Saturday, October 08, 2005

India Cements begins $100 million GDR road-show in NY

Cement major India Cements Ltd has commenced the road-shows for Global Depository Receipts issue in New York on a 'good note' with officials expressing confidence of mobilising the target of $115 million by October 14.

A team of top company officials headed by its Chairman, Mr N Srinivasan on their first halt in New York yesterday received good response from international investors including the NRIs, company sources said here today.

The team will proceed to London, Hong Kong and Singapore, before returning to India on October 17. The sources said that they expect to mobilise the required funds by October 14.

The GDR issue, lead managed by ABN AMRO and the Deutsche Bank will be listed on the Luxembourg Stock Exchange.

The initial size of the GDR issue was set at $100 million, with a cushion to add another $15 million as 'green-shoe option.'

The sources expressed confidence of achieving this target, going by the initial response in New York. The funds would be utilised for its expansion programmes, already in the pipeline, they said.

Tech firms' results to boost Indian market in week ahead

India's blue chip equities are likely to stay firm in the coming sessions on better than expected quarterly earnings, likely to be announced by heavyweight technology companies in the week ahead.

Leading software makers such as Infosys Technologies and India's largest software exporter Tata Consultancy Services will unveil their July-September quarterly financial results in the coming week.

Analysts and market traders say the overall sentiment on the bourses in the week ahead will also be influenced by the trading patterns in overseas stock exchanges and flow of foreign fund investments into the domestic market.

The stock market barometer, the 30-share Bombay Stock Exchange sensitive index or Sensex, closed Friday at 8,491.56, a loss of 142.92 points or 1.66 percent from its previous week's close.

The stock market closed in the negative zone for the week ended Friday after surging sharply higher in the previous week. The market index had touched a new record high of 8,766.37 Tuesday on across the board buying interest.

"With India's two leading technology companies kickstarting the quarterly earnings season next week, there is lot of optimism inside the trading ring," said an analyst with a domestic brokerage firm.

"Taking into account the new contracts bagged by the software companies in the recent months, the financial numbers are likely to exceed investors' expectations," added the analyst.

"The technology stocks haven't had a great run on the bourses in the recent past despite the sustained bull run. The financial results may help the software shares to outperform the market."

Experts say the trading pattern in the coming week would also be influenced by the flow of foreign institutional investments, termed as the backbone of India's liquidity hungry equity market, into the domestic trading ring.

Overseas funds have invested over $8.6 billion in Indian equities in the current year so far, up from $8.5 billion invested in the whole of 2004, betting on robust economic growth in the current fiscal year.

In the intra-week trade ended Friday, the stock market opened Monday on a positive note with hopes of robust corporate earnings performance propelling the key index to a new all-time high.

The bull-run continued in the following session with the index breaching the 8,700-level for the first time in the history of the Indian capital market.

The market, however, failed to maintain its momentum and the share index finished lower Wednesday as investors adopted a cautious approach ahead of the beginning of the corporate earnings season.

The index plunged over two percent Thursday, dragging its loss to the second session. The market closed for the week Friday on a negative note on sustained institutional selling pressure.

FIIs cash, F&O sales at over Rs 1,700 crore on Thursday

When the benchmark Sensex touched the 8,000-mark in September, there were fears that FIIs, the prime drivers of the bull run, would slow down their purchases in the near-term. The fears have come true and the mood on the Indian bourses is anything but upbeat.

FIIs turned net sellers on Thursday in the cash market at Rs 568.50 crore, after being sellers in the derivatives segment at Rs 1,173.35 crore. FIIs have been net sellers in the current month at Rs 211.20 crore. Cumulative FII positions as percentage of total gross market position in the derivatives segment has been around 33%.

On Friday, the Sensex of the Bombay Stock Exchange (BSE) Ltd lost 37.14 points to close at 8,491.56 - it last closed below the 8,500-mark on September 26. The index has now lost nearly 310 points since Wednesday.

The broader S&P CNX Nifty of the National Stock Exchange (NSE) closed at 2,573.75, shedding 5.40 points.

