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Markets this week
The Sensex which gained 340 points on Monday to end at 15,500, swung between 15,360 and 15,520 during the session. Dealers attributed the rise to US markets' strong close on Friday and softening of crude prices. Reliance, ONGC, ICICI Bank, SBI, and HDFC Bank were the major contributors for the rise. Reliance Industries gained 3.4 percent to Rs 2,326 on hope that there would be more investment buying.
PN Notes are once again on the agenda of SEBI, which began a review of the entire "regulatory framework" governing these instruments at its board meeting on August 13. This triggered expectations among market participants that the market regulator may consider easing some of the restrictions introduced in October 2007.
The Sensex halted its five-day rally on Tuesday, owing to lower June industrial production of 5.4 per cent and profit booking in pivotals. The Sensitive Index plunged by 290 points to end at 15200. It traded between 15124.91 and 15579.78 during the session.
The recently announced new investment policy for urea has the potential to sharply improve realisations and open up new growth opportunities for domestic fertiliser manufacturers. There is a substantial supply deficit of urea in the domestic market, which is currently being bridged by imports. All these gave impetus to urea stocks where accumulation was seen in the recent past.
Steel producers were done in by rising input costs, and high costs of borrowing suggest they have to hold back price increases for some more time. Steel majors RINL, Tata Steel and JSW Steel have agreed to hold their price line on declining global steel prices and pressure from the Government to keep inflation in check. The weak sentiment pulled the steel stocks down in the recent past.
On Wednesday, the markets were down on weak global equity markets and lower GDP growth estimate of 7.7 per cent for the current fiscal. Banks and blue chips were the major losers. The Sensex slided by 120 points to end at 15,100.
SEBI has given the nod to NSE to offer currency futures trading, and NSE will commence mock trading in currency futures next week. Currency derivatives will be the new trading instruments on the stock exchanges.
The much-debated issuance of PNs by FIIs was taken up by the SEBI board on Wednesday, but there was nothing by way of any decision from the regulator although a section of the market expected changes. The board reviewed the data on P-Notes but did not arrive at any decision, the SEBI Chairman, Mr C.S. Bhave, said.
On Thursday, frenzied trading was seen in the 39 scrips that will be included in the futures and options by the end of August even as the Sensex dropped 100 points. Investors are drawn to stock futures as there is a lot of liquidity with no circuit filters and entry and exit becomes easier.
Private sector managed provident fund and superannuation trusts can now have greater exposure in the stock markets. They can invest up to 15 per cent of their investible funds in shares on which derivatives are available in the BSE or NSE. This was provided in the new guidelines issued by the Finance Ministry here recently.
The Union Cabinet has approved the recommendations of the Sixth Central Pay Commission after some modifications. With this decision, Central Government employees are to get pay hikes averaging 21 per cent from September this year. The revised pay scales will come into effect from January 1, 2006 and revised rates of allowances from September 1, 2008. Arrears would be from January 1, 2006 to August 31, 2008.
The annual WPI-based inflation surged to 12.44 per cent during the week ended August 2, above the previous week's annual rise of 12.01 per cent, government data showed on Thursday. "After being nearly stable for four weeks, this rise has come as a major disappointment," said a finance ministry statement.
While the surge in inflation was not entirely unexpected, the Sixth Pay Commission bonanza could well lead to higher inflation, making the already nervous market players unwind their positions. This pulled the Sensex down by 310 points or 2.44 per cent to finish the day at 14,720, but lost nearly 440 points on weekly basis.
Compiled by B.L. Sudarsan and S. Vasudevan
Podcast by M.J. Madhavan
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