Re-energized bulls take Nifty beyond the crucial 5,000 bastion; Sensex surges 1.59%

Boisterous benchmarks showcased yet another enthusiastic performance on Tuesday rallying well over one and half a percentage points and breaking psychological levels on the northbound journey, ahead of the two day holiday. Though the session was highly volatile yet the benchmarks managed to fervently surge to higher levels as investors continued to hunt for fundamentally strong but oversold bargains. The BSE's thirty share Sensex has amassed over eight hundred points since the start of new week while Nifty has gone on to retrace the crucial 5,000 bastion by garnering over two hundred fifty points in last two session. Sentiments remained euphoric right from the initial moments of trade as apart from the spillover effect of Monday's rally, the strong overnight rally on Wall Street as well as in European markets buoyed local sentiments. Marketmen traded with conviction on the back of overnight encouraging developments including the impact of Hurricane Irene turning out to be less severe, robust US consumer spending data reinforcing views that the world's largest economy was not sliding back into recession and reports of merger of the 2nd and 3rd largest Greek banks as well as reassurance from the European commission which said a fresh round of bank recapitalizations was not needed. On the domestic front, the largely in line GDP growth numbers showed that Indian economy grew at 7.7% in the April-June period, the slowest pace since 2010, confirming fears of a slowdown mainly due to the poor performance of the manufacturing sector. RBI's longest stretch of monetary tightening in a decade made borrowing more expensive and slowed investment and consumer demand in Asia's third-largest economy. Though, the GDP numbers were largely in line with expectations yet the frontline indices came off to some extent in the noon trades as marketmen dissected the first quarter GDP numbers and speculated tough times ahead amid the aggressive monetary tightening from Indian central bank and the persistence of debt crisis in developed economies.

Earlier on Dalal Street, the benchmark got off to a gap up opening in tandem with the optimistic sentiments prevailing in Asian markets on the back of sanguine global developments. But some profit booking at higher levels caused the frontline indices to drift to lower levels. The key indices were swift enough to move back to around sessions' highs in mid morning trades but only for a brief period as the gauges drifted to the lowest point in the session in early noon trades post the government released the economic growth numbers. Just when it looked like the indices will not be able to forestall the decline and slip into the red terrain, the indices found support and speedily recovered to eventually settle around the intraday high level for the second straight session. Finally the NSE's 50-share broadly followed index Nifty, accumulated over one and half a percent to settle a tad above the crucial 5,000 support level while Bombay Stock Exchange's Sensitive Index, Sensex garnered over two hundred fifty points and ended above the psychological 16,650 mark. The broader markets traded on an optimistic note through the session, but failed to match the fervor displayed by their larger peers and settled with gains of over a percent. On the BSE sectoral space, the metal and rate sensitive counters like Bankex and Realty witnessed maximum traction and settled as top gainers. On the other hand, the defensive FMCG pocket remained the only chunk in the armor settling with moderate losses. Among individual losers, index heavyweight ONGC too got butchered in the session as it lost over four percent, being the top laggards among the heavyweights followed by ITC, Tata Power and L&T. The markets bounced on good volumes of over Rs 1.23 lakh crore while the turnover for NSE F&O segment too remained reasonable compared to Monday at over 1.13 lakh crore. The market breadth remained extremely optimistic as there were 1841 shares on the gaining side against 976 shares on the losing side while 127 shares remained unchanged.

Finally, the BSE Sensex surged 260.42 points or 1.59% to settle at 16,676.75, while the S&P CNX Nifty soared 81.40 points or 1.65% to close at 5,001.00.

The BSE Sensex touched a high and a low of 16,714.70 and 16,443.35 respectively. The BSE Mid cap and Small cap indices were up by 1.44% and 1.10% respectively.

The top gainers on the Sensex were DLF up 4.42%, Jindal Steel up by 5.34%, Sun Pharma up by 5.16%, Tata Steel up by 4.79% and Hindalco Inds up by 4.34%.

On the flip side, ONGC down 4.29%, ITC down 0.97%, Tata Power down 0.35%, L&T down 0.31% and Bharti Airtel down 0.16% were the top losers on the index.

The top gainers on the BSE sectoral space were, Metal up 3.74%, Reality up 3.62%, Bankex up 2.24%, IT up 2.08% and TECk up 1.71%. While FMCG down 0.32% was the lone loser on the BSE sectoral space.

Meanwhile, India's economic growth rate slowed down to 7.7% in the first quarter of 2011-12 as compared to 8.8% achieved in the same quarter of the previous financial year, on the back of steady rise in interest rates combined with persistently high inflation. The lower growth rate has come mainly on account of construction, which saw an increase of just 1.2% during April-June 2011, compared with 7.7% in the same quarter of last year.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the decline in GDP growth is due to moderation in the construction activities which fell to 1.2% in April-June 2011 from 7.7% achieved in April-June 2010. Other sector such as mining and quarrying (1.8%), manufacturing (7.2%) and community, social and personal services (5.6%) showed moderation in growth in April-June 2011. However, sectors like agriculture, forestry and fishing (3.9%), electricity, gas and water supply (7.9%), and trade, hotels, transport and communication (12.8%) showed improvement.

The estimates of GDP for the April-June quarter of 2011-12 released by the CSO of the Ministry of Statistics an Programme Implementation said the GDP had grown to Rs 12,26,339 crore in the first quarter (Q1) of 2011-12 as against Rs 11,38,286 crore in the same quarter of 2010-11.

According to the latest estimates available on the Index of Industrial Production (IIP) for the new series, the index of mining, manufacturing and electricity, registered growth rates of 1.0%, 7.5% and 8.2%, respectively, during Q1 of 2011-12 as compared to the growth rates of 8.0%, 10.3% and 5.4% in these sectors during Q1 of 2010-11. The estimates of Q1 for 2009-10 and 2010-11 have been revised on account of using new series of IIP.

The key indicators of construction sector, namely, production of cement declined by 0.9% and consumption of finished steel registered growth rate of 1.5%, during Q1 of 2011-12. Among the services sectors, the key indicators of railways, namely, the net tonne kilometres and passenger kilometres have shown growth rates of 6.3% and 6.1%, respectively during Q1 of 2011-12.

In transport and communication sectors, the sales of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation, passengers handled by the civil aviation registered growth rates of 14.1%, 5.2%, 4.9% and 14.6% respectively during Q1 of 2011-12 over Q1 of 2010-11. The other key indicators, namely, aggregate bank deposits, and bank credits have shown growth rates of 18.7%, and 21.0%, respectively during Q1 of 2011-12 over Q1 of 2010-11.

However, the investment in economy have decline because of increased interest rates, as per the CSO data, in terms of GDP at market prices, the rates of Gross Fixed Capital Formation (GFCF) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 28.4% and 31.2%, respectively, as against the corresponding rates of 29.2% and 31.4%, respectively in Q1 of 2010-11.

In terms of GDP at market prices, the rates of the Government Final Consumption Expenditure (GFCE) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 10.5% and 10.4%, respectively, as against the corresponding rate of 11.1% each in Q1 of 2010-11. In terms of GDP at market prices, the rates of Private Final Consumption Expenditure (PFCE) at current and constant (2004-2005) prices during Q1 of 2011-12 are estimated at 58.1% and 60.5%, respectively, as against the corresponding rates of 58.7% and 61.7%, respectively in Q1 of 2010-11.

The slowdown in the GDP growth rate for the first quarter of 2011-12 has mainly come from the interest rate sensitive sectors such as constructions, manufacturing activities and sectors, which indicate that, nonstop hike in Reserve Bank of India's short term leading and borrowing rates have adversely affected the economic growth.

This quarterly decline in the India's GDP growth, is the slowest in last six quarters, during the January-March 2011, India had achieved economic growth of 7.8%. The government has also revised downward GDP data from 9.3% to 8.8% for the first quarter of 2010-11. Another issue of concern is the investment rate i.e. GFCF also showed the moderation during April-June 2011, which can have backlog effect on the growth of manufacturing and other sectors indicating, this slowdown in economic growth may continue in coming quarters. The S&P CNX Nifty touched high and low of 5,016.25 and 4,927.55, respectively.

The top gainers of the Nifty were Sesa Goa up 11.05%, DLF up 6.78%, HCL Tech up 6.03%, JP Associate up 5.92% and Jindal Steel up 5.19%.

On the flip side, ONGC down 4.09%, GAIL down 0.83%, ITC down 0.77%, BPCL down 0.76% and Bharti Airtel down 0.35% were the top losers on the index.

The European markets were trading in mixed. France's CAC 40 lost 0.13%, Britain's FTSE 100 jumped 2.31% and Germany's DAX lower by 0.74%.

Most of the Asian equity indices finished the day's trade in the positive terrain on Tuesday following Wall Street rally after a better-than-expected batch of US consumer spending data. Moreover, news of merger between two big Greek's banks too aided the sentiments. Meanwhile, Seoul shares snapped the day's trade with a gain of about 0.80 percent, with foreign investors turning net buyers after three consecutive sessions of selling, snapping up 196 billion won ($182.5 million) worth of shares. However, Chinese Shanghai trimmed earlier gains and ended with a cut of 0.40 percentage point on lingering concerns of a liquidity squeeze after the central bank ordered banks to hold more types of deposits in reserve.