"The ferocity of Wednesday's fall supported by actual numbers of large-scale shorting of Nifty futures by FIIs, accompanied by delivery-based selling in the cash market indicates across the board profit-taking", said Arun Kejriwal, director, KRIS.

According to a dealer with a domestic brokerage, "Reports of a hike in the US interest rates have led to many FIIs booking profits at higher levels.

However, interestingly, the number of big deals involving domestic FIs have also diminished in the past couple of days. Previously, they used to act as stabilising agents." Domestic MFs, on the other hand, were also net buyers in equities worth only Rs 37.66 crore in October.

The overseas markets also dampened the mood as most of the major indices, US and Asian, lost ground on fears of slowdown in the global economies. The Nikkei 225 lost 132 points on Friday after falling 331 points on the previous day.

On BSE, most of the sectoral indices also closed in the red except BSE FMCG and BSE Healthcare that gained marginally to close in the black. The turnover on BSE and NSE was lower at Rs 3,606.49 crore and Rs 6,706.78 crore, respectively.

Punj Lloyd files for IPO

Punj Lloyd, a leading engineering construction company in the country, plans to mobilise over Rs 500 crore from the capital market through an initial public offering (IPO). The company filed its draft red herring prospectus with the Securities and Exchanges Board of India (Sebi) on Friday.

The company proposes to enter the market with a public issue of 9,172,937 equity shares with a face value of Rs 10 each, at a price to be decided through the 100% book-building process. This comprises a fresh issue of 83,55,174 equity shares and an offer for sale of 8,17,763 equity shares.

The issue will reserve one lakh equity shares for employees. The issue will constitute 17.57% of the post-issue paid-up equity share capital of the company. The shares will be listed on the Bombay Stock Exchange and the National Stock Exchange (NSE).

Of the net offer for the public, at least 60% will be reserved for allotment to qualified institutional buyers (QIBs). About 5% of the QIB portion will be available for allocation to mutual funds (MFs).

Further, up to 10% will be available for allocation to non-institutional investors and the balance 30% will be available for allocation to retail investors. The book-running lead managers to the issue are ICICI Securities, DSP Merrill Lynch, Citigroup Global Markets India, and Kotak Mahindra Capital.

Punj Lloyd provides integrated design, engineering, procurement, construction and project management services for energy industry and infrastructure projects with operations spread across the Middle East, Caspian, Asia Pacific, Africa and South Asia. Standard Chartered, New York Life, Merlion Fund and Dunearn Investments, an affiliate of Temasek, hold stakes in the company.

Friday, October 07, 2005

IPOs may net Rs 20,000 cr more

The string of IPOs that is to hit the market in the next four months is likely to rake in about Rs 20,000 crore (Rs 200 billion), say leading investment bankers.

The money gathered by domestic IPOs so far this year has been low compared with that of the previous year. But there is plenty of money waiting and the market is upbeat.

According to Sanjay Sharma, head of capital markets, DSP Merrill Lynch, the IPO market is expecting a large amount of money. In the next four months, there can be IPOs totalling Rs 20,000 crore.

A research report by Enam pegged total equity issuances, including overseas offerings like ADRs, GDRs and FCCBs in the near-term, at $4.11 billion (Rs 17,670 crore).

Analysts say while investor interest has been high even this year, there is a dearth of big issues. Says Mehul Savla, vice-president, ICICI Securities, "There is scarcity of big issues this year, but the market is going to be flush with IPOs in the next few months, mostly from medium sized firms."

Apart from the Bank of Baroda issue, the issues of Andhra Bank (about Rs 900 crore), Air Deccan (about Rs 500 crore), MCX (about Rs 300 crore), ABG Shipping, Bannari Amman Spinning Mills, PVR Cinema, Punj Llyod, GSDL and Pyramid Retail have been lined up to hit the market.

While, the money gathered through overseas issues was less compared with funds raised via domestic issues last year, this year has already seen about Rs 15,000 crore (Rs 150 billion) coming from GDRs and FCCBs.

This is much more than the money raised from domestic issues. Analysts attribute this to the general nervousness in the market after the Sensex crossed 7,000.

But they note that the sustained rise in the Sensex is gradually building the confidence level among bankers and promoters, and not just among investors.

