Nifty call options attract attention
Chennai, Sept. 2
Market witnessed strong rally amidst improved trading volumes. The NSE F&O segment saw a turnover of 58,889.38 crore in the F&O segment on the NSE against Monday's volume of Rs 37,943 crore. The Nifty September future ended at 4516.8 against the spot close of 4504; it also added about 17 per cent or 5.15 lakh shares in open interest positions. Cost-of-carry also jumped, indicating that lot of participants turned bullish on the market.
After a gap of long time, call options turned active and added significant number of open interest positions. The unmatched order book on the NSE of call options suggests the strong emergence of call buyers. Nifty September 4500, 4400 and 4600 strikes were prominent among them. On the other hand, the Nifty 4300 put was the most active among puts but the unmatched order book suggests the emergence of put writers, indicating that 4300 could act as strong support.
The NSE Volatility index or India VIX also painted positive bias, as it weakened to 30.45 against the previous day's close of 31.28.
Stock futures Reliance Industries was the most active followed by Reliance Capital, SBI and ICICI Bank. Most of the counters saw sharp accumulation of long positions, which pushed up open interest positions too. However, a few such as ICICI Bank, RNRL, DLF, ONGC and NTPC saw unwinding of long positions, particularly towards closing hours.
HDIL was the star performer in today's trade. The September future ended at 326 against the spot close of 325.5. It added about 2.50 lakh shares in open interest positions.
However, the other realty major DLF future ended in discount at 525.05 against the spot close of 530.2. It added about 14.56 lakh shares in open interest, while cost of carry remained negative, presenting a mixed outlook on the counter.
FII activity Foreign institutional investors turned huge buyers in the F&O segment on Tuesday to the tune of Rs 2,246.89 crore. They were net buyers in the cash segment also by Rs 1132.25 crore.
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FIIs reduce holding in Unitech, Parsvnath Developers
Sept. 2 Foreign institutional investors (FIIs) have reduced their holding in real estate companies Unitech and Parsvnath Developers by over two percentage points and by 0.8 percentage point respectively, year-on-year.
While the FII holding in India's largest real estate company DLF Ltd ended up marginally higher as on June 2008 against June 2007, it actually displays a dip when seen in the context of the FII holding in the company as on December 2007.
According to shareholding data available on BSE, the financial institutions and banks have increased their holding in Unitech Ltd by just over 1.5 percentage point, even as the stake of FIIs has come down .
In the case of Parsvnath, there were marginal changes in the institutional shareholding (mutual funds/UTI and financial institutions and banks) within the non-promoter category, even as the 'individual' holding rose by just less than a percentage point.
"The FII stake in Parsvnath had almost doubled between June 2007 and December 2007, but came down subsequently, in line with market trend," a market observer said.
Gloomy situation
When contacted, Mr Shailesh Kanani, analyst with Angel Broking said that the drop in FII holding in these companies reflected the uncertainty in the market. "Across the board, in large and mid cap companies, the FII holding is down and the situation is gloomy.
Things may change once the macro economic situation improves," Mr Kanani pointed out.
The stake of promoter and promoter group in the three companies remained virtually unchanged compared to the year-ago period.
Holding categories
When it comes to 'public shareholding' in Unitech, the stake held by various mutual funds and UTI stood at 0.51 per cent on June 30, 2008 — a tad higher than 0.25 per cent in the year-ago period. According to market sources, while FIIs have trimmed their holding in Unitech, the shares sold by them may have been picked up by private Indian insurance firms.
The non-institutions' category saw there was a marginal change with the stake of bodies corporate in Unitech rising to 9.11 per cent from 8.44 per cent in June 2007, while that of 'individuals' fell to 8.5 per cent against 8.98 per cent in the same period last year.
For DLF, which got listed in mid-2007, the FII holding within (non-promoter shareholding) rose to 6.55 per cent from 5.92 per cent a year ago. The total 'individual' shareholding dipped by 0.88 per cent year-on-year.