Meanwhile, Malaysian and Singaporean bourses are closed on account of Hari Raya Puasa today while the stock markets in Indonesia too remained shut for Idul Fitri holiday. Indonesian stock exchanges will remain closed till September 2.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,566.59	-9.82	-0.38
Hang Seng	20,204.17	339.06	1.71
Nikkei 225	8,953.90	102.55	1.16
Seoul Composite	1,843.82	14.32	0.78
Taiwan Weighted	7,646.19	68.18	0.90
Jakarta Composite	-	-	-
KLSE Composite	-	-	-
Straits Times	-	-	-

 

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Benchmarks lose momentum as sanguinity wanes post GDP numbers

The optimism in Indian equity markets got tempered in afternoon trades on Tuesday and the frontline indices came off to some extent from the intraday highs as marketmen dissected the first quarter GDP numbers. Indian economy grew at 7.7% in the April-June period, the slowest pace since 2010, confirming fears of a slowdown mainly due to the poor performance of the manufacturing sector. RBI's the longest stretch of monetary tightening in a decade have made borrowing more expensive and slowed investment and consumer demand in Asia's third-largest economy. Though the GDP numbers were largely in line with expectations yet optimism waned in domestic stock markets as investors speculated tough times ahead amid the aggressive monetary tightening from Indian central bank and the persistence of debt crisis in developed economies. Meanwhile the European stock markets too got off to an optimistic opening on expectation that the US economic reports due this week would soothe nerves over the gloomy economic prospects. The benchmarks have managed to hold on to the psychological 4,950 and 16,500 levels thanks to the hefty position build up in high beta - real estate and Metal counters. The beaten down information technology and rate sensitives also are seeing some buying. However, the Capital Goods pocket bore the brunt of selling pressure as it got dragged to the bottom of the sectoral table on BSE after bellwether L&T plunged post weak manufacturing growth numbers in the GDP data. Index heavyweight ONGC too got butchered in the session as it lost around four and half a percent, being the top loser in the space.

Moreover, the broader markets too lost a lot of ground from the high point of the day but held their head above the water with moderate gains. The bourses climbed on good volumes given that these are the initial days of a new F&O series while the market breadth on BSE was in favor of advances in the ratio of 1535:1032 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,535.32 up by 118.99 points or 0.72% after trading as high as 16,678.72 and as low as 16,443.35. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.61% and Small cap rose 0.39% respectively.

On the BSE sectoral space, Realty up 2.53%, Metal up 1.76%, TECk up 1.22%, Bankex up 1.01% and IT up 0.90% were the major gainers while Capital Goods down 0.87%, PSU down 0.46% and FMCG down 0.36% were the only losers on the index.

Tata Steel up 4.67%, DLF up 4.53%, Sun Pharma up 2.73%, RIL up 2.71% and JP Associates up 2.30% were the major gainers on the Sensex, while ONGC down by 4.40%, L&T down 2.09%, ITC down 0.74%, Bajaj Auto down 0.71% and Tata Power down 0.51% were the major losers on the index.

Meanwhile, to enhance trade over the land routes, India and Bangladesh have taken the first major step by relaxing the present practice of unloading trucks at the zero border point. Trucks from both sides would now be allowed to enter 200 metres inside each other's territories.  To reinforce trade at the Petropole-Benapole border in Bengal's North 24 Parganas district, Union Home Minister P Chidambaram laid the foundation stone for a new road there to ensure flawless traffic flow on the route, with state-of-the-art warehouses and modern parking facilities for heavy vehicles. The Petropole border is the largest land customs station in Asia.

The total cost of the project is around Rs 125 crore and State-run RITES is the advisor. This new stretch would be a bypass road on the present congested one, connecting Benapole to NH35, bypassing Bongaon, the last town in the India-Bangladesh border that is 97 km from Kolkata. This move by the government would ease overcrowding and allow trucks to move in a smoother fashion to the Bangladesh side and also to receive the traffic coming from there. It is also reported that both the sides were also discussing a Comprehensive Motor Vehicular Agreement, to encourage seamless cross-movement of cargo.

Development of the land trading route with the installation of proper security measures was on the main agenda discussed during the visit of Bangladeshi Prime Minister, Hasina, in January 2010. Both sides had agreed to comprehensively address all land boundary issues and announced creation of a Joint Boundary Working Group. The need of sufficient infrastructure in the trading routes across borders has resulted in major delays and cost overruns. Traffic congestions, delay in handling shipments and increasing storage-dwell times have been major non-tariff barriers for trade.

Earlier last month, Commerce, Industry and Textile Minister Anand Sharma and his Bangladeshi counterpart, Muhammad Faruk Khan, inaugurated 'Border Haats' at Kalaichar in the West Garo Hill district in Meghalaya. It is estimated that bilateral trade worth $20 million will take place annually from these Haats, which would re-establish the traditional system of marketing local produce.

The bilateral trade between India and Bangladesh has increased from $2.7 billion in 2009-10 to $3.9 billion in 2010-11, an increase of 45 percent. The growth of exports from Bangladesh to India has also increased from $0.25 billion in 2009-10 to $0.39 billion in 2010-11. In 2010, India offered a $1 billion line of credit to Bangladesh, the largest ever one-time bilateral financial assistance extended to any country by India.

The S&P CNX Nifty is currently trading at 4,957.70, higher by 38.10 points or 0.77% after trading as high as 4,998.05 and as low as 4,927.55. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were DLF up 4.72%, Tata Steel up by 4.65%, R Com up 4.23%, SESA Goa up 4.07%, and IDFC up 3.20%.

ONGC down 4.42%, L&T down 2.11%, SAIL down 1.59%, BPCL down 1.59% and BajaJ Auto down 0.89% were the major losers on the index.

Asian markets traded on a positive note, Hang Seng surges 1.06%, Nikkei 225 soared 1.16%, Seoul Composite climbed 0.78% and Taiwan Weighted amassed 0.90%.

On the other hand, Shanghai Composite eased 0.02%.

Meanwhile, Malaysian and Singaporean bourses are closed on account of Hari Raya Puasa today while the stock markets in Indonesia too remained shut for Idul Fitri holiday. Indonesian stock exchanges will remain closed till September 2.

The European markets traded on optimistic note as France's CAC 40 surged 0.86%, Germany's DAX climbed 0.79% and Britain's FTSE 100 soared 1.95%. 

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Markets hold early gains after better than expected GDP numbers

The Indian equity markets are holding on early gains in-line with GDP data for the period FY12-Q1 in late morning trades. However, with several front line stocks witnessing resistance at higher levels due to profit taking, the market has given up a fine share of its gains at present. Meanwhile, GDP growth during the period FY12-Q1 stands at 7.7% versus 9.3% (YoY). The agriculture growth during the period stands at 3.9% versus 2.4% (YoY), manufacturing growth stands at 7.2% versus 12.7% (YoY), construction growth is at 1.2% versus 7.7% (YoY), industry grew by 5.1% and service sector grew by 10% during the period. India's economic growth in the first quarter of the ongoing fiscal year was in-line with consensus estimates, as a better agriculture output was offset by weaker expansion in the manufacturing sector. On sectoral front Realty, metal, information technology and bank stocks posted handsome gains. Stocks from consumer durables, oil & gas and automobile sectors too have drifted down a bit after a rousing start. Capital goods, PSU and FMCG stocks were pulling the market down. On the global front, Asian markets continued to trade in positive. Back home, the market breadth favoring the positive trend; there were 1,639 shares on the gaining side against 793 shares on the losing side while 108 shares remained unchanged.

The BSE Sensex is currently trading at 16,562.44, up by 146.11 points or 0.89%. The index has touched a high and low of 16,678.72 and 16,518.42 respectively. There were 22 stocks advancing against just 8 declining ones.

The broader indices kept trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.94% and 0.78% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 2.15%, Metal up by 2.11%, Bankex and Metal up by 1.32% and IT up by 1.08%. While, CG down by 0.66%, PSU up by 0.15% and FMCG up by 0.10% remained the top losers on the index.

The top gainers on the Sensex were Tata Steel up by 4.81%, DLF up by 3.58%, RIL up by 2.89%, Jaiprakash Associate up by 2.64% and Hindalco Industries up by 2.53%.

On the flip side, ONGC down by 3.73%, L&T down by 1.90%, ITC down by 0.45%, Bajaj Auto down by 0.39% and Tata Power down by 0.38% were the top losers on the Sensex.

Meanwhile, the estimates of GDP growth numbers for the April - June quarter has come in slightly better than expected at 7.7% amid broader expectations of 7.6%.GDP at factor cost at constant (2004-05) prices in Q1 of 2011-12 is estimated at Rs 12,26,339 crore, as against  Rs 11,38,286 crore in Q1 of 20010-11, showing a growth rate of 7.7% against 8.8% recorded in first quarter of 2010-11 and 7.8% quarter on quarter.

The economic activities which registered significant growth in Q1 of 2011-12 over Q1 of 2010-11 are  'electricity, gas & water supply' at 7.9%,  'trade, hotels, transport and communication' at 12.8%, 'financing, insurance, real estate and business services' at 9.1%.

Other sectors which expanded at a good pace are 'manufacturing', rising 7.2%, 'community, social and personal services' gaining 5.6%, 'agriculture, forestry & fishing' increasing 3.9%, 'mining & quarrying' growing 1.8% and 'construction' rising 1.2% in the April-June period.