Sensex up by 32 points during early trade

The Bombay Stock Exchange Benchmark 30-share Index on Friday made a strong turnaround after a weak start and was quoted up by 32 points at 10.30 am on fairly good buying support from investors at the weekend.

The Sensex opened marginally lower at 8525.80 as against Thursday's close of 8528.70 but later rallied smartly to a high of 8574.19 before being quoted at 8560.71 at 10.30 am.

The market seemed to be on a recovery path after having consolidated during a sharp slide in the past days, brokers said, adding "the economic fundamentals are strong and second quarter working results to be announced next week onwards are likely to prompt a fresh price rally".

Easing in crude prices is also seen as a positive factor for the market, they added.

Analysts, however, felt that the market is still in overbought zone and a big correction is necessary for its good health. FII inflows also are expected to slow down in the near future.

BSE Sensex opens flat

A day after registering a massive fall, the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) opened flat this morning.

The 30-share Sensex opened flat at 8,525.80 and was trading eight points down at 8520 at 1128 hrs compared to its last close of 8,528.

The National Stock Exchange (NSE)'s 50-share Nifty opened 2 points lower at 2577.20 compared to last close at 2579.15. The Nifty was trading at 2581, up by two points at 1125 hours.

Top losers this morning were HDFC Bank, Hero Honda, Larsen & Toubro, BHEL, ACC, Cipla, Gujarat Ambuja, Tata Steel, SBI and Tata Motors.

Top gainers were HLL, Ranbaxy Lab, ONGC, Tata Power, Bajaj Auto, TCS, HDFC, Wipro, Hindalco, Dr Reddy's Lab.

Markets are likely to trade positive on the back of a meltdoen in the global crude oil prices, which are trading at a two-month low of around USD 61 per barrel, experts said.

Thursday, October 06, 2005

Sensex drops 196pts.

The Sensex opened with a negative gap of 31 points at 8,693, which turned out to be the high for the day. Sustained, across-the-board selling saw the index crash to a low of 8,508 - down 216 points from the previous close. The Sensex finally closed with a loss of 196 points (2.24%) at 8,529.

ONGC dropped 3% (Rs 33) to Rs 1,039. Reliance declined 1.4% (Rs 11) to Rs 791. SBI slipped 2.3% (Rs 22) to Rs 925.

While HLL was down Rs 6 at Rs 175, ITC was down Rs 4 at Rs 128.

Infosys lost Rs 27 to Rs 2,616. While TCS declined Rs 44 to Rs 1,426, Wipro was down 3.6% (Rs 15) to Rs 390.

Bajaj dropped 3.3% (Rs 58) to Rs 1,724. BHEL dipped 2.8% (Rs 35) to Rs 1,225.

ICICI Bank declined 4.5% (Rs 25) to Rs 536. HDFC was down Rs 29 at Rs 1,002, and HDFC Bank dropped Rs 24 to Rs 684.

Dr. Reddy's bucked the trend, and moved up Rs 14 to Rs 923. Ranbaxy was up Rs 6 at 519.

AurionPro IPO oversubscribed- The Economic Times

The initial public offering of AurionPro Solutions Ltd was oversubscribed 13.53 times. The IPO closed yesterday on October 4, 2005.

According to information available, The Institutional (QIB) quota was oversubscribed by 6.34 times, non institutional (HNI) category was oversubscribed 12.42 times, retail was oversubscribed 27.46 times, and employees was oversubscribed 1.27 times.

Against 13,75,000 equity shares available for allocation to Qualified Institutional Buyers, the company received bids for 87,17,660 equity shares. In the non-institutional portion, the company received bids for 51,24,140 equity shares against 4,12,500 equity shares available for allocation.

The company received bids from retail category for 2,64,33,120 equity shares against 9,62,500 equity shares available for allocation. The company also received bids for 3,16,610 equity shares against a reservation of 2,50,000 equity shares for employees. The company came out with an IPO for 30 lakh equity shares of Rs 10 each at a price band of Rs 81 - Rs 90 representing 25.44% of the post issue paid-up capital of the company.

The price will be determined based on the book that has been built during the bidding process. The Book Running Lead Managers to the issue are Centrum Capital Limited and Karvy Investor Services Limited.

