SENSEX 16882.16 -90.35
NIFTY 5114.65 -31.40
USD/INR 0057.01 -00.11
NASDAQ 2840.42 -52.00
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UPDATEDTIME 09.28 PM 25 JUNE 2012
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The government
announced measures on Monday to support the falling rupee but left the markets
disappointed as investors expected bolder measures. The markets ended in the
red.
Analysts said while the measures would benefit the bond markets in the long run, a sustainable impact on the rupee was doubtful.
The Sensex closed at 16,882.16, down 90.35 points, or 0.53 percent. It touched an intraday high of 17,131.15 and a low of 16,853.05.
The Nifty ended at 5,114.65, down 31.40 points, or 0.61 percent. It touched an intraday high of 5,194.60 and a low of 5,105.65.
The central bank eased ECB norms by increasing theFII investment cap in government bonds to $20 billion from $15 billion. The ECB limit for new manufacturing and infrastructure projects was hiked by $10 billion.
Sovereign wealth, pension and insurance funds can now buy gilts, and the lock-in period for FIIs in infra debt funds has been reduced. Qualified financial institutions can buy mutual funds with a 25 percent AUM in infra stocks. Residual maturity for FIIs in G-Secs has been lowered to 3 years.
Well, not the 'shock and awe' the market was looking for, but we shall see what else gets announced. Not surprised to see USD/INR higher.
Until they address longer-term structural issues around capital flows and competition in the domestic retail sector which can help bring down inflation pressures, I think markets will be left disappointed," he added.
The RBI said it will issue operational guidelines later.
The step taken by the RBI is considered not significant enough to help India Inc. from taking benefits of the foreign money or to arrest the fall in the currency. All in all, one can say the markets were disappointed on the outcome as expectations were high, but there are some positive takeaways too that can be denied.
Commenting on the move, C Rangarajan, Chairman at PMEAC, Now that the RBI's measures would encourage capital flows. He added that the rupee needs larger amount of capital flows to stabilise, and that the ECB route will be tapped by large companies as refinance rules are eased.
The BSE Midcap Index was down 0.03 percent and the BSE Smallcap Index edged 0.24 percent higher.
All major sectoral indices closed in the red. The BSE Bankex fell 1.02 percent, the BSE Power Index fell 0.94 percent, the BSE Metal Index was down 0.72 percent and the BSE Realty Index declined 0.71 percent.
"It will take a while for any of those effects to happen. Just because you have allowed people to invest does not mean that there are a whole bunch of guys waiting to invest. Already, Indian corporates have actually probably had the largest amount of ECB and FCCB restructuring, and that will dampen investors' desires to put money into India.
Also, I do not think the limit for government bonds has been set and if the rating is cut, the likelihood that a lot of money will rush is another problem.
Hero MotoCorp (2.72 percent), Hindalco Industries (2.35 percent), ONGC (2.31 percent), Cipla (2.26 percent) and SBI (1.94 percent) were the major Sensex losers.
Maruti Suzuki (1.14 percent), GAIL (0.76 percent), Reliance Industries (0.72 percent), HDFC (0.54 percent) andBajaj Auto (0.31 percent) were the major gainers.
Shares of Sterlite Industries and Sesa Goa gained momentum as shareholders approved their proposed merger. The companies will now require the Bombay High Court's approval for the merger.
The market breadth was positive on the BSE with 1,420 gainers against 1,334 losers.
Foreign institutional investors sold equities worth Rs 174.22 crore on Friday, as per provisional stock exchange data.
The rupee also pared most of the gains and ended at 57.01 per dollar, against its previous close of 57.12. The Indian unit started the day strong after Finance Minister Pranab Mukherjee on Saturday gave hopes to the market of many measures that RBI and the ministry were working on to support the falling rupee and to boost economic growth.
The steps may be in right direction but what the markets and rupee needed was an immediate booster, which the RBI did not provide, according to an ET Now report. The RBI now may have to come out with a new set of measures apart from this to tackle the situation and to improve the business climate by encouraging inflows and narrowing trade deficits.
However, Sajjid Chinoy, India Economist at JPMorgan, said the increase in the limit for government securities was broadly in line with expectations.
We have to recognise that the rupee's decline in the last few days has been the result of several global factors, but it is a good start by the government. Hopefully, some of the fundamental issues will be addressed in the coming months and that would provide further support to the rupee.