The S&P CNX Nifty is currently trading at 4,963.90, higher by 44.30 points or 0.90%. The index has touched a high and low of 4,998.05 and 4,948.40 respectively. There were 35 stocks advancing against 15 declines on the index.

The top gainers of the Nifty were Reliance Communication up by 5.40%, Tata Steel up by 4.74%, Sesa Goa up by 3.90%, DLF up by 3.66% and JP Associate up by 3.52%.

On the flip side, ONGC down by 3.98%, L&T down by 1.94%, SAIL down by 1.22%, BPCL down by 1.11% and GAIL down by 0.88%, were the major losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite was up by 0.67%, Hang Seng was up by 1.95%, Nikkei 225 was up by 1.19%, Seoul Composite was up by 0.80% and Taiwan Weighted was up by 0.90%.

Meanwhile, Malaysian and Singaporean bourses are closed on account of Hari Raya Puasa today while the stock markets in Indonesia too remained shut for Idul Fitri holiday. Indonesian stock exchanges will remain closed till September 2. 

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Local bourses capture some more ground; first quarter GDP data eyed

Local bourses have captured some more ground as active bulls running across the space have created fresh short tailing the gains of the global equities. However, there is some air of caution at Dalal Street as finicky investor's are opting to stay on the bay before initiating any large bets ahead of the release of first quarter GDP data. The general market expectation is that Indian economy probably grew at an annual 7.6 percent in the quarter through June, slowing from the previous quarter's 7.8 percent growth. On the global front, U.S. stocks extended gains on Monday with the Nasdaq rising 3 percent after a merger between two big banks in Greece and a rebound in consumer spending boosted investors' appetite for risky assets. Meanwhile, Asian stocks too are imitating the pattern of the Wallstreet is trading in jubilant mood. However, US future indices are showing a downtick in the screen trade. Back home, on the BSE Sectoral front, stocks from Realty, TECk and Bankex counters are doing the most to enhance the gains of the bourses, while stocks from PSU counter are the only spoil sport. All Oil marketing companies bucking the trend are trading in red as brent crude rose for a sixth straight session on Tuesday, buoyed by strong data from the United States that allayed fears the world's top oil consumer was sliding back into recession and a landmark bank merger deal in Greece. Meanwhile, investor's at Dalal Street have once again got some reason to rejoice as GDP data despite declining from last year's first quarter numbers, stood at 7.7%, tad above the market expectation.

The BSE Sensex is currently trading at 16,602.14, up by 185.81 points or 1.13%. The index has touched a high and low of 16,678.72 and 16,518.42 respectively. There were 25 stocks advancing against just 4 declining one's, while one stock remained unchanged on the index.

The broader indices kept trading in line with benchmarks; the BSE Mid cap and Small cap indices rose 1.10% and 0.85% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 2.36%, TECK up by 1.64%, Bankex and Metal up by 1.63% and CD up by 1.33%. While, PSU down by 0.14% remained the lone loser on the index.

The top gainers on the Sensex were Tata Steel up by 3.79%, DLF up by 3.77%, Jaiprakash Associate up by 3.15%, RIL up by 3.02% and Bharti Airtel up was up by 2.28%.

On the flip side, ONGC was down by 4.00%, BHEL down by 0.73%, Bajaj Auto down by 0.50% and L&T was down by 0.43% were the top losers on the Sensex.
Meanwhile, the Reserve Bank of India (RBI) on August 29 released the much awaited draft guideline for the New Banking Licenses. In a statement RBI said that it has sought views/comments on the draft guidelines from banks, non-banking financial institutions, industrial houses, other institutions and the public at large. The key facet of the released draft guidelines are as follows:

Private companies (promoters/promoters group) with diversified ownership, sound credential and integrity that have a successful track record for minimum of 10 years will be eligible to promote banks. On the other hand, entities that earn 10 percent or more from realty, construction or broking activities, either individually or taken together in the past three years will not be eligible for such licenses.

 On the corporate structure, new banks will be set up only through a wholly owned Non-Operative Holding Company (NOHC) to be registered with the RBI as a non-banking finance company (NBFC) which will hold the bank as well as all the other financial companies in the promoter group. However, the aggregate non-resident shareholding in the new bank shall not exceed 49 percent for the first 5 years after which it will be as per the extant policy.

 For setting up new bank, the minimum capital requirement will be Rs 500 crore. Nevertheless, the actual capital to be brought in will depend on the business plan of the promoters. The NOHC holding will be 40 percent for first 5 years, and then it will be reduced to 20 percent within next 10 years and 15 percent within 12 years from the date of licensing of the bank.

 On the corporate governance front, at least 50 percent of the directors of the NOHC should be independent directors. The corporate structure should be such that it does not impede effective supervision of the bank and the NOHC on a consolidated basis by the RBI.
 The other key highlights of guidelines are the exposure of bank to any entity in the promoter group shall not exceed 10 percent and the aggregate exposure to all the entities in the group shall not exceed 20 percent of the paid-up capital and reserves of the bank. The bank shall get its shares listed on the stock exchanges within two years of licensing.

The bank shall open at least 25 percent of its branches in unbanked rural centres (population upto 9,999 as per 2001 census). And existing NBFCs, if considered eligible, may be permitted to either promote a new bank or convert themselves into banks.

The draft also proposes that in respect of promoter groups having 40 percent or more assets / income from non-financial business, certain additional requirements will be stipulated.

The Finance Minister Pranab Mukherjee in his budget speech had announced that it was the government's intent to open up the banking sector further, and RBI had floated a discussion paper on the subject. Some of the big corporate houses such as Tata, the Aditya Birla Group, Anil Ambani-led Reliance Group, Bajaj Financial Services and Shriram Finance are expected to apply for the new banking license.

Final guidelines will be issued and the process of inviting applications for setting up of new banks in the private sector will be initiated after receiving feedback, comments and suggestions on the draft guidelines, and after certain vital amendments to Banking Regulation Act, 1949 are in place, the RBI said.

The S&P CNX Nifty is currently trading at 4,978.95, higher by 59.35 points or 1.21%. The index has touched a high and low of 4,998.05 and 4,948.40 respectively. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were JP Associate up by 4.20%, Reliance Communication up by 4.10%, Tata Steel up by 3.81%, DLF up by 3.71% and Reliance Capital up by 3.29%.

On the flip side, ONGC down by 4.16%, Gail India down by 0.77%, Bajaj Auto down by 0.71%, BHEL down by 0.51% and BPCL down by 0.39%, were the major losers on the index.

All the Asian equity indices were trading in the green; Shanghai Composite was up by 0.99%, Hang Seng was up by 2.22%, Nikkei 225 was up by 1.23, Seoul Composite was up by 0.82% and Taiwan Weighted was up by 1.05%.

Meanwhile, Malaysian and Singaporean bourses are closed on account of Hari Raya Puasa today while the stock markets in Indonesia too remained shut for Idul Fitri holiday. Indonesian stock exchanges will remain closed till September 2. 

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Anna impact along with Bernanke speech re-energize bulls; benchmarks surmount crucial levels

After weeks of horrendous feat, Indian benchmark staged a blockbuster performance on the first day of a new week by vehemently rallying close to a whopping over three and half a percent in the session and re-conquering the psychological 16,400 levels (Sensex) and 4900 (Nifty). The frontline indices took a quantum leap, registering the best gains in this calendar year. Sentiments across the globe remained highly sanguine in the session as Fed Chairman Bernanke gave his much anticipated speech in Jackson Hole, Wyoming, expressing mild optimism for the US economy but did not explicitly announced a third round of quantitative easing. Marketmen cheered Fed Chairman Bernanke's optimistic view of the US economy as he was hopeful that the world's largest economy will gradually get better and that the Fed has more options to prop up growth. The onus now has shifted to the 2-day Fed FOMC meeting on September 21 where the central bank is expected to announce fresh policy measures. Meanwhile, the Hurricane Irene which pounded the New York metropolitan area with furious winds and lashing rain overnight on Sunday, resulting in flooding, downed trees and power outages in some areas, did not have any effect on the US futures which exhibited optimistic trends. The European and Asian counterparts too displayed energetic performances in the session. On the domestic front, local investors also cheered the government's decision to give into anti-corruption crusader Anna Hazare's demands on the Jan Lokpal bill, as it is perceived that decisions on key economic reforms were held back. The Indian central bank too spent a day full of activity as they released one report after another. Earlier in the day the RBI released report on the issues and concerns in the NBFC Sector in which the RBI panel advocated for tough new norms for non-banking financial companies (NBFCs) with the aim of strengthening the regulatory and supervisory framework for such lenders. Latter the Reserve Bank released draft guidelines for licensing of New Banks in the Private Sector. In another development, the government is likely to announce a duty drawback scheme soon to replace the Duty Entitlement Passbook (DEPB) scheme that expires on September 30. Reports suggest that the government's new duty drawback rates may be 1-3% lower than DEPB rates.