The Company proposes to list its equity shares on Bombay Stock ExchangeLimited (BSE) and National Stock Exchange of India Limited (NSE). AurionPro Solutions Ltd. Is an ISO 9001:2000 certified company, headquartered in Mumbai, India with a subsidiary each in Singapore and USA.

Stock Exchange's sensitive index falls by 163.20 points at 8561.27

Tracking global trend, the domestic stock markets also witnessed a crash with the Bombay Stock Exchange's sensitive index falling by 163.20 points at 8561.27 today in early trading.

The BSE index, which had been volatile recently had gained nearly 1,000 points in the last one month, fell today on fresh selling by major market players.

Major stocks which dragged down the sensex were ONGC, Reliance Industries, Bajaj Auto, HDFC Bank, HDFC Ltd, State Bank of India and Larsen and Toubro.

A few stocks mid-section were also down on fresh spell of selling.

Have you spotted these dark horses?

Market experts believe that the bull run in Indian markets is here to stay. According to them, laggards like pharma, tech and auto stocks are back in action which should lead the markets further.

Technical Analyst, Ashwani Gujral, believes that the market has become more broad-based and it's just a matter of time before the Sensex will breach the 9000-mark. He says, "The good news from Monday has been that midcaps and small caps are back. The legs of support in this market has been increasing."

According to Gujral, laggards like pharma, tech and auto sector stocks are back in action which should lead the Nifty towards the 2700-2730 zone.

Gujral says that Dr Reddy's Laboratories and Cipla are leading the pharma rally. He also advises investors to book profits when they gain 15-20% in these stocks. "Dr Reddy’s Lab has crossed Rs 880 and is showing strengh now. The stock looks good for about Rs 1120-1130. If Cipla can sustain above Rs 360, it could easily head for above Rs 420-423," he adds.

Investment Advisor, PN Vijay, says that he will buy IT stocks now. According to him, the IT sector would be quite strong going forward and their quarterly results will be fine. 'The big and the middle level IT stocks have not really gone up the way some other sectors have. The negatives we had on the currency front in the last quarter are definitely out of the way. The businesses are expanding and most of the companies in this space are adding vertical,' he adds.

Vijay likes ONGC, Gail, Indraprastha Gas and Petronet LNG within the energy space. 'These are all excellent companies with strong positions and have potential for explosive and continuous growth. The only issue here is the pricing. However, the gas pricing is slightly easier for the government to handle than petrol and oil pricing as consumers are not that much involved,' he adds.

Vijay believes that Engineers India is a good buy within the capital goods space. According to him, it's a very good company with an excellent profile

Wednesday, October 05, 2005

Correction forces Sensex to trail by over 50 points

With profit-booking catching up the stock markets this afternoon, the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) was down by more than 50 points at 8,734 points compared to yesterday's record close at 8,799.96 points at 1300 hrs.

The National Stock Exchange (NSE) S&P CNX Nifty was trading 19 points lower at 2,644 points at 1300 hrs compared to its last close at 2,663 points on Tuesday.

Earlier in the morning, Sensex opened 15 points up at 8,815.67 from its last close at 8,799.96 points, then it went up to 8,821.84 points before falling below 8,800-level.

Among the top gainers this afternoon were Ranbaxy, Tata Power, NTPC, BHEL, Grasim Industries, Wipro, Gujarat Ambuja, HDFC, Dr Reddy's Lab, and Larsen & Toubro.

The top losers this afternoon were Hindalco, ITC, ICICI Bank, Satyam Computers, Bajaj Auto, HDFC Bank, Tata Motors, HLL, SBI and ACC.

Most of the BSE indices were trading lower this afternoon, BSE bankex was trailing by 1.36 per cent, BSE FMCG index by 1.58 per cent and BSE Metal index by 1.26 per cent.

BSE Small and Midcap indices were also trailing this afternoon.

The crude oil prices at US 64 dollars a barrel will support the market at the current level compared to its earlier price of above USD 66 a barrel.

