The Indian markets surged on Wednesday, a day marked
by another terror strike in national capital Delhi. At least 10 people
were killed and 65 others injured in a bomb blast outside the Delhi High
Court. Markets remained un-affected by the incident and extended their
last sessions rally in tandem with the other regional peers. There was
broad based buying witnessed in the markets and apart from the blue
chips, the broader markets too equally participated in the rally. Both
the benchmarks scaled past to the psychological levels of 17000 (Sensex)
and 5100 (Nifty). Surprising the beaten down sector realty surged in
the day, emerging as the top gaining sectoral indices after the
introduction of Land Acquisition bill in parliament, the bill was
cleared by cabinet earlier this week. The proposed Land Acquisition Bill
is likely to sharply inflate business costs for companies from the
mining, metal and infrastructure sectors. The new land draft proposes
compensation to farmers that is four times the market rate. An allowance
of Rs 3,000 per month for a year and an annuity of Rs 2,000 per month
will have to be paid for 20 years. Developers will also have to provide
employment to each family. However, the positive global cues mainly
boosted the morale of the markets as after the surge in Asian markets on
value picking the European markets too showed good move and the major
indices gained over 2-3 percent in early trade after Germany's top court
rejected challenges to the participation of Europe's largest economy in
euro rescue funds.
Back home, the start of the markets was in positive terrain tracking the gains in the regional peers and the late hour bounce back in the US markets on unexpectedly better services sector data, however they closed in red but gave a reason for other markets to rejoice that the recovery was not floundering at the worlds' largest economy. The local markets initially lacked confidence and dithered a bit in morning trade but with the progress of trade gained momentum and started moving higher with the support of gains in realty and banking stocks. The banks were in jubilant mood today after the Reserve Bank of India (RBI) governor Duvvuri Subbarao said that the minimum mandatory amount of deposits that banks need to set aside to invest in government bonds need to come down gradually. The governor is of the view that the CRR, a portion of deposits that the banks have to keep as cash with RBI and SLR the percentage of deposits that banks have to invest in government securities, currently at 6 and 24 percent respectively, needs to be reduced in calibrated manner so that bank can have more money to lend. The other sectors that flared today include power and capital goods. It was in noon trade after the buoyant opening of the European markets that indices gathered stem and went past their psychological levels, however some last hour profit booking cut the gains and the indices slipped from the high points of the day, still managing to gain over a percent for the day. The markets surged on slightly lower volume of around Rs 1.18 lakh crore while the turnover for NSE F&O segment too remained on lower side as compared to Tuesday at over 1.02 lakh crore. The market breadth remained strongly in favour of advances with 1939 shares on the gaining side against 912 shares on the losing side while 109 shares remained unchanged.
Finally, the BSE Sensex surged by 202.19 points or 1.20% to settle at 17,065.00, while the S&P CNX Nifty soared by 60.35 points or 1.19% to close at 5,124.65.
The BSE Sensex touched a high and a low of 17,157.21 and 16,922.31 respectively. The BSE Mid cap and Small cap indices were up by 1.24% and 1.53% respectively.
The top gainers on the Sensex were Jaiprakash Associated up 7.70%, HDFC Bank up by 3.42%, Coal India up by 3.38%, Tata Power up by 3.38% and NTPC up by 2.95%.
On the flip side, ITC down 0.99%, Mahindra & Mahindra down 0.99%, Infosys down 0.53%, Bajaj Auto down 0.20% and Hindustan Unilever down 0.13% were the top losers on the index.
The top gainers on the BSE sectoral space were, Reality up 3.42%, Power up 2.43%, Capital Goods (CG) up 2.12%, Bankex up 2.12% and Metal up 2.02%. While, FMCG down 0.13% was the only loser on the BSE sectoral space.
Meanwhile, the Reserve Bank of India (RBI) is considering reintroducing Inflation-Indexed Bonds (IIBs), the RBI Governor Duvvuri Subbarao on August 6 said that the central bank is planning to introduce inflation-indexed bonds, under which an investor would get a return on the basis of the prevailing inflation at the time of maturity.
Expressing concern over the success of IIBs in present time, the RBI Governor said, 'One cause of concern is whether in a period of relative high inflation...whether they (inflation-indexed bonds) will be successful. We will think through this... but certainly we will introduce that.'
Under IIBs, bonds are indexed to inflation, and return on such bond will be linked to the ongoing rate of inflation at the maturity of instrument on both coupons and on the principle repayments at the time of maturity. Presently, the exiting bonds are capital-indexed and only protect the capital/principle against inflation, however, an IIB will be offering investors inflation-based returns. The index will be based on the Wholesale Price Index (WPI).
RBI Governor also noted the past experience from such instruments, he said, 'we have diversified the instruments for government borrowings now...The zero coupon bonds, capital indexed bonds and now there is a proposal to introduce inflation indexed-bonds. We tried those inflation indexed bonds earