.

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Union Bank, ICICI Bank and HDFC Bank fell 5.85 per cent, 2.23 per cent and 1.93 per cent, respectively. SBI inched up 0.41 per cent to Rs 3,193.45. Union Bank on Wednesday posted 40 per cent decline in September quarter PAT to Rs 303 crore compared with the same period a year ago.

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NTPC fell 3.24 per cent after the company reported 2.07 per cent drop in PAT on 20.46 per cent year-on-year rise in net sales for the September quarter. The results were announced after Tuesday’s trading hours.

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Among other stocks in news, MRPL rose 1.76 to Rs 83.95 after its Q2 net profit jumped 56.70 per cent to Rs 281.57 crore. ONGC and HPCL, the two stakeholders of the company, dipped 1.80 per cent and 1.42 per cent.

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Shriram Transport Finance hit an all-time high and rose 3.94 per cent to Rs 89.45 after its net profit surged 44.11 per cent year-on-year to Rs 298.96 crore.

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Weekly Update of The Market (1st – 5th February) Part 1

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and along with the latest global business and industry updates.

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Weekly Update of The Market (1st - 5th February) Part 1

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A bout of volatility was witnessed in the domestic market throughout the week due to

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1.  F&O expiry,

2.  unfavorable global cues because of gloomy earnings forecast,

3.  anxiety about China‘s monetary tightening,

4.  the deteriorating finances of countries ranging from Greece to Japan and

5.  India’s central bank‘s decision to raise the CRR to 5.75.

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🙂

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But on later days of the week, US Federal Reserve’s decision to keep interest rates unchanged boosted sentiments of global markets.

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Closer home, investors also heaved a sigh of relief as the central bank kept key interest rates unchanged at the quarterly policy review indicating that it would maintain a balance between price stability and growth and raised its GDP growth projection for the current fiscal to 7.5 %.

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The RBI at its quarterly monetary policy review raised CRR by 75 basis points to suck out excess liquidity from the banking system to the tune of Rs 36000 crore.

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On the flip side, the challenges that RBI foresees for the economy is fiscal consolidation.

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The central bank lifted its wholesale price index inflation forecast for the end of the fiscal year in March 2010 to 8.5% from its earlier forecast of 6.5%.

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RBI also said it expected inflation to moderate starting in July 2010, assuming a normal monsoon and global oil prices holding at current levels.

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Moreover, US Federal Reserve too maintained interest rates at near zero levels and vowed to do so for an extended period of time.

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Additionally, it also signaled its intention of unwinding the massive monetary stimulus that it had undertaken during the peak of the crisis.

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🙂

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Stay Tuned for More on weekly updates.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

Merchant bankers expect only two PSU public issues

Merchant bankers expect only two PSU public issues

Merchant bankers believe that not more than two public sector IPOs are likely to happen this year, notwithstanding the Finance Minister’s statement indicating that disinvestment is still top on the Government’s agenda.

National Hydroelectric Power Corporation (NHPC) and Oil India are the two PSU companies which merchant bankers think will hit the markets with their IPOs.

“NHPC and Oil India are the most likely companies to come out with IPOs this year and you might see minority stake sales in PSU banks as well. The Government will divest slowly and there will not be many big bangs IPOs,” said Mr Saurabh Mukherjea, Head of Indian Equities at Noble Group.

NHPC and Oil India will raise close to Rs 3,000 crore through their issues.

The Finance Minister even issued a list of companies proposed for disinvestment. In 2009-10, the Government proposes to disinvest a small portion of equity in Rail India Technical and Economic Services Ltd, Cochin Shipyard, Telecommunications Consultants India Ltd, Manganese Core India Ltd, Rashtriya Ispat Nigam Ltd and Satluj Jal Vidyut Nigam Ltd.

But investment bankers said they expected disinvestment to happen only in those companies which are more profitable.

The validity periods of the DRHPs filed with SEBI of both NHPC and Oil India expire in September this year, said Mr Jagannadham Thunuguntla, Equity Head at SMC Capitals.

He added that the Government will look at selling its stake in only a few companies, which will also garner most funds rather than sell small stakes in several PSUs.

“The Government may not be as aggressive as the market would wish it to be,” he said.

Revival

Investment bankers said that the signs are pointing towards a revival of the IPO market and that even two PSU divestments would pave the way for this. “PSUs hold the key to the revival of the primary market and the outcome of these IPOs is very critical,” said Mr Thunuguntla.

“Once the Adani Power (private sector) and NHPC IPOs go through we will get a clearer picture of things to come,” said Mr Mukherjea.