Earlier on Dalal Street, the benchmark got off to a gap up opening in tandem with the optimistic sentiments prevailing in Asian markets post the Fed Chairman's enthralling speech. The frontline indices gathered momentum and commenced the northbound journey with great conviction. There appeared no resistance what so ever throughout the session as the indices kept conquering one psychological level after another. The indices surged from strength to strength and the journey halted only with the end of session around the highest point of the day. Finally the NSE's 50-share broadly followed index Nifty, accumulated over one hundred fifty points to settle a below the crucial 4,900 support level while Bombay Stock Exchange's Sensitive Index Sensex garnered a gargantuan over five hundred fifty points and ended above the psychological 16,400 mark. The broader markets traded on an optimistic note through the session, but failed to match the fervor displayed by their larger peers and settled with gains of over two percent. On the BSE sectoral space, the information technology and rate sensitives' which went through turbulent times in recent days saw huge position build-up in the session while the defensives' like Heathcare and FMCG were not amongst the swiftest of gainers yet traded with around a percent gain. Barring the two heavyweights, ONGC and Maruti Suzuki, all the components of the Sensex settled in the green territory. The markets bounced on good volumes of over Rs 1.01 lakh crore while the turnover for NSE F&O segment too remained reasonable compared to Friday at over 0.90 lakh crore. The market breadth remained extremely optimistic as there were 2121 shares on the gaining side against 716 shares on the losing side while 103 shares remained unchanged.

Finally, the BSE Sensex climbed 567.50 points or 3.58% to settle at 16,416.33, while the S&P CNX Nifty Jumped 171.80 points or 3.62% to close at 4,919.60.

The BSE Sensex touched a high and a low of 16,462.03 and 16,068.73 respectively. The BSE Mid cap and Small cap indices were up by 2.48% and 2.06% respectively.

The top gainers on the Sensex were TCS up 7.32%, Jaiprakash Associate up by 6.92%, Jindal Steel up by 6.75%, Tata Steel up by 5.90% and L&T up by 5.45%.

On the flip side, ONGC down 1.10% and Maruti Suzuki down 0.02% were the top losers on the index.

The top gainers on the BSE sectoral space were, IT up 5.06%, Metal up 4.63%, Reality up 4.43%, TECk up 4.15% and Bankex up 4.10%. There was no loser on the BSE sectoral space.

Meanwhile, to enhance trade over the land routes, India and Bangladesh have taken the first major step by relaxing the present practice of unloading trucks at the zero border point. Trucks from both sides would now be allowed to enter 200 metres inside each other's territories.  To reinforce trade at the Petropole-Benapole border in Bengal's North 24 Parganas district, Union Home Minister P Chidambaram laid the foundation stone for a new road there to ensure flawless traffic flow on the route, with state-of-the-art warehouses and modern parking facilities for heavy vehicles. The Petropole border is the largest land customs station in Asia.

The total cost of the project is around Rs 125 crore and State-run RITES is the advisor. This new stretch would be a bypass road on the present congested one, connecting Benapole to NH35, bypassing Bongaon, the last town in the India-Bangladesh border that is 97 km from Kolkata. This move by the government would ease overcrowding and allow trucks to move in a smoother fashion to the Bangladesh side and also to receive the traffic coming from there. It is also reported that both the sides were also discussing a Comprehensive Motor Vehicular Agreement, to encourage seamless cross-movement of cargo.

Development of the land trading route with the installation of proper security measures was on the main agenda discussed during the visit of Bangladeshi Prime Minister, Hasina, in January 2010. Both sides had agreed to comprehensively address all land boundary issues and announced creation of a Joint Boundary Working Group. The need of sufficient infrastructure in the trading routes across borders has resulted in major delays and cost overruns. Traffic congestions, delay in handling shipments and increasing storage-dwell times have been major non-tariff barriers for trade.

Earlier last month, Commerce, Industry and Textile Minister Anand Sharma and his Bangladeshi counterpart, Muhammad Faruk Khan, inaugurated 'Border Haats' at Kalaichar in the West Garo Hill district in Meghalaya. It is estimated that bilateral trade worth $20 million will take place annually from these Haats, which would re-establish the traditional system of marketing local produce.

The bilateral trade between India and Bangladesh has increased from $2.7 billion in 2009-10 to $3.9 billion in 2010-11, an increase of 45 percent. The growth of exports from Bangladesh to India has also increased from $0.25 billion in 2009-10 to $0.39 billion in 2010-11. In 2010, India offered a $1 billion line of credit to Bangladesh, the largest ever one-time bilateral financial assistance extended to any country by India.

The S&P CNX Nifty touched high and low of 4,934.40 and 4,806.05, respectively.

The top gainers of the Nifty were Reliance Capital up 13.22%, HCL Tech up 8.19%, TCS up 7.35%, Reliance Power up 7.25% and Kotak Bank up 6.98%.

On the flip side, ONGC down 1.42% and Maruti down 0.09% were the top losers on the index.

The European markets were trading in green. France's CAC 40 surged by 1.89% and Germany's DAX soared by 1.36% while Britain's FTSE 100 was closed for a summer bank holiday.

All the Asian equity indices barring Shanghai Composite finished the day's trade in the positive terrain on Monday tracking climbs in US stock futures after US Federal Reserve Chairman Ben Bernanke raised expectations for more stimulus for the world's largest economy. Index like Straits Times, Seoul Composite, Taiwan Weighted and Hang Seng surged in the trade by 1-3 percent after Bernanke provided more hopes to investors ahead of (U.S.) President Barack Obama's September 5 speech and the next Federal Open Market Committee (FOMC) meeting on September 20. Chinese Shanghai ended with a cut of over a percent as concerns about monetary tightening returned while Tokyo pared early gains after Japan's finance minister Minister Yoshihiko Noda, a fiscal hawk, won the ruling party leadership run-off vote to become Japan's next prime minister.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,576.41	-35.78	-1.37
Hang Seng	19,865.11	282.23	1.44
KLSE Composite	1,447.27	2.46	0.17
Nikkei 225	8,851.35	53.57	0.61
Straits Times	2,791.89	43.71	1.59
Seoul Composite	1,829.50	50.55	2.84
Taiwan Weighted	7,578.01	132.91	1.79
Jakarta Composite	-	-	-

 

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Sanguine global cues prop up Indian equities; Benchmarks revisit crucial levels

Indian stock indices have managed to capitalize on the initial momentum and are trading at the session's high levels in the Monday afternoon trades as sentiments got fortified further following the encouraging European market opening. The European equities rejoiced on Fed Chairman Bernanke's optimistic view of the US economy as he was hopeful that the world's largest economy will gradually get better and that the Fed has more options to prop up growth. The BSE's thirty share sensitive index has sustained its northbound journey and has even gone on to re-conquer the psychological 16,300 levels rallying over four hundred fifty points thanks to the broad based short covering rallies across the sectoral space. The inflammation technology and rate sensitives which went through turbulent times in recent days are seeing huge position build-up in the session while the defensives like Heathcare and FMCG are not amongst the swiftest of gainers yet trading with around one and a quarter percent gains. Barring the two heavyweights like ONGC and Maruti Suzuki, all the components of the Sensex are trading in the green territory. Meanwhile, RBI has released a report on the Issues and concerns in the NBFC Sector in which the RBI panel has suggested to impose a risk weight of 150% for capital market loans and 125% for commercial real estate loans by such NBFCs. In another development, reports suggest that government is likely to announce a duty drawback scheme by next month-end to replace the Duty Entitlement Passbook scheme which is set to expire on September 30.

Moreover, the broader markets traded on an optimistic note in the afternoon trades, but failed to match the fervor displayed by their larger peers and traded with gains of around two percent. The bourses climbed on weak volumes given that these are the initial days of a new F&O series while the market breadth on BSE was dominantly favor of advances in the ratio of 1945:637 while 88 scrips remained unchanged.

The BSE Sensex is currently trading at 16,302.90 up by 454.07 points or 2.87% after trading as high as 16,309.33 and as low as 16,068.73. There were 28 stocks advancing against 2 declines on the index.

The broader indices were trading on a optimistic note; the BSE Mid cap index surged 1.99% and Small cap rose 1.66% respectively.

On the BSE sectoral space, IT up 4.71%, TECk up 3.97%, Bankex up 3.51%, Metal up 3.42% and Realty up 3.28% were the major gainers while there were no losers on the index.

Jindal Steel up 6.21%, TCS up 6.15%, Wipro up 4.31%, Infosys up 4.19% and Hindalco up 3.88% were the major gainers on the Sensex, while ONGC down by 0.83% and Maruti Suzuki down 0.81% were the major losers on the index.

Meanwhile, to enhance trade over the land routes, India and Bangladesh have taken the first major step by relaxing the present practice of unloading trucks at the zero border point. Trucks from both sides would now be allowed to enter 200 metres inside each other's territories.  To reinforce trade at the Petropole-Benapole border in Bengal's North 24 Parganas district, Union Home Minister P Chidambaram laid the foundation stone for a new road there to ensure flawless traffic flow on the route, with state-of-the-art warehouses and modern parking facilities for heavy vehicles. The Petropole border is the largest land customs station in Asia.

The total cost of the project is around Rs 125 crore and State-run RITES is the advisor. This new stretch would be a bypass road on the present congested one, connecting Benapole to NH35, bypassing Bongaon, the last town in the India-Bangladesh border that is 97 km from Kolkata. This move by the government would ease overcrowding and allow trucks to move in a smoother fashion to the Bangladesh side and also to receive the traffic coming from there. It is also reported that both the sides were also discussing a Comprehensive Motor Vehicular Agreement, to encourage seamless cross-movement of cargo.