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Realisation to improve for IT companies
BL Research Bureau
The depreciation of the rupee to Rs 44.5 levels, by 13.2 per cent since January this year, against the dollar might improve realisations for Indian IT companies.
The current level of the rupee versus the dollar provides comfort on the ability of companies such as Infosys and Satyam to meet or exceed their earnings/revenue guidance for the full year.
Infosys and Satyam had pegged their earnings guidance to an exchange rate of Rs 43.04 and Rs 42.88 to a dollar respectively.
With the rupee depreciating well below this level to Rs 44.5 to a dollar, though the total year's average rate may be lower, dollar-denominated revenues would definitely come in at better realisations.
Pricing environment
These companies have a fairly high proportion of dollar denominated revenues as they derive over 50 per cent of their overall revenues from clients in North America.
Last year, when the rupee appreciated sharply against the dollar, IT companies were able to get a 3-4 per cent pricing increase.
Frontline IT companies such as TCS, Infosys and Satyam, are now grappling with a flat- to-declining pricing environment from clients.
In light of this, the depreciation of the rupee to current levels may provide relief to these and most IT companies. These companies also hedge 30-40 per cent of their full-year revenues.
But for mid-tier IT companies that have hedged a larger part of their revenues, the gains-to-realisations from any rupee depreciation beyond the levels at which the hedge is locked in may be capped.
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SEBI to launch new IPO refund process on Sept 8
Kolkata, Sept. 2 SEBI would launch the new IPO payment and refund process — Applications Supported by Blocked Amount (ASBA) — with 20 Micron public issue on September 8 on a pilot basis. Mr C.B. Bhave, SEBI Chairman, told reporters at an interactive session, organised by Merchant Chamber of Commerce, here today that five banks — SBI, ICICI Bank, HDCFC Bank, Corporation Bank and Union Bank — will be part of the pilot project.
According to banking sources, though the facility would be available at select branches, the banks would ensure that investors are covered nationally through intra- and inter-bank networks.
Systemic change
Through ASBA, investors' money will remain blocked in an account till the allotment. Then, the money will be deducted to the extent of allotment and the balance would be immediately available for other purposes.
This would change the payment and refund modes, reducing blocking of investors' fund and delays in getting the refund.
The systemic change called for a change in software and intermediate processes and linkages. Under the new system, the banks are eligible to act as Self Certified Syndicate Banks (SCBS) in public issues.
After a successful pre-launch testing, the pilot project would verify systemic strengths and weaknesses for an eventual rollout.
Interest rate futures
The SEBI Chairman also said the committee comprising representatives from the RBI and SEBI was working on rollout of interest rate futures by this year.
He, however, did not specify the exact time of the launch, but said the preparatory phase would be shorter than that of the currency futures. To launch currency futures, the regulators took roughly 6 months.
Regarding a viable de-listing route for the tiny cap companies, the SEBI chief said that not only market regulators' guidelines would be required for such an exercise, but also amendment of rules by the Government would be needed to resolve the problem.
Mr Dave said none of the trade organisations involved in the securities trades were comfortable becoming self-regulatory organisations. Every organisation wants to promote the interest of the members, but when it came to disciplining the erring members, all fought shy.
"It is difficult until mindset is changed." He, however, felt that it needed to be realised that a clean reputation of an organisation worked in favour of the interests of the members more than anything else.
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Exchange traded interest rate futures likely by Dec
Our Bureau
New Delhi, Sept. 2 Exchange-traded interest rate futures (ETIRF) will be a reality in the Indian market by December 2008 or latest by January next year, a top SEBI official said here today.
"We had it (ETIRF) some years back. It did not take off. Now we are trying to make it flexible. A recent report on interest rate futures had recommended that banks, financial institutions and also FIIs be allowed in this market," Dr T.C. Nair, SEBI Wholetime Member, said after releasing an Assocham report on 'Hedge Funds'.