Mr Rangari said most PSUs were under-valued and that their IPOs usually enjoy good response from the investors. He said that his company has gota few mandates and has one issue a month lined up for the next four months. They are small issues whose total size is between Rs 100 crore and Rs 150 crore each.

QIPs abound, but analysts sceptical of their success

As many 40 companies are planning to raise money via QIP but marketmen say that not all of these issues will be successful.

The initial euphoria for the first handful of QIPs has been replaced by fatigue. But QIPs cannot be written off and their success would be “issue specific,” they said.

“Companies with reasonable valuations will see their issues going through. Not all companies that have announced QIPs will succeed with the issue. Pricing is very important,” said Mr Krish Shanbhag, Head of Research at Antique Stock Broking.

Of the companies that announced their QIP plans since April, only five have completed their issues.

Mr Jagannadham Thunuguntla

“The issues that were completed show that the success of a QIP is not sector-related. Though the majority of the QIPs are from the real estate sector, the five companies that completed their QIPs are from a range of sectors,” said Mr Jagannadham Thunuguntla, Head Equity at SMC Capitals.

List of companies

The five companies to complete their QIPs are Unitech, Indiabulls Real Estate, Power Trading Corporation, Network 18 and Sree Renuka Sugars.

Some of the companies that have announced their QIPs include Hindalco, Tech Mahindra, Max India, Nagarjuna Constructions, Bank of Rajasthan, Bajaj Hindustan, Ansal Properties, HDIL, HDFC and Akruti City.

GMR Infrastructure, which announced its QIP on Monday, said on Tuesday that it is withdrawing the issue “in light of the existing market conditions”. This led to its stock price plummeting close to 9 per cent.

“The set of QIPs who have raised money from the market had done it at close-to-the-bottom valuations. At those valuations investors were interested. However, it remains to be seen if investor appetite remains at levels that are significantly higher than the levels at which the bulk of the fund-raising happened in the recent past. Clearly, from what we understand, some of the QIPs have had to withdraw from the market,” said Mr Prateek Agrawal, Head of Equity, at Bharati AXA Investment Managers.

The markets have rallied quite a bit since April and companies wanted to grab hold of this window of opportunity to raise capital. The QIP route was the easiest, said marketmen.

“A QIP issue does not involve the same hassles as IPOs, FPOs or rights issues. It is an easier and quicker means to raise much-needed liquidity. The real estate sector is the probably the most liquidity-starved, which is why we have seen the majority of the QIPs coming in from this sector. But investors are aware of the fact that conditions in the real estate sector have not improved much. Which is the reason why not all the issues have received the same response,” said Mr B. Madhuprasad, Vice-Chairman, Keynote Corporate Services.

Source:http://www.thehindubusinessline.com/2009/07/01/stories/2009070151851000.htm

Entry Fee Removal May Slow Indian Mutual Fund Spread

Indian capital market regulators’ move to scrap an entry fee on mutual funds is expected to bring more transparency in the growing industry even though it may temporarily hurt mutual fund penetration as distributors will lose the incentive to sell funds.

In the long run, the move should bring down the cost of investing in mutual funds, attracting more investors and helping the industry grow, experts said.

“The idea behind the SEBI move is to make mutual fund schemes available to the investor at the lowest cost possible,” said Anil Chopra, group chief executive and director, Bajaj Capital Ltd.

The so-called entry load is a fee that asset management companies, or AMCs, deduct from the amount of money an investor puts in a scheme to pay for marketing and distribution expenses, most of which is an upfront payment to distributors as commission.

Last week, C.B. Bhave, chairman of the Securities & Exchange Board of India, said the upfront commission shall now be paid by the investor to the distributor directly, adding that distributors will have to disclose the commission received for their services.

The benefit for investors would be that they now get to negotiate the amount of commission payable.

Also, the removal of the entry load can actually increase the compounded return for investors as the entire amount they wish to put in a fund would get invested.

For example, earlier, if an investor paid 100,000 rupees for a fund investment, he was allotted units only worth 97,750 rupees-97,500 rupees after deducting the entry load.

At present, equity funds typically impose an entry load of 2.25% to 2.50% on their schemes.

Also, distributors will now be more accountable to investors.

Jagannadham Thunuguntla, head of equity at SMC Capitals Ltd.

“This is a path-breaking change, and one which would check mis-selling of mutual fund schemes by distributors,” said Jagannadham Thunuguntla, head of equity at SMC Capitals Ltd.

Mr. Thunuguntla said distributors could now look at turning into advisers who educate investors on the prospects of a fund and its potential performance by demanding an advisory fee in return.