Development of the land trading route with the installation of proper security measures was on the main agenda discussed during the visit of Bangladeshi Prime Minister, Hasina, in January 2010. Both sides had agreed to comprehensively address all land boundary issues and announced creation of a Joint Boundary Working Group. The need of sufficient infrastructure in the trading routes across borders has resulted in major delays and cost overruns. Traffic congestions, delay in handling shipments and increasing storage-dwell times have been major non-tariff barriers for trade.

Earlier last month, Commerce, Industry and Textile Minister Anand Sharma and his Bangladeshi counterpart, Muhammad Faruk Khan, inaugurated 'Border Haats' at Kalaichar in the West Garo Hill district in Meghalaya. It is estimated that bilateral trade worth $20 million will take place annually from these Haats, which would re-establish the traditional system of marketing local produce.

The bilateral trade between India and Bangladesh has increased from $2.7 billion in 2009-10 to $3.9 billion in 2010-11, an increase of 45 percent. The growth of exports from Bangladesh to India has also increased from $0.25 billion in 2009-10 to $0.39 billion in 2010-11. In 2010, India offered a $1 billion line of credit to Bangladesh, the largest ever one-time bilateral financial assistance extended to any country by India.

The S&P CNX Nifty is currently trading at 4,880.35, higher by 132.55 points or 2.79% after trading as high as 4,883.85 and as low as 4,806.05. There were 45 stocks advancing against 5 declines on the index.

The top gainers of the Nifty were TCS up 6.23%, Jindal Steel up by 5.78%, HCL TECH up 5.29%, Kotak up 5.28%, and Infosys up 4.42%.

Maruti down 1.51%, Ranbaxy down 1.01%, ONGC down 0.88%, Ambuja Cement down 0.08% and Seas down 0.07% were the major losers on the index.

Asian markets traded on a positive note, Hang Seng added 1.36%, KLSE Composite rose 0.17%, Straits Times surged 1.56%, Nikkei 225 climbed 0.61%, Seoul Composite soared 2.84% and Taiwan Weighted amassed 1.79%.

On the other hand, Shanghai Composite eased 1.41%.

Meanwhile, the stock markets in Indonesia remained shut on Monday on account of the Idul Fitri holiday. The markets there will remain closed till September 2.

The European markets traded on optimistic note as France's CAC 40 surged 1.41% and Germany's DAX soared 1.52%.

Stock markets in London remained closed on Monday for summer holiday. 

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Indian equity markets trade at day’s high; Sensex surges over 400 points

The Indian equity markets were trading at days high on the back of short coverings in the heavyweights. The market is looking very strong and trading with huge gains as political worries took a backseat and modest recovery in global markets have helped to improve the sentiments. The 30-share BSE Sensex surges over 400 points and the 50-share NSE Nifty inches towards 4,900 level. Investors went on a buying spree in early trade despite the US Federal Reserve Chairman Ben Bernanke not announcing any fresh stimulus to the boost the U.S. economy, his statement that the economy was not moving slowly enough to need a booster at present, appears to have eased fears about a slowdown to an extent. Meanwhile, RBI unveils report on NBFC sector, where it has insisted on a minimum asset size of more than Rs 50 crore for registering any new NBFC. On sectoral front all sectoral indices are in the green while information technology stocks, led by sector heavyweights Infosys, Tata Consultancy Services and Wipro, are leading the charge up north at present. Several stocks from metal, banking, realty, capital goods, oil and automobile sectors have rallied sharply.  Power, PSU and FMCG stocks too are mostly up with impressive gains. On the global front, Asian markets continued to trade in positive. Back home, the market breadth favoring the positive trend; there were 1,915 shares on the gaining side against 523 shares on the losing side while 82 shares remained unchanged.

The BSE Sensex is currently trading at 16,272.89, up by 424.06 points or 2.68%. The index has touched a high and low of 16,281.92 and 16,068.73 respectively. 28 stocks were advancing against 2 declining stock on the index.

The broader indices added further ground as both the BSE Mid cap and Small cap index rose by 1.86% and 1.61% respectively.

The top gaining sectoral indices on the BSE were, IT up by 3.93%, TECk up by 3.35%, Metal up by 3.30%, Bankex up by 3.29% and Realty up by 2.95%. There were no losers on the index.

The top gainers on the Sensex were Jindal Steel up by 6.13%, TCS up by 5.46%, Tata Motors up by 3.68%, Hindalco Industries up by 3.56% and Tata Steel up by 3.51%. While, Maruti Suzuki down by 0.85% and Cipla down by 0.16% were the losers in the 30 share pack.

Meanwhile, to boost funding for roads, ports and highways, the government is planning to draw in the country's biggest insurer - Life Insurance Corporation (LIC) - into infrastructure project financing. The government is aiming to spend over $1 trillion over the 12th Five-Year Plan (2012-17) on building new and upgrading the existing infrastructure. The plan to include LIC in infrastructure funding was discussed at a meeting convened by the Finance Ministry recently.

Under the infrastructure project financing, LIC is likely to tie up with India Infrastructure Finance Company (IIFCL) to buy out long-tenure loan portfolios of commercial banks. The practice, called take-out financing, seeks to free up the capital of banks so that they can lend to new projects. It is reported that the issue will be discussed in the investment committee of LIC, to see whether the insurance firm has the scope under the sectoral exposure norm.

The projected venture will allow LIC and IIFCL to buy out 40 percent of a bank's loan by taking an exposure of 20 percent each. On the other hand, IIFCL will carry out the due diligence for the venture and risk factors associated with it, as it has built an expertise in this area. The rules also mandate that exposure to a single company should not exceed 10 percent of the insurer's funds, or 10 percent of the paid up capital of investee.

The Insurance Regulatory and Development Authority (IRDA) guidelines also require life insurers to invest at least 15 percent of their controlled funds in infrastructure and social sectors. However, LIC and IIFCL will have to work out the proportion of liability, in case the loan turns bad or non-performing. On the contrary, the venture may not take off if banks do not participate.

Earlier last week, it was reported that the government would now push banks to sell their infrastructure portfolio to IIFCL through take-out financing to create space for them to lend to the sector again. The take-out financing scheme has remained largely grounded with only Rs 70 crore of funds disbursed so far. IIFCL, the dedicated infrastructure financier created by the government, is sitting on a cash pile of about Rs 8,000 crore to buy out loan portfolios of banks.

Take-out financing allows banks to discard their loan portfolios after retaining them on their books for a few years. This frees them to fund more projects. IIFCL has also customized its take-out finance scheme recently to make it more attractive. It now proposes to take on projects immediately after their commercial operation date, as against the earlier norm of one-year waiting period. It has also scrapped the 0.3 percent take-out fee, which it used to charge the lender using the scheme. The company has so far sanctioned Rs 3,000 crore spread over 15 projects.

The S&P CNX Nifty is currently trading at 4,876.70, higher by 128.90 points or 2.71%. The index has touched a high and low of 4,878.70 and 4,806.05 respectively. There were 44 stocks advancing against only 6 declining ones on the index.

The top gainers of the Nifty were Jindal Steel up by 6.12%, TCS up by 5.80, Kotak Bank up by 4.86%, Reliance Infra up by 4.55% and IDFC up by 4.39%.

On the flip side, Ranbaxy down by 1.28%, Maruti down by 0.97%, Cipla down by 0.32%, Ambuja Cement down by 0.26% and ONGC down by 0.20% remained the top losers on the index.

All the Asian counterparts barring Shanghai Composite and Jakarta Composite were trading in the green; Hang Seng was up 1.27%, KLSE Composite was up by 0.17%, Nikkei 225 was up by 0.49%, Straits Times was up by 1.34%, Seoul Composite was up by 2.90% and Taiwan Weighted was up by 1.79%.

On the flip side, Shanghai Composite was down by 1.22% and Jakarta Composite plunged 0.07%. 

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Anna and Bernanke uplift the sentiment at Dalal Street; bourses enlarge gains

Barometer gauges after reclaiming their psychological level in early deals post slumping to an 18 month low in the previous session, have added some more ground. Investors taking the opportunity of the oversold markets indulged in grabbing fundamentally strong stocks available at attractive valuations tailing the sanguinity of the global markets. A dash of enthusiasm was gathered across the board after US Federal Reserve Chairman Ben Bernanke left the door open for further action to stimulate the economy and fight high unemployment. On Friday night, US markets Wall Street posted its first weekly gain in more than a month as Fed Chairman Ben Bernanke raised hopes for more stimulus for the economy at the U.S. central bank's September meeting. Meanwhile, mass of Asian stock markets were demonstrating positive trends in the morning trades tailing the euphoria of the US markets. The US future indices too were showing an uptick on the screen trade. Back home, a rush of joy also came in post Anna Hazare ended his 12-day long public fast as the parliament agreed to incorporate his three contentious demands on the Lokpal Bill. Meanwhile, Oil prices which dipped post energy demand got impacted by the closure of refineries and airports as Hurricane Irene struck the US east coast, also relieved the markets, thereby injecting strength in stocks of Oil marketing companies. Though buying was broad based on the BSE Sectoral front, but stocks from Information Technology, TECk were displaying immense vigiur, thereby topping the chart of gainers. The 30 scrip sensitive index on BSE-Sensex- capturing gains of over 300 points was trading happily above the 16000 mark, while the 50 share widely followed index- Nifty- adding over 100 points was trading above the 4800 mark. The broader indices too tailing the larger counterparts were ruling up over 1%. The overall market breadth on BSE was in the favour of advances which thrashed declines in the ratio of 1795:438, while 66 shares remained unchanged.

