Barometer indices gyrating in a tight band sustain losses

Both barometer indices gyrating in a tight band have sustained their losses thanks to another government forex intervention after the yen hit a new record versus the dollar, which prompted risk aversion among riskier assets. Monday's action, confirmed by Finance Minister Jun Azumi, came after the Japanese currency had surged to a post-World War II high of 75.32 yen against the dollar earlier. This development came on the heels of Finance Minister- Jun Azumi - threat of government intervention in financial markets on Thursday. The minister then complained that speculators were using Europe's debt crisis as an excuse to push the safe haven yen higher. However, back home, market men also preferred booking profits post witnessing the second consecutive splendid rally in the last trading session of the previous week. Meanwhile, there was some caution ahead of a US Federal Reserve meeting on Wednesday. Investors focus for now appears to be shifting from Europe to key events such as the Federal Reserve's monetary policy meeting and U.S. economic data, including jobs, due later this week to gauge the state of the world's largest economy. US markets made a mixed closing on Friday, the trade there remained volatile and despite some good economic reports Nasdaq could not manage a close of green. Meanwhile, Asian stocks too riding on declining trajectory. The US future indices were showing a downtick in the screen trade.

Back home, the gains of country’s no 2 Software exporter -Wipro- were counterbalanced by that of losses of Maruti Suzuki India.  Wipro’s Q2 net beats forecast at Rs 1301 crore, helped by a weaker rupee and rise in spending on outsourcing by overseas clients. Bangalore-based Wipro forecasted third-quarter revenue of $1.50 billion to $1.53 billion from its IT services unit, which accounts for three-quarters of its total revenue, a rise of 2% to 4.1% from the second quarter. However,  Maruti Suzuki India plummeted over 1.25% after the company posted higher-than-expected 60% fall in its fiscal second-quarter net profit which stood at Rs 240.44 crore as compared to Rs 598.24 crore for the quarter ended September 30, 2010. The losses at Dalal Street are also the contribution of stocks belonging from the Oil & Gas and Metal counters, besides Auto one. However, stocks from IT, TECK and Realty are striving their best to provide a lid to the losses. The 30 share index-Sensex losing over 75 points is trading sub 17,800 level, while 50 share index-losing over 25 points is of 5,400 mark. The overall market breadth is in the favour of advances which have currently piped declines in the ratio of 1188:1008, while 90 shares remained unchanged.

The BSE Sensex is currently trading at 17,712.47, down by 92.33 points or 0.52%.  The index has touched a high and low of 17,806.21and 17,688.34 respectively.  There were 9 stocks advancing against 21 declines on the index.

The broader indices kept outperforming benchmarks; the BSE Mid cap and Small cap indices were up by 0.26% and 0.33% respectively.

The only gaining sectoral indices on the BSE were, IT up by 0.79%, TECk up by 0.51% and Realty up by 0.41%. While, Auto down by 1.12%, Oil & Gas down by 1.10% and Metal down by 1.04%  were the top losers on the index.

The top gainers on the Sensex were Wipro up by 2.60%, NTPC up by 1.34%, Infosys up by 1.20%, Hero MotoCorp up by 1.00% and HUL up by 0.44%.

On the flip side, Tata Motors down by 3.39%, Maruti Suzuki was down by 2.75%, Sterlite Industries down by 2.71% Hindalco Industries down by 2.07% and ONGC down by 2.04% were the top losers on the Sensex.

Meanwhile, by the end of the next financial year an independent debt management office (DMO) is likely to be fully functional, which will handle the sobering debt of the government. In this year’s Budget speech, Finance Minister Pranab Mukherjee had proposed to introduce the Public Debt Management Agency of India Bill in the next financial year.

The finance ministry has sent the draft bill to all stakeholders, including the Reserve Bank of India (RBI), and comments are soon expected on the bill. If all the stakeholders agree, then the ministry will seek the cabinet’s approval so that it can submit the draft bill in parliament, so that DMO can become operational in 2012.

However, the RBI has often expressed its discontent on the proposed move of shifting debt management functions under its aegis to finance ministry. Whereas as per the finance ministry official, all the differences with the RBI have been shorted out, but publicly, central bank has not supported this move. By adding further he said, we are targeting the winter session for Public Debt Management Agency of India Bill. We need RBI’s comments for drafting legal provisions and various other technicalities. Our aim is to make DMO operational towards the end of the next financial year (2012-13).

However, any objection from apex bank could reduce the chance of introduction of Bill. The finance ministry, on the other hand had said that it had tried to address the concern of the RBI in the design and structure of DMO. On the same time, the ministry has started introductory action on creating DMO.

Another concern of RBI is that, when DMO was planned, the government’s fiscal health was under pressure. To this the ministry’s argument is that the government is on the path of fiscal consolidation. As per the finance ministry, with the setting up of the DMO, the dilemma of RBI between managing monetary policy and debt operations of the government will be eliminated.

At present, both the government’s debt and fresh borrowings are managed by the central bank. The finance ministry, however, is of the view that there is a conflict of interest and wants to divide RBI’s role as the decision maker of interest rate in the market and at the same time being the banker to the government.

Earlier this year, RBI Governor D Subbarao had said only the central bank had the requisite expertise to manage market volatility, and an independent debt agency, driven by narrow objectives, would not be able to do.

The S&P CNX Nifty is currently trading at 5,325.90, lower by 34.80 points or 0.65%. The index has touched a high and low of 5,360.25 and 5,318.70 respectively.  There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were Wipro up by 2.27%, Siemens up by 1.79%, Sesa Goa up by 1.53%, NTPC up by 1.51% and IDFC 1.14%.

On the flip side, Tata Motors down by 3.68%, Maruti Suzuki down by 2.55%, Sterlite Industries down by 2.30%, Grasim Industries down by 2.19% and ONGC down by 2.12%, were the major losers on the index.

All the Asian counterparts were trading on the subdued note on Monday, Shanghai Composite declined by 0.53%, Hang Seng was down surrendered 1.14%, Jakarta Composite plunged 1.69%, KLSE Composite lost 0.27%, Nikkei 225 descended 0.16%%, Straits Times plummeted 1.48%, Seoul Composite lost 1.11% and Taiwan Weighted declined by 0.48%.