India's Matrix buys 95.51 pct of Docpharma

India's Matrix Laboratories (MAXL.BO: Quote, Profile, Research) has acquired 95.51 percent of Belgian generic drugs distributor Docpharma (DOCH.BR: Quote, Profile, Research) through an agreed takeover bid and now plans to acquire the remaining shares via a squeeze-out.

Docpharma and Matrix said in a statement the squeeze-out bid will run from Oct. 12 until Nov. 2.

Matrix will offer 34 euros per share, valuing the entire company at about 220 million euros ($262 million).

Shares in Docpharma were suspended on Tuesday pending the statement. On Monday the shares closed at 33.50 euros each.

The Indian drug maker had earlier already purchased around 22 percent of Docpharma from previous owners and company founders, the Van Rompay family, also paying 34 euros per share.

Zenith Infotech to raise Rs 100 cr

Zenith Infotech Ltd, a banking solution company, has decided to raise Rs 100 crore by issuing equity shares and warrant on preferential basis.

A decision to this effect was taken at the ninth annual general meeting held recently, the Mumbai-based company informed the Bombay Stock Exchange on Tuesday.

The AGM unanimously passed the resolution to issue and allot equity shares and warrants, each convertible into one equity share as per the SEBI Guidelines within 18 months on preferential basis to the promoter group.

Tuesday, October 04, 2005

Sensex Bails Out Debt Dealers

A 2-1/2-year boom in India's stock market has made millions of investors rich, and now it is even helping dealers from the shrinking bond market stay in work.

The launch in August of screen-based trading in the 25-billion rupee-a-day ($567 million) federal debt market has killed off telephone dealing, once dominated by 30 brokerages.
As a result, broking house bond dealers have been rendered almost redundant.

But instead of sacking them, brokerages are retraining them to talk about earnings per share and price to earnings multiples to satisfy ever-increasing demand for equities.

"Most of us have equities business, so some redeployment and shifting is taking place from debt to equity," said Madhur Morarka, director at Mumbai-based Mata Securities Pvt. Ltd., one of the largest debt brokerages in India.

"Even if a person is not best suited for the equities job, we still say let us try him."

The Reserve Bank of India kicked off screen-based trading on Aug. 1 to improve transparency and curb volatility.

The move follows a trend around the world, with electronic bond trading taking off over the past seven years. A survey by the U.S. Bond Markets Association showed 77 electronic fixed income trading systems were operating in the United States and Europe in late 2003 versus 11 in 1997.

In India, large investors such as state-run banks have taken to it as it cuts transaction costs and brokers say their share of bond business has shrunk by 55-60 percent since the system began.

In contrast, equity trading has more than doubled to 80 billion rupees a day on the Bombay Stock Exchange and the National Stock Exchange -- both of which are screen-based.

India's stock market, the second-best performing major market in Asia this year, has rallied 32 percent since the start of January, backed by foreign inflows of $8.5 billion. Foreign fund investment in Indian bonds is capped at just $2.25 billion.

The surge in share trading has led to more demand for equity traders, research analysts and sales staff -- which the redundant bond traders are partly filling.

"We are starting to give our dealers the option of mutual fund distribution and corporate finance," said a senior manager at another leading brokerage.

Sensex past the 8,800 points

Unstoppable bulls kicked up the Bombay Stock Exchange's benchmark Sensex past the 8,800 points barrier in early trade as foreign and domestic institutional investors bought heavily in auto and technology stocks.

The Sensex, which struggled for long at 8,774 points barricade, spurted to trade at 8,800.24 revealing a handsome gain of 102.59 points at 1445 hrs as index-related auto stocks such as Bajaj Auto, Maruti Udyog, Tata Motors and Hero Honda gained significant ground following reports of rise in vehicle sales in September month.

Other blue-chips that followed suit were Larsen and Toubro, ACC, BHEL, HDFC Bank, Tata Steel and Reliance Energy.

Crediting the fresh rally in share prices to the strong 8.1 per cent GDP growth in the first quarter of this fiscal, brokers said investors expected the encouraging second quarter working results to boost the economic growth.

The Confederation of Indian Industry (CIIs) also was optimistic that strong prospects of kharif production and encouraging performance by industrial and services sector may help the economy register 7.3 per cent growth in 2005-06.