The BSE Sensex is currently trading at 16,200.62, up by 351.79 points or 2.22%. The index has touched a high and low of 16,242.91 and 16,068.73 respectively. 29 stocks were advancing against 1 declining stock on the index.

The broader indices added further ground as both the BSE Mid cap and Small cap index rose by 1.63% and 1.57% respectively.

Buying was witnessed across the space however, topping the chart of the gainers on BSE were, IT up by 3.39%, TECk up by 2.99%, Bankex up by 2.64%, Metal up by 2.56% and Realty up by 2.53%.

The top gainers on the Sensex were Jindal Steel up by 6.15%, TCS up by 4.10%, Wipro up by 3.81%, Infosys up by 3.37% and ICICI Bank up by 3.15%. While Maruti Suzuki down by 0.11% was the lone loser in the 30 share pack.

Meanwhile, the Technology Upgradation Funds Scheme (TUFS), which provides support for textiles through interest reimbursement and capital subsidy will be extended during the 12th Plan period as well, Union Commerce Minister Anand Sharma said.

The restructured TUFS with a total subsidy cap of Rs 1,972 crore was to end on March 31, 2012. But now the government plans to extend it to 12th plan with an overall allocation of Rs 15,404 crore, almost double the Rs 8,000 crore originally approved for the 11th Five-Year plan.

TUFS, a subsidy scheme for setting up a state-of-the-art technology for the growth of textile industry, was introduced first in 1999 to catalyze investments in all sub-sectors of the textile and jute industry, by way of five percent interest reimbursement. The scheme was initially approved from April 1999 to March 31, 2004. Subsequently, it was extended in 2004 and again in 2007 with modifications. The scheme was discontinued on June 28, 2010.

Meanwhile, the Ministry of Textiles, expects the technical textiles sector in India to grow by 11 percent every year to attain a market size of $14.8 billion by 2012-13 from the current size of $9.9 billion. In order to promote technical textiles in the country and to address the growth bottlenecks the, Ministry of Textiles has launched the Technology Mission on Technical Textiles (TMTT). Sharma said two new missions aimed at standardization of testing laboratories and boosting marketing strength will be announced shortly.

The S&P CNX Nifty is currently trading at 4,860.50, higher by 112.70 points or 2.37%. The index has touched a high and low of 4,863.35 and 4,806.05 respectively. There were 47 stocks advancing against only 3 declining one's on the index.

The top gainers of the Nifty were Jindal Steel up by 6.34%, Reliance Infra up by 4.55, IDFC up by 4.34%, TCS up by 4.33% and Kotak Bank up by 4.06%.

On the flip side, Ranbaxy down by 1.65%, Sesa Goa down by 1.45% and Maruti Suzuki down by 0.65% remained the lone loser on the index.

All the Asian counterparts barring Shanghai Composite and Jakarta Composite were trading in the green; Hang Seng was up 1.51%, KLSE Composite was up by 0.17%, Nikkei 225 was up by 0.54%, Straits Times was up by 1.37%, Seoul Composite was up by 2.80% and Taiwan Weighted was up by 1.85%.

On the flip side, Shanghai Composite was down by 1.06% and Jakarta Composite plunged 0.07%.

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Strong global cues pull markets higher; Sensex regains 16,000 level

The Indian equity markets have made a positive start and trading on a firm note tracking positive cues from global indices. The US markets made a good bounce back on Friday while, all the Asian peers barring Shanghai Composite were trading in the green at this point of time, indicating strong investors' sentiments. Moreover, fresh buying by funds and retail investors too strengthened the sentiments. Back home, sustained buying in mostly all the key heavyweights along with broader indices supported BSE's -- Sensex -- and NSE's -- Nifty -- to regain their crucial 16,000 and 4,800 mark respectively. The end of the face-off between the government and anti-corruption activist Anna Hazare during the week-end too aided some sentiments to the domestic market. Software witnessed the maximum gain in trade followed by technology and bankex while, there were no losers on the BSE sectoral space. Meanwhile, textile sector stocks like Arvind, Alok Industries, Grasim Industries and Vardhman textile were trading higher in the trade as the Union Commerce Minister Anand Sharma has said that the Technology Upgradation Funds Scheme (TUFS) that provides support for textiles through interest reimbursement and capital subsidy will be extended during the 12th Plan period as well. The broader indices too were trading on a firm note. The market breadth on the BSE was positive; there were 1,360 shares on the gaining side against 334 shares on the losing side while 41 shares remained unchanged.

The BSE Sensex opened at 16,080.74; about 231 points higher compared to its previous closing of 15,848.83, and has touched a high and a low of 16,225.48 and 16,068.73 respectively.

The index is currently trading at 16,199.78, up by 350.95 points or 2.21%. All the 30 stocks were advancing on the index.

The overall market breadth has made a strong start with 78.39% stocks advancing against 19.25% declines. The broader indices too were trading on firm note; the BSE Mid cap and Small cap indices rose 1.61% and 1.40% respectively.

The top gaining sectoral indices on the BSE were, IT up by 2.81%, TECk up by 2.56%, Bankex up by 2.46%, Metal up by 2.43% and CD was up by 2.29%. While, there were no losers on the index.

The top gainers on the Sensex were Jindal Steel up by 6.74%, TCS up by 3.20%, Infosys up by 3.06%, ICICI Bank up by 2.91% and RIL was up by 2.86%. While there were no loser on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) has asked banks to balance risk while lending to small scale enterprises (SME) as they play a very important role in the development of Indian economy. RBI's Deputy Governor Subir Gokarn said banks will have to balance risks while lending to small and medium enterprises if they want to make this sector a significant part of their credit portfolio.

At the SME summit, Gokarn said that if banks are looking at SMEs as a significant part of their lending activity for expanding their portfolio, they will have to balance the credit to the sector with the consideration of increased riskiness that comes with the increase in portfolio.

The government is paying special attention for facilitating finance from the formal sector to SMEs, the sector is also a part of priority sector lending. As per the RBI data, the total deployment of gross bank credit by the micro and small sector till June 2011 stood at Rs 2,334 crore from Rs 2,291 crore in March 2011. Indicating to this increasing trend Gokarn said that fair amount of attention has been given to the finance and credit problems of the SME sector as many banks have taken initiatives in providing funds to SMEs.

Gokarn said banks need to realize that as they move down the scale of hierarchy; risks will increase...that is the nature of business and commercial environment. Therefore, there is a need to balance out risk with lending activity.' He also argued that there is need for developing a system for risk management, so that the lending to SME sector becomes more commercially viable and competitive. He also noted that the government policy intervention can make this sector more viable and competitive.

He also pointed that the SME sector needs to adopt a collaborative approach for their overall development. 'If they collaborate, they will be able to leverage larger challenges such as technology availability, brand building and marketing among others,' Gokarn added.

The S&P CNX Nifty opened at 4,806.20; about 59 points higher compared to its previous closing of 4,747.80, and has touched a high and a low of 4,857.75 and 4,806.05 respectively.

The index is currently trading at 4,848.90, higher by 101.10 points or 2.13%. There were 49 stocks advancing against only 1 decline on the index.

The top gainers of the Nifty were Jindal Steel up by 6.71%, TCS up by 3.47%, Infosys up by 3.29%, Reliance Infra up by 3.26% and IDFC up by 3.24%.

On the flip side, Sesa Goa down by 1.57% remained the lone loser on the index.

All the Asian counterparts barring Shanghai Composite were trading in the green; Hang Seng was up 296.63 points or 1.51% to 19,879.51, KLSE Composite was up 2.46 points or 0.17% to 1,447.27, Nikkei 225 was up 120.06 points or 1.36% to 8,917.84, Straits Times was up 37.75 points or 1.37% to 2,785.93, Seoul Composite was up 55.91 points or 3.14% to 1,834.86 and Taiwan Weighted was up by 160.54 points or 2.16% to 7,605.64.

On the flip side, Shanghai Composite was down by 27.79 points or 1.06% to 2,584.40. 

#4406, Lane V, New Madhopuri, Ludhiana-141008, Punjab (INDIA).