“The taste of easy money (by just selling a scheme) would be gone…the distributors will have to make sure they give the best advice to the investors in order to ensure regular income,” he said.

The SEBI move comes at a time when fund managers are looking to make the most of the revival in Indian markets.

Total assets under management for fund houses in India rose 16% in May to a record 6.39 trillion rupees ($135.90 billion), compared with 5.51 trillion rupees in April, as the benchmark Sensex has soared over 50% since the start of 2009.

Mutual fund penetration in India is still a low 3% of total household savings, and the industry is banking on tapping investors in tier II and tier III cities for growth.

But the SEBI move may limit these efforts in the short-term as the industry may see a fall in the number of distributors, and consequently a fall in business volumes, say analysts.

Experts say distributors might look at other business opportunities as they would now cease to receive the fixed commission from the AMCs for selling mutual funds.

“Selling mutual funds will become much less attractive,” said Dhirendra Kumar, chief executive, Value Research – an independent provider of investment information on mutual funds.

Manish Sonthalia, a fund manager at Motilal Oswal Securities Ltd. said, “(Fund) mobilization would tend to slow down and, even if profitability does not get impacted directly, volumes at AMCs would be hit.”

In the short term, distributors may opt to sell other investment products like unit-linked insurance plans, or ULIPs, pension schemes and post-office savings certificates, which could hurt the asset management industry.

An option out for fund houses is to distribute their products directly, Mr. Kumar of Value Research said.

However, analysts say this is unlikely as setting up distribution centers at several locations across the vast Indian subcontinent would be costly and time-consuming for AMCs.

Source:http://online.wsj.com/article/SB124584142778546881.html?mod=googlenews_wsj

Nifty BeES ! (Nifty Benchmark Exchange Traded Scheme)

Nifty Bees

Nifty Bees

1. What is Nifty BeES?

Nifty BeES is an Open-Ended Exchange Traded Mutual Fund. It is a combination of a share and a Mutual Fund Unit. Nifty BeES tracks the S&P CNX Nifty Index.

The investment objective of Nifty BeES is to provide investment returns that, before expenses, closely correspond to the total returns of the S&P CNX Nifty Index.

Nifty BeES is listed on the Capital Market Segment of the NSE.

2. How is Nifty BeES different from Nifty Futures?


Nifty BeES & Nifty Futures both allow investors to take exposure to the Nifty Index. However, Nifty Futures are derivative products and trade in the F&O segment of NSE, while Nifty BeES is a cash product and trades in the Capital Market Segment.

Unlike futures, there is no lot size for Nifty BeES, you can buy as little as one unit.

As Nifty BeES is traded in the cash segment, you do not need to roll it over every month and can hold it as for long as you want. In terms of Taxation, with Index Futures it is not possible to take advantage of Long Term Capital Gains while with Nifty BeES you can take advantage of Long Term Capital Gains if you hold it for over a year.

3. Can one buy & sell any time during trading hours?

Yes, one can buy or sell Nifty BeES just like one buys or sells any other share. It trades on the capital market segment of NSE and is settled just like any other shares on T+2.
4. About Benchmark :

Benchmark Asset Management Company Pvt. Ltd. (BAMC) is a SEBI registered Asset Management Company launched in June 2001. BAMC is the first and only asset management company in India with a primary focus on indexing and using quantitative techniques in creating innovative products. Benchmark is run and co-promoted by professionals with a long experience in the Indian and International Financial Markets.
Benchmark Milestones


·First AMC in Asia (ex Japan) to launch ETF, and only 18th in the World

·Launched the First ETF in India – Nifty BeES

·Nifty BeES has been awarded the “Best Performing Mutual Fund of the Year in the index fund category at the CNBC-TV18-CRISIL Mutual Fund Awards in 2007 & 2008

·BAMC is the largest Index Fund Manager and the largest ETF manager in India

·BAMC was the first AMC to conceptualize the idea of a Gold ETF in the world

·BAMC has been ranked as the “Best Provider of Structured Products” in their Private Banking Poll 2006, by Euro money
Details of other ETFs:

·Nifty BeES: The First ETF in Asia (Barring Japan)

·Junior BeES: The First and only Midcap Index Fund and ETF in India.

·Bank BeES: The First and only Sector Index Fund and ETF in India.

·PSU Bank BeES: The First PSU Bank Sector Index Fund and ETF in India.

·Gold BeES: The First Gold ETF in India.

·Liquid BeES: The First and only Liquid ETF in the world

·Shariah BeES : First Shariah based ETF in India

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SMC Global Securities

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