An interest rate futures is a futures contract with an interest bearing instrument, like a 10-year Government paper, as an underlying asset. National Stock Exchange (NSE) had introduced ETIRF in 2003, but it did not attract critical mass of participants and transactions, with no trading thereafter, due to variety of reasons.
For the introduction of ETIRF under a new framework, SEBI and RBI are now working in the same manner as was done for exchange traded currency futures, which was launched last week by the Union Finance Minister, Mr P. Chidambaram, at NSE.
RBI, SEBI panels
"There are two committees looking at interest rate futures. One from RBI and the other from SEBI are working out the nitty-gritty of ETIRF. RBI technical committee has already submitted its report. From SEBI's side, we will be ready with the operational norms (like quantum of margin etc) and put it on our Web site next month. The RBI as the regulator of the money market, credit market and Government securities market will decide on the policy aspects of ETIRF," he said.
FIIs have not been allowed to participate in the recently introduced exchange – traded currency futures market. Dr Nair felt that the Government and the RBI will consider allowing all players in this market as and when it stabilises.
An RBI technical committee had recently suggested waiver of securities transaction tax (STT) for trades in ETIRF. It had also recommended that exchanges may consider introducing contracts based on 2-year, 5-year and 30-year Government securities, or those of any other maturities, or coupons.
| Sugar-Creating Overcapacity Without Sugar Cane, then ask for sops |
| Under Mulayam Singh's tenure a new Sugar expansion package was announced by the State Government, which was availed of by Bajaj Hindustan, Balrampur, Dhampur, Oudh and Upper Ganges. No one thought about the supply of Sugarcane, so even as global Sugar prices rise why is the industry crying now? I think they will cry much more in 2009, when there will be no cane to crush. Sugar exporters have expressed their dissension over the Finance Minister, Mr P. Chidambaram's suggestion to discontinue the subvention (grant of money) given to sugar exports before its deadline of September 30. Speaking to reporters on the sidelines of a function to inaugurate currency futures at the National Stock Exchange, Mr Chidambaram said: "In my view, the subvention given for sugar exports must now come to an end. Much sugar has been exported now. I have spoken to the Ministry of Agriculture regarding this." Of the export target of 45 lakh tonnes till end-September, sugar companies have exported 43.7 lakh tonnes till date. Last year, 18 lakh tonnes were exported. Mr Naik Navre, Managing Director, Federation of Cooperative Sugar Industry in Maharashtra, said the move, if implemented, will be highly detrimental for the industry. "It will lead to exporters defaulting on their commitments and earn a bad name for the country," he added. The Government announced a subvention of Rs 1,350 a tonne on sugar exports last year on the back of a bumper production. Last few months sugar prices have been rising in the domestic markets raising Government's concern. "The removal of subvention will not have any impact on the domestic prices as they are driven by other factors. Overseas scenario Expectation of lower sugarcane output in India and Brazil next year has pushed up global prices by over 17 per cent in last three months. In fact, sugar is the only commodity that has withstood the sharp correction in commodity prices. According to International Sugar Organisation, global sugar output is expected to fall 4 per cent to 161.6 million tonnes (mt) in sugar season ending September, 2009. In India, output is estimated to drop by 17 per cent to 22 mt next season, said Indian Sugar Mills Association. The area under sugarcane cultivation in Maharashtra is also expected to go down by 26 per cent to 8 lakh hectares in 2008-09 against 10.88 lakh hectares last year. Consequently, the cane output is expected to drop 21 per cent to 702 lt (855 lt), while cane available for crushing is estimated lower by 35 per cent at 500 lt (761 lt). Sugar production will be down 37 per cent to 57 lt (90.96 lt). The sugar production in 2008-09 is estimated to fall 20 per cent to 217 lakh tonnes (lt), against 273 lt. It may slip further by 14 per cent to 187 lt in 2009-10 sugar season.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.) |
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Arvind Parekh
+ 91 98432 32381