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Carnage continues on D-Street; Benchmarks dragged to 18 month lows

Indian equities once again swayed to the tune of gloomy global developments and replicated somberness for the third straight session of trade. The session remained highly volatile amid low trading volumes on the first day of a new futures and options series and even got dragged to lowest levels in over eighteen months. Though the frontline indices showed some resilience in the early hours of trade but lack in investors' conviction was firmly evident as investors remained reluctant to initiate large bets and evidently preferred to sit out until some clarity emerges from Jackson Hole meeting of central bankers where Federal Reserve Chairman Ben Bernanke is expected to use his annual speech to announce another economic stimulus programme. However, position squaring gathered greater momentum after European markets got pulverized as jittery investors waited to see whether Fed would promise new steps to help the US economy ward off another recession. Although expectations that he might offer more stimulus have receded this week, any sign that Bernanke is considering such a move would boost markets. On the domestic front fresh build-up of shorts positions and sell-off by foreign institutional investors weighed on the sentiments. Foreign funds have been relentlessly ploughing back their funds from Indian equity markets amid heightened worries over economic slowdown and the spiraling inflationary pressure while the recent reports over 8% below rainfall, lingering deadlock over the Jan Lokpal Bill along with the fears of yet another interest rate hike by RBI in September continued to compound worries of the market participants. The ADAG pack did the maximum damage in the session as major stocks like R Power, R Infra, R Capital and R Com from that group went through heavy pounding in the range of 5 - 12%. Meanwhile, the Supreme Court extended a ban on mining to two more districts of Karnataka on Friday. The move is likely to hamper output from the country's second biggest producer of the steel-making commodity. Reports of that ban had been extended to Tumkur and Chitradurga districts, as part of moves to control illegal mining, sent shares of three top iron ore miners like Sesa Goa, NMDC and JSW Steel clobbered out of shape which lost in the rage of 3 - 6.50%.

Earlier on Dalal Street, the benchmark got off to a sluggish opening in tandem with the lackluster sentiments prevailing in Asian markets ahead of Fed Chairman's speech. The frontline indices soon overlooked the dismal trends that Asian peers exhibited and clawed back into the green territory. But the optimism fizzled out soon and the profit booking gradually started gaining momentum. Thereafter, there was no sign of recovery for the frontline indices as every attempt of recovery was seen as opportunity for bears to square off positions. Selling pressure also intensified in the dying hours as bears build up hefty short positions across the board as investors waited to see whether Bernanke will signal further steps to support the economy. Finally the NSE's 50-share broadly followed index Nifty, took a close to triple digit cut to settle below the crucial 4,750 support level while Bombay Stock Exchange's Sensitive Index, Sensex shaved off almost three hundred points and ended below the psychological 15,850 mark. The broader markets failed to show any resilience in the session and succumbed to the selling pressure evident in the heavyweights. In the BSE sectoral space, the high beta Real Estate counter languished at the bottom of the table with over four percent losses as heavyweights like DLF, HDIL and Unitech plummeted in the range of 4.50-6%. The metal pocket too bore the brunt of selling pressure slipping over three and half a percent after index majors like Tata Steel and Coal India got brutally battered by 4.77% and 3.90% respectively. The markets got slaughtered on low volumes of over Rs 1.1 lakh crore while the turnover for NSE F&O segment too remained on the lower side compared to Wednesday at over 0.89 lakh crore. The market breadth remained pessimistic as there were 636 shares on the gaining side against 2222 shares on the losing side while 118 shares remained unchanged.

Finally, the BSE Sensex plunged by 297.50 points or 1.84% to settle at 15,848.83, while the S&P CNX Nifty shaved off 91.80 points or 1.90% to close at 4,747.80.

The BSE Sensex touched a high and a low of 16,256.38 and 15,765.53 respectively. The BSE Mid cap and Small cap indices were down by 2.25% and 2.65% respectively.

The top gainers on the Sensex were Hero Moto Cop up 2.70%, Mahindra & Mahindra up by 1.20% and Infosys up by 0.68%.

On the flip side, Jaiprakash Associate down 7.58%, DLF down 5.76%, Tata Steel down 4.77%, Reliance Industries down 4.61% and Coal India down 3.90% were the top losers on the index.

There was no gainer on the BSE sectoral space. While, Realty down 4.09%, Metal down 3.69%, Oil & Gas down 3.19%, PSU down 2.58% and Bankex down 2.50% were the top losers on the BSE sectoral space.

Meanwhile, the state-owned Oil Marketing Companies (OMCs) is likely to post a revenue loss of Rs 121,000 crore in the current financial year for selling diesel, domestic cooking gas and kerosene at the subsidized rates. Oil Minister S Jaipal Reddy said, "State fuel retailers may post a whopping Rs 121,000 crore revenue loss on selling diesel, domestic LPG and kerosene at government-controlled rates this fiscal."

The huge revenue loss to OMCs is despite the recent hike in petroleum products and moderation in the international prices of crude oil. Earlier in June, government had increased the prices of diesel by Rs 3/litre and kerosene by Rs 2/litre and domestic cooking gas by Rs 50 per cylinder, and it also removed custom and excise duties from petroleum products.  The decision of increasing the prices of petroleum product was taken in the wake of hovering prices of crude oil in the international market.

At a meeting of the Parliamentary Consultative Committee on Petroleum and Natural Gas, Jaipal Reddy said, 'even after these measures, the oil marketing companies (OMCs) are currently suffering under-recoveries to the tune of Rs 235 crore per day and are expected to incur an under-recovery of over Rs 121,000 crore during 2011-12". However, before the prices of petroleum products and removal of custom and excise duties, OMCs were estimated to make a revenue loss of Rs 171,000 crore in the current financial year.

Presently, OMCs such as Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum are incurring loss of around Rs 4.97 per litre of diesel, Rs 23.74 per litre of kerosene and around Rs 247 on every cylinder of domestic LPG. 'Besides absorbing an annual estimated revenue loss of Rs 49,000 crore on account of duty reductions, the government will also be required to compensate a large portion of these (Rs 121,000 crore) remaining under-recoveries,' oil minister said.

The losses on fuel sales at subsidized rates have a significant impact on the financial health of OMCs, with diminishing cash flow and reduced resource generation for capacity expansion and modernization. 'The OMCs are forced to borrow heavily from the market even for their working capital requirement, which is leading to mounting interest burden on them,' minister said.

To protect the common man from the adverse impact of increase in oil prices in the international market and to keep cap on the inflationary condition, government continues to sell petroleum products at subsidized rates.  Presently, the market prices of diesel, kerosene and domestic cooking gas are well below the market rates. The petrol prices, which was decontrolled in June 2010, has increased by 21%, at present the petrol cost around Rs 63.70/litre from Rs 51.43 litre in June 2010. The government is also considering decontrolling the prices of diesel, as the government is expected to exceed its fiscal deficit target for 2011-12.

The S&P CNX Nifty touched high and low of 4,872.00 and 4,720.00, respectively.

The top gainers of the Nifty were Hero Moto Cop up 3.14%, M&M up 1.23% and Infosys up 1.13%.

On the flip side, Reliance Capital down 12.33%, RCOM down 11.11%, JP Associated down 7.42%, Reliance Infra down 6.53% and DLF down 6.25% were the top losers on the index.

The European markets were trading in red. France's CAC 40 lost 0.90%, Britain's FTSE 100 lower by 0.44% and Germany's DAX plunged by 1.67%.

Most of the Asian equity indices finished the trade in the negative terrain on last trading day of the week as investors remained cautious ahead of a much-anticipated speech by Ben Bernanke later in the day to see if he will set out a plan to kick start the stumbling US economy moreover, poor lead from Wall Street too dampened the sentiments. Meanwhile, China stocks down slightly by 0.12 percent as the announcement of an upcoming major initial public offering by a coal company drove coal stocks lower. However, Taiwan stocks ended with a gain of about half a percent, led by electronics and chip issues, though Acer fell for a second session as investors fretted about prospects for the computer maker's recovery.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,612.19	-3.07	-0.12
Hang Seng	19,582.88	-169.60	-0.86
Jakarta Composite	3,841.73	-2.65	-0.07
KLSE Composite	1,444.81	-19.93	-1.36
Nikkei 225	8,797.78	25.42	0.29
Straits Times	2,748.18	-17.56	-0.63
Seoul Composite	1,778.95	14.37	0.81
Taiwan Weighted	7,445.10	34.23	0.46

 

#4406, Lane V, New Madhopuri, Ludhiana-141008, Punjab (INDIA).

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Indian equities continue to show lackadaisical moves in afternoon trades

Indian stock indices failed to capitalize on the momentum despite trading in the green terrain for most of morning trades and have even gone on to breach the psychological 4,850 and 16,100 levels. Trade remained lackluster since the initial moments as investors remained reluctant to initiate large bets and evidently preferred to sit it out until some clarity emerges from Jackson Hole meeting of central bankers where Federal Reserve Chairman Ben Bernanke will use his annual speech to announce another economic stimulus programme. However, domestic benchmarks are witnessing fresh rounds of selling pressure since the opening of European stock exchanges as the indices there have drifted to session's lows after starting on a flat note. On the domestic front, the ADAG pack did the maximum damage on the bourses as major stocks like R Power, R Infra, R Capital and R Com from that group went through heavy pounding in the range of 3%-6%. On the sectoral front, the high beta Real estate counter got lacerated by around two and half a percent after heavyweights like DLF, HDIL and Unitech plummeted over three and half a percent. While the metal pocket too languished at the bottom of the table with over one and half a percent losses after majors like Tata Steel and Coal India sank 2.14% and 3.33% respectively. However, the downside for the markets was limited by gains in rate sensitive Automobile pocket which traded with around a percent gains after majors like M&M and Hero Motor jumped around two percent. Short covering in some IT bellwethers and defensive - Healthcare counters too prevented further downside.

