Investors must be careful about risky mkt: Sebi chief

Sebi is getting stronger and intensifying surveillance over the capital market, he said.

Bhave said Sebi has collected Rs 25 crore in the last 14 years as penalty from the companies or financial institutions who had violated the capital market. People often get into the trap of illegal financial companies who assure to provide them hefty returns within a shot span of time.

"Sebi is gradually changing its mechanism so that the fraudsters can not cheat the investors in the capital market,” he added.

He said ASBA (application supported by blocked amounts) is a system introduced by Sebi for protection of the initial public offers by which applicant's account can be protected until shares are allotted to him.

Nifty may fall to 5,600 in near future

The Nifty futures saw short-covering from day traders below the lower band of the value area, with the trade summary matrix showing buy-side volumes below 5,766.

The market picture chart for the day hints at a level of 5,937, based on price projections using time-price opportunities (TPOs). However, an intra-day volume-based selloff during the afternoon can take the Nifty futures to around 5,657, according to volume picture chart. The spot Nifty is expected to witness strong support around 5,707. On the upside, the index may face resistance around 5,917-5,912.

The premium for the Nifty January futures slipped from 15-20 points earlier to just four points on Thursday, signalling that bears have started building short positions on expectations of further weakness. Bulls seem to have unwound long positions, while bears have gone for fresh shorts, as futures added 1.11 million shares in the open interest (OI) at close, of the intraday build-up of 2.58 million shares.

The call and put options data show significant call writing in the 5800-5,900 call options. The 5,700-strike call options also added OI of 928,200 shares, mostly through sell-side trades, which hints at a loss of support for the index at that level. On the other hand, unwinding was observed in the 5,800-6,000-strike put options and change of hands in the 5600-5,700-strike put options. This suggests a weak undercurrent, with the index likely to fall to 5,600 in the near future.

Deposit growth jumps 16.4% at Dec quarter end

This could be indicative of more and more people preferring bank fixed deposits as an investment avenue in response to the recent rate hikes. In the third quarter, interest rates on deposits have gone up by almost 250 basis points due to cash-starved banks competing with each other to attract funds.(Click for table & graph)

But analysts point out this may be due to wholesale deposit growth. “This could be a combination of a rise in both bulk deposits as well as retail deposits,” said Suresh Ganapathy, head of financial research team, Macquarie Securities. Usually, banks resort to taking up short-term bulk deposits towards the quarter end to shore up their balance sheets. “If this is so, there will be huge repayments in the next fortnight,” he added.

A senior official from State Bank of India said there was an element of window dressing, especially in the current accounts of companies. “They take in credit and for a short term this money (loan money) moves to their current account. Hence both assets and liabilities move up close to the quarter end,” he added.

But this time it seems both retail and bulk deposits have helped. “Usually at the quarter end, deposits tend to bulge. But even if that is removed, the deposit growth has been robust,” said S Govindan, general manager, personal banking and operations, Union Bank of India.

SBI has raised term deposit rates by over 100-150 basis points across different categories. “This has helped us to manage business till the end of March and our dependence on bulk deposits would be minimal,” said the official.

Going forward, one can expect further rate hikes. “Deposit rates could go up by another 25 to 50 basis points in this financial year,” said Ganapathy.

RBI has estimated a deposit growth of 18 per cent for financial year 2010-11 in its annual monetary and credit policy.

Markets in bear grip, Sensex below 19,000

Today, the markets were in a panic mode, with the Bombay Stock Exchange Sensex dipping 322.38 points, or 1.7 per cent, to close at 18,860.44, a level last seen in November. On the National Stock Exchange, the key CNX Nifty shed 97.35 points, or 1.7 per cent, and closed at 5,654.55. Marked with high volatility sessions, the week saw the Sensex fall 4.2 per cent and the Nifty four per cent.

Experts say Indian equities will remain bearish. Deepak Mohoni, director at trendwatchindia.com, says, “It’s looking like a bear market. There is a possibility that the Nifty may fall to the 5,000-5,300 level. There needs to be a strong rally in the next two trading sessions to reverse the current downtrend.”

According to analysts, the Nifty is very close to its 200-day moving average, which is around 5,600, and a fall below this will trigger further selloff. Foreign institutional investors (FIIs), after buying in the first two quarters, are preferring the western markets and those in other emerging economies. This week, FIIs sold shares worth Rs 3,671.2 crore, while for the year to date, the sale has been Rs 4,279.1 crore.

U R Bhat, managing director, Dalton Capital Advisors, said, “FIIs have lightened their positions. The outlook for the Indian market is neutral to negative.The country needs to position itself well in terms of monetary and fiscal action.” He also raised concerns about the widening current account deficit.

Market observers pointed to the government’s helplessness in controlling inflation. The Reserve Bank of India is now expected to raise rates by at least 50 basis points, they say.

N Sethuram, chief investment officer at Shinsei Investments, says, “India de-rating is happening because of various macro factors. It is not that these factors are new. Even six months ago, fiscal deficit, inflation and current account deficit were being talked about. However, now there is a gradual feeling that inflation is not being contained by normal regulatory measures. If further steps are taken to tame inflation, growth will come down, affecting corporate earnings. GDP growth could be revised down to six-seven per cent in that case.”

He said there would be further selling by FIIs. “In 2011, India will be relatively less attractive. Why should FIIs not go to other growth markets?”

Agrees Piyush Garg, chief investment officer at ICICI Securities: “The government seems to panicking over inflation. In its helpnessness, it may take actions which will not be desirable and affect growth. In fact, the economy is already showing signals of moderation in growth. With this, the choppiness in the markets is likely to continue.”

Markets trade lower, eye on inflation data

SI Reporter / Mumbai January 14, 2011, 10:59 IST - Source Business Standard

The markets continue to trade in the red on back of weak global cues and selling pressure in rate sensitives ahead of the headline inflation data for the month of December expected at noon today. The S&P CNX Nifty was down 27 points, at 5725 and the Sensex fell 84 points, at 19,098.

Metal shares were leading the losses after SAIL results dissapointed as Q3 net dipped 34% to Rs 1,107 cr. The BSE metal index was down 1.5% dragged by SAIL, down 4.8%, JSW Steel dipped 2.8% and Sesa Goa was off 1.9%.

WPI (wholesale price index) for the month of December is seen at 8.35% according to reuters poll. Rate sensitive auto and banking stocks witnessed selling pressure. From the auto pack Tata Motors and Ashok Leyland declined 3.2% and Maruti Suzuki fell 1.2%. Investors cashed out Axis Bank, down 2.9%, HDFC Bank, down 0.7% and Canara Bank, down 2.5%.

IT shares rebounded led by Infosys, up 0.6% after Goldman Sachs upgraded the stock to buy from neutral. Other rivals Wipro surged 2.1% and HCL Technologies climbed 1.7%.

Broader markets were trading in the red, midcap index was down 0.4% and smallcap index fell 0.2%.