Analysts said while the measures would benefit the bond markets in the long run, a sustainable impact on the rupee was doubtful.
The Sensex closed at 16,882.16, down 90.35 points, or 0.53 percent. It touched an intraday high of 17,131.15 and a low of 16,853.05.
The Nifty ended at 5,114.65, down 31.40 points, or 0.61 percent. It touched an intraday high of 5,194.60 and a low of 5,105.65.
The central bank eased ECB norms by increasing theFII investment cap in government bonds to $20 billion from $15 billion. The ECB limit for new manufacturing and infrastructure projects was hiked by $10 billion.
Sovereign wealth, pension and insurance funds can now buy gilts, and the lock-in period for FIIs in infra debt funds has been reduced. Qualified financial institutions can buy mutual funds with a 25 percent AUM in infra stocks. Residual maturity for FIIs in G-Secs has been lowered to 3 years.
Well, not the 'shock and awe' the market was looking for, but we shall see what else gets announced. Not surprised to see USD/INR higher.
Until they address longer-term structural issues around capital flows and competition in the domestic retail sector which can help bring down inflation pressures, I think markets will be left disappointed," he added.
The RBI said it will issue operational guidelines later.
The step taken by the RBI is considered not significant enough to help India Inc. from taking benefits of the foreign money or to arrest the fall in the currency. All in all, one can say the markets were disappointed on the outcome as expectations were high, but there are some positive takeaways too that can be denied.
Commenting on the move, C Rangarajan, Chairman at PMEAC, Now that the RBI's measures would encourage capital flows. He added that the rupee needs larger amount of capital flows to stabilise, and that the ECB route will be tapped by large companies as refinance rules are eased.
The BSE Midcap Index was down 0.03 percent and the BSE Smallcap Index edged 0.24 percent higher.
All major sectoral indices closed in the red. The BSE Bankex fell 1.02 percent, the BSE Power Index fell 0.94 percent, the BSE Metal Index was down 0.72 percent and the BSE Realty Index declined 0.71 percent.
"It will take a while for any of those effects to happen. Just because you have allowed people to invest does not mean that there are a whole bunch of guys waiting to invest. Already, Indian corporates have actually probably had the largest amount of ECB and FCCB restructuring, and that will dampen investors' desires to put money into India.
Also, I do not think the limit for government bonds has been set and if the rating is cut, the likelihood that a lot of money will rush is another problem.
Hero MotoCorp (2.72 percent), Hindalco Industries (2.35 percent), ONGC (2.31 percent), Cipla (2.26 percent) and SBI (1.94 percent) were the major Sensex losers.
Maruti Suzuki (1.14 percent), GAIL (0.76 percent), Reliance Industries (0.72 percent), HDFC (0.54 percent) andBajaj Auto (0.31 percent) were the major gainers.
Shares of Sterlite Industries and Sesa Goa gained momentum as shareholders approved their proposed merger. The companies will now require the Bombay High Court's approval for the merger.
The market breadth was positive on the BSE with 1,420 gainers against 1,334 losers.
Foreign institutional investors sold equities worth Rs 174.22 crore on Friday, as per provisional stock exchange data.
The rupee also pared most of the gains and ended at 57.01 per dollar, against its previous close of 57.12. The Indian unit started the day strong after Finance Minister Pranab Mukherjee on Saturday gave hopes to the market of many measures that RBI and the ministry were working on to support the falling rupee and to boost economic growth.
The steps may be in right direction but what the markets and rupee needed was an immediate booster, which the RBI did not provide, according to an ET Now report. The RBI now may have to come out with a new set of measures apart from this to tackle the situation and to improve the business climate by encouraging inflows and narrowing trade deficits.
However, Sajjid Chinoy, India Economist at JPMorgan, said the increase in the limit for government securities was broadly in line with expectations.
We have to recognise that the rupee's decline in the last few days has been the result of several global factors, but it is a good start by the government. Hopefully, some of the fundamental issues will be addressed in the coming months and that would provide further support to the rupee.
Regards
RAKESH MAKIN
+91, 9041667797(DIRECT),
9915684997
OFF 0172-4657997
PANCHKULA (Haryana).
Email:makin_97@yahoo.com
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