Moreover, the broader markets traded on a pessimistic note in the afternoon trades, declining over half a percent point and underperforming their larger peers. The bourses receded on weak volumes given that this is the first day of a new F&O series while the market breadth on BSE was favor of declines in the ratio of 1500:992 while 120 scrips remained unchanged.

The BSE Sensex is currently trading at 16,080.64 down by 65.69 points or 0.41% after trading as high as 16,256.38 and as low as 16,073.02. There were 12 stocks advancing against 18 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index eased 0.85% and Small cap shed 0.67% respectively.

On the BSE sectoral space, Auto up 1.16%, IT up 0.73%, TECk up 0.37% and Healthcare up 0.14% were the only gainers while Realty down 2.47%, Metal down 1.65%, Power down 1.57%, FMCG down 1.08% and PSU down 1.01% were the major losers on the index.

M&M up 2.66%, Hero Moto up 2.63%, Infosys up 2.11%, Tata Motors up 1.12% and Bharti Airtel up 0.85% were the major gainers on the Sensex, while DLF down by 3.67%, JP associates down 3.45%, Tata Power down 3.32%, Coal India down 2.27% and NTPC down 2.26% were the major losers on the index.

Meanwhile, in a move to reduce the burden of litigation, the finance ministry has considerably raised the monetary threshold for legally contesting indirect tax disputes. The apex indirect taxes body - Central Board of Excise and Customs (CBEC), under the finance ministry, has instructed its officials not to file appeals in the tax tribunals if the fine and penalty on an alleged offender is less than Rs 5 lakh. The existing entry for approaching an appellate tribunal is Rs 1 lakh.

The order will come in effect from September 1, covering all the indirect taxes levied by the central government, i.e., customs duty, excise duty and service tax. The move is aimed to cut down on the unnecessary proceedings. On the other hand, the ministry has also raised the monetary limit for filing appeals in high courts to 10 lakh from 2 lakh now, and in the Supreme Court to Rs 25 lakh as against Rs 5 lakh at present.

The ministry has, however, clarified that adverse judgments, irrespective of the amount involved, would be contested in cases where the constitutional validity of the provisions of an Act or rule are under challenge, and where notification, instruction, order or circular has been held illegal or ultra vires. The ministry also added that, monetary limit will also apply in all cases where audit objections have been accepted by the department. In such cases, officials would have to carry on raising defensive demands, but monetary limit would have to be considered before filing appeals.

The finance ministry has been compelled to amend the rules because of the high volume of tax-related cases awaiting in courts. The threshold for litigation was introduced only last year. It is reported that around 87,862 appeals are pending at various levels as on March, locking up over Rs 62,000 crore in indirect taxes. The new rules are in line with country's national litigation policy that seeks to make the government a well-organized and responsible litigant. The CBEC has already revised the monetary threshold to cut litigation in direct tax disputes.

The S&P CNX Nifty is currently trading at 4,824.90, lower by 14.70 points or 0.30% after trading as high as 4,872.00and as low as 4,824.45. There were 16 stocks advancing against 34 declines on the index.

The top gainers of the Nifty were M&M up 2.80%, Hero Moto up by 2.78%, Infosys up 2.73%, Dr Reddy's up 1.27%, and Tata Motors up 1.18%.

R Capital down 5.67%, R Com down 5.62%, R Infra down 4.22%, DLF down 3.98% and R Power down 3.60% were the major losers on the index.

Asian markets traded on a mixed note, Shanghai Composite eased 0.26%, Jakarta Composite declined 0.70%, KLSE Composite plunged 1.42% and Straits Times sank 0.51%.

On the other hand, Hang Seng added 0.01%, Nikkei 225 advanced 0.29%, Seoul Composite climbed 0.81% and Taiwan Weighted amassed 0.46%.

The European markets traded on weak note as France's CAC 40 slipped 0.25%, Germany's DAX declined 0.55% and London's FTSE shed 0.33%. 

#4406, Lane V, New Madhopuri, Ludhiana-141008, Punjab (INDIA).

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Markets trade flat with negative bias

The Indian equity markets pared all its early gains and currently trading flat with negative bias on profit booking at some heavyweight counters. The investors remained quite cautious ahead of a speech from Federal Reserve Chairman Ben Bernanke and on the Reserve Bank of India's warning that inflation is likely to remain high and economic growth will be around 8% or even lower in 2011-12 due to high interest costs. On sectoral front investors picked up shares in auto, IT and healthcare stocks. Buying was seen in information technology and capital goods sector shares as well. However, reality, power, metal stocks were pulling the market. Bank, Oil, FMCG and (ADAG) shares as well as select consumer durables shares were being dumped. On the global front, Asian markets continued to trade mixed. Back home, the market breadth favoring negative trend; there were 1,002 shares on the gaining side against 1,398 shares on the losing side while 109 shares remained unchanged.

The BSE is currently trading at 16,143.42, down by 2.91 points or 0.02%. The index has touched a high and low of 16,256.38 and 16,107.80 respectively. There were 15 stocks advancing against 15 declines on the index.

The broader indices descended in red; the BSE Mid cap index was down by 0.66% while, Small cap index was down by 0.44%.

The top gaining sectoral indices on the BSE were, Auto up by 1.06%, IT up by 0.91%, HC up by 0.58%, TECk up by 0.57%, and CG up by 0.07%. While, Realty down by 2.16%, Power down by 1.32%, Metal down by 1.07%, Bankex down by 0.75%, and PSU down by 0.59% were the top losers on the index.

The top gainers on the Sensex were Mahindra &Mahindra up by 2.37%, Hero Motors up by 2.05%, Infosys up by 1.39%, Tata Motors up by 1.03% and Sun Pharma up by 0.96%.

On the flip side, DLF down by 3.56%, Tata Power down by 3.24%, Jaiprakash Associates down by 2.78%, Hindalco Industries down by 2.19% and NTPC down by 1.76% were the top losers on the Sensex.

Meanwhile, country's macro-economic fundamentals may get worsen if the global economy slips back to recession, because the current financial health of government don't allow it to offer stimulus packages like it has given during  the 2008 global financial meltdown. The uncertainties in the global economy have increased after the downgrade of the United States credit rating and debt crisis in European nations.

 After releasing the RBI's Annual report, RBI deputy governor Subir Gokarn said 'the fiscal space to provide counter-cyclical policy is limited compared to what it was in 2008,'by adding further he said 'a lot will hinge on the stand that Fed governor Bernanke takes. 

The government is likely to exceed its fiscal deficit target of 4.6% of Gross Domestic Product for the current financial year on the back of subsidies on the petroleum products and fertilizers surge. And the welfare spending on employment programmes such as Mahatma Gandhi National Rural Employment Guarantee Scheme are also expected to put limitation on government financial health, if the revenue collection plunges below the expected level due to slowdown on economic growth.

'There are risks that the twin deficits, fiscal and current account, could increase if the global economic problems deepen,' the RBI's Annual report said. The alarming warning has come at the time when industry experts and economist are debating over the issue of whether RBI should take a halt in rate hikes. The RBI, since, March 2010, has increased its short term lending and borrowing rates by 11 times to curb inflation.

The economic growth condition for current fiscal year is unfavorable compared to last financial year due to a number of unfavourable developments. Global uncertainties have increased. If global financial problems intensifies and slows down global growth markedly, it would impart a downward bias to the growth projection as suggested in First Quarter Review of Monetary Policy 2011-12. The 'above trend growth' is expected to decelerate, yet remain about 8%.

The headline inflation, measured by the wholesale price index, remained a major macro-economic challenge, due to the supply side constrains. The headline inflation has been hovering around double digit mark for quite some time. With weak supply response, inflation remains an important macro-economic challenge,' RBI said. High inflation cannot be accepted as new normal.

The RBI's Annual report said, "Inflation is likely to remain high and moderate only towards the latter part of the year to about 7% by March 2012. Should the global recovery weaken, commodity prices may decline further, which should have a salutary impact on domestic inflation".

It is expected that if the debt crisis in US and Europe deepens, then the capital outflow is most likely to occur as foreign portfolio investors could set equities in the emerging markets, including India to make out losses. Along with the outflow of capital, risk aversion may increase the cost of borrowing for Indian companies and also impact direct investments. Moreover, the domestic bonds may still remain unattractive option if a slowdown affects the fiscal position negatively.

The S&P CNX Nifty is currently trading at 4,835.50, lower by 4.10 points or 0.08%. The index has touched a high and low of 4,872.00 and 4,825.70 respectively. There were 17 stocks advancing against 33 declines on the index.

The top gainers of the Nifty were M&M up by 2.37%, Hero Motors up by 2.04%, Infosys up by 1.84%, TCS up by 1.41% and Dr Reddy up by 1.29%.

On the flip side, RCOM down by 5.74%, Reliance Capital down by 5.06%, Reliance Infra down by 4.07%, DLF down by 3.71% and Sesa Goa down by 3.05% were the major losers on the index.

Most of the Asian counterparts were trading in the red; Shanghai Composite was down by 0.63%, Hang Seng was down by 0.11%, Jakarta Composite was down by 1.01%, KLSE Composite was down by 1.24% and Straits Times was down by 0.57%.

On the flip side, Nikkei 225 was down by 0.33%, Seoul Composite was up by 0.86% and Taiwan Weighted was up by 0.46%. 

#4406, Lane V, New Madhopuri, Ludhiana-141008, Punjab (INDIA).

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