Strong dollar against rupee extended support to technology stocks such as Infosys, Satyam Computers, Tata Consultancy and Wipro on expectations that the industry, which has 60 per cent revenue from the US market, might boost second quater financial results.

Markets Dance To Navratri Tunes

Markets dance to navratra tunes, Sensex up 70 points

The stock markets are in the tight grip of the bull this navratra as for the second day in a row the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) opened strong today and soon extended their gains to cross the 8700-mark.
The 30-stock Sensex was up 70 plus points at 8768 at 1132 hrs.

The benchmark index opened at 8706.70 with a gain of nine points compared to Monday's close at 8,697.65.

The National Stock Exchange (NSE)'s 50-share Nifty too was up 23 points at 2653 this morning.

Top Sensex gainers this morning were HDFC Bank, Wipro, Dr Reddy's Lab, Maruti, Larsen & Toubro, Tata Motors, HIndalco, Grasim, Bajaj Auto and Ranbaxy Lab.

Only three blue chips trailed - Cipla, Gujarat Ambuja Cement and TCS.

All the BSE indices are up this morning. Both the BSE Smallcap and Midcap indices are up by 1.53 and 1.28 per cent respectively.

Auto and metal counters were also doing well. BSE Auto index was up 1.52 per cent and the BSE Metal index rose 1.30 per cent.

Markets & Investing

Intra-day trades fuelling bulk deals!!

A significant proportion of bulk deals reported on the Bombay Stock Exchange are on account of intra-day trading and arbitrage transactions.

According to Sebi guidelines, trading volumes in a single scrip accounting for more than 0.5 per cent of the equity capital of the company done by any exchange member should be reported as a bulk deal.

Thus bulk deals reported by stock exchanges are inclusive of intra-day trading transactions carried out by day traders attached to the member broker.

“Unlike popular perception, not all bulk deals reported on the stock exchanges are buy and sell matched positions. There are also a large number of intra-day transactions.” Confirmed an official from the BSE.

Transactions executed by several stock brokers such as H J securities, Asit C Mehta, Ramesh M Damani, Daulat Securities, Ghalla Bhansali Stock Brokers seem to be arbitrage transaction executed by jobbers.

For instance, H J Securities, which operates from a small outfit in Cama Building, adjacent to the BSE building in South-Mumbai, has about 50-odd traders who trade intra-day for wafer thin margins.

For these day traders, anything more than 30 seconds is “long-term” and entails “market risk”. The average transaction size in these cases is as low as Rs 5000.

“Clubbing arbitrage volumes or intra-day speculative transactions by clients under bulk deals gives a misleading picture” said a broker.

In the past few weeks there has been talk about price manipulation in penny stocks and malpractices such as conversion of black money to white by routing dubious transactions through the exchange.

This turned the spotlight on several broking firms which are regulars in the bulk deals list on suspicion that they may be creating false volumes and misguiding the markets.

However, that may not be entirely true.

“Soon this confusion will be sorted out as block deals (which are buy and sell matched deals, not bulk deals) will be reported separately” said a BSE official.

Usually, block deals or matched transactions are executed by brokers doing clientele business which includes large broking houses dealing for domestic and foreign funds.

Sensex at new peak

The stocks rally on Monday drove the Sensex to new heights on consistent flow of funds from all quarters on the back of active participation by foreign institutional investors, partly buoyed by a robust economic growth.

The Bombay Stock Exchange benchmark 30-share index climbed to a new intra-trade high of 8725.75 before ending at another new closing peak at 8697.65 against last Friday's close of 8634.48, a net rise of 63.17 points. The Sensex opened firm at 8662.99. The broadbased BSE-100 index rose by 43.54 points to 4610.17. Institutional investors' activity was largely confined to frontline stocks even as the mid-cap and small-cap counters attracted fairly heavy buying support from operators and retail investors, brokers said.

A strong growth of 8.1 per cent growth in gross domestic product during the first quarter of this fiscal backed by a robust growth in industry and services sectors bolstered sentiment with the market expecting encouraging second quarter corporate earnings.

