Benchmarks recover some lost ground on easing inflation numbers

The Indian equity benchmarks came off the low point of the day and recovered some lost ground but still remained in negative territory on easing inflation numbers. Investors were trading cautiously and pressing sales almost across the board, tracking weak global cues. Meanwhile, Primary articles inflation for week ended December 3 has come in at 5.48% versus 6.92%, food articles inflation at 4.35% versus 6.6%, while fuel group inflation is at 15.24% versus 15.53%. On sectoral front, all were trading in red with consumer durables, capital goods, IT and realty stocks were among the major losers at present. However, fall in global peers on euro-zone concerns and sharp rupee depreciation pushed stocks lower and markets now waiting for the RBI’s policy on December 16 for getting some trigger. On the global front, markets in the Asia-Pacific region were witnessing selling pressures amid renewed worries about the European economy, while the US markets closed lower overnight. Back home, the market breadth favoring the negative trend; there were 495 shares on the gaining side against 1,829 shares on the losing side while 98 shares remained unchanged.

The BSE Sensex is currently trading at 15,674.49, down by 206.65 points or 1.30%. The index has touched a high and low of 15,795.84 and 15,596.22 respectively. There were just 6 stocks advancing against 24 declining ones the index.

The broader indices too extended its southbound journey; the BSE Mid cap and Small cap indices were down by 1.74% and 2.03% respectively.

CG down by 3.02%, CD down by 2.85%, TECk down by 2.16%, IT down by 1.86% and Realty down by 1.85% were the top losers on the index. While, there were no gainer on the index.

Bharti Airtel down by 4.19%, BHEL down by 3.31%, Sterlite Industries down by 3.24%, L&T down by 3.15% and Tata Motors down by 2.91% were the top losers on the index.

While, HDFC up by 0.99%, HUL up by 0.70%, Cipla up by 0.68% and Sun Pharma up by 0.51% and Tata Power up by 0.35% were remained the top gainers on the index.

Meanwhile, the government has tabled the much awaited Companies Bill in Lok Sabha, which will overhaul India’s corporate law to strengthen governance and increase the transparency. The union cabinet on November 24, approved the Companies Bill, 2011, however it delayed on the back of opposition parties protesting FDI in multi-brand retail.

The Companies Bill, via its 470 provisions, recommends tightening laws for raising money from the public, besides prohibiting any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence. It will also make mandatory for companies to earmark 2% of their average profit of the preceding 3 years for CSR activities and make a disclosure to shareholders about the policy adopted in the process.

The bill also seeks mandatory rotation of auditors and audit firms, regulation of related-party transactions, protection of minority shareholders, provision for class action suits, enhancement of penalties and a mandatory slot for a woman director on company boards are all new proposals included in the bill.

Corporate Affairs Minister M Veerappa Moily was confident the bill would be passed in the current session. If not this session, then it will be enacted in the budget session. The companies bill has already been examined by the parliament’s standing committee on finance chaired by former finance minister Yashwant Sinha.

The amendment bill was introduced way back in 2008 but due to the dissolution of the 14th Lok Sabha was referred to the Parliamentary Standing Committee in 2009.  Following incorporating several suggestions, it was decided to introduce the bill again as the Companies Bill 2011.

The companies bill tabled in the backdrop of Rs 14,000-crore Satyam fraud, seeks to ensure greater accountability thorough additional disclosure norms, facilitate rising of capital. The Companies Act was first passed in 1956. Once passed the draft bill will update the company law in line with the best global practices and modernize the corporate regulation.

Besides this, the bill also spelt out fixed term of four years for auditors and five years for independent directors, who must constitute one-third of the total directors. This has done to make sure transparency in the internal workings of companies in order to avoid any scams. 

The bill has put in places many provisions for Serious Fraud Investigation Office (SFIO) such as the power of arrest. However, it has avoided to giving it suo-moto powers like those enjoyed by the Competition Commission of India. It also bars offering stock option to independent directors on board of company. The S&P CNX Nifty is currently trading at 4,698.30, down by 64.95 points or 1.36%. The index has touched a high and low of 4,732.75 and 4,673.85 respectively.  There were just 10 stocks advancing against 40 declining ones on the index.

The top gainers of the Nifty were BPCL up by 3.24%, HDFC up by 0.80%, PowerGrid up by 0.47%, Tata Power up by 0.46% and HUL up by 0.43%.

Cairn India down by 4.66%, Sesa Goa down by 4.48%, Ranbaxy down by 4.47%, Bharti Airtel down by 4.24% and Reliance Communication down by 3.88% were the major losers on the index.

All the Asian equity indices were trading in the red; Shanghai Composite plunged 1.77%, Hang Seng down by 2.11%, Jakarta Composite slid by 1.85%, Nikkei 225 lost 1.50%, Straits Times was down by 1.44%, Seoul Composite down by 2.03% and Taiwan Weighted plummeted by 2.28%.