Automobile stocks hogged the limelight scoring impressive gains on heavy buying support. Bajaj Auto, Tata Motors, Maruti Udyog, Satyam Computer, Infosys Technologies, HLL, Dr. Reddy's Lab, State Bank, Tata Steel, Wipro and ONGC recorded sharp gains.

The BSE Small-Cap index bounced back by 126.90 points or 2.23 per cent to 5824.59. The Mid-cap index recovered by 60.57 points to 4257.27.

The total volume of business fell further to Rs. 3,050.90 crore from Rs. 3,669.80. ICICI Bank clocked the highest turnover of Rs. 230.24 crore followed by Reliance (Rs. 167.46 crore).

TTT volumes dip by 28%

value dips by 43% on tight liquidity!!

The tight liquidity situation prevailing in the market over the last four days due to the nationwide bank employees strike on September 29 continued to hit the Trade to Trade (TTT) segment on Bombay Stock Exchange (BSE) on Monday. This is despite the Sensex closing at an all time high, up by 63.17 at 8697.65. According to the data available with BSE, the trading volume in this segment dipped by 28% and turnover in value by 43% on Monday.

This is sharply lower than that on September 28, a day before the bank strike. The trading volume was 3.37 crore with total turnover of Rs 81.70 on September 28 which has come down to 2.41 crore and Rs 46.86 crore, respectively. A senior official from a domestic broking firm said that the dip in the volume and turnover was due to the tight liquidity situation prevailing in the system in the last four days due to the bank employees strike.
The TTT segment on Bombay Stock Exchange Ltd (BSE) which had been badly affected by bank strike on September 29 are likely to see higher volumes Tuesday onwards as the cheque clearance operations have been normalised.

An RBI official said that there is a steep rise in the clearance of high value of cheques piled up due to bank strike. The clearance of the back log existing in the system has been hastened. The banking system has cleared 28,137 instruments with a total value of Rs 14,148 Monday, the official said.

According to a senior RBI official, the bank strike had affected the clearance of the high value of cheques. The banking system clears 14,500 instruments every day with a cumulative value of Rs 10,000 crore.

According to the senior official of the broking firm, the normalisation of cheque clearances would help the investors to trade in TTT from tomorrow as the margins have to be paid upfront.

The bank strike on Thursday had hit the cheque clearance operations. It had dipped by more than 60% in terms of volume, 85% in value on the bank strike day. In real terms, it was just 4992 instruments with a total value of Rs 1,356 crore. The apex bank official said that no high value cheque was cleared on September 30 due to the half yearly closing of the accounts. The high value of cheques could not be cleared on October 1 as it was Saturday. The Union FM P Chidambaram had said that the bank branches will be kept open for full day on Saturday but this did not help the system to clear the high value of cheques.

Sebi drops plan for central listing body

The market watch-dog’s move to put in place a system to ensure only quality companies got listed did not take off as the Centre felt it was not necessary.

The Securities & Exchange Board of India (Sebi) has shelved the plan to set up a Central Listing Authority that was supposed to ensure that only quality companies get listed on stock exchanges.

Actually, Sebi had gone ahead with the idea some three years ago and tried to formally set up the authority by appointing a chief executive. However, the idea never came through and just got discarded, according to sources.

As per the brief prepared by Sebi the central listing authority was expected to “set, enforce and continuously upgrade the disclosure and listing standards for the healthy development of the capital markets.” Incidentally, It was expected to encourage the new issuances and listing of securities in a time-bound manner.

It would also make efforts to prevent undeserving persons from tapping the public resources and listing securities, which are detrimental to the interest of investors, the brief had said.

However, according to sources, there were two reasons that the authority never came into being. The first being that it could not be finalised whether the authority should be at par with Sebi or work under Sebi.

Given the possible composition of people working in the authority, it would have been difficult to make it below the level of Sebi.

One other reason cited was that the central government took a view that there was no reason to set up the listing authority as the country’s stock exchanges themselves should be asked to do due delligence before allowing listing of any company.

However, as another source pointed out if there was to be such a authority, it would have ensured that large number of small companies on the Bombay Stock Exchange would not be around as many of them are there due to legacy and following old rules of listing.

Incidentally, it may be pointed out that these very companies which saw massive price manipulation recently that attracted the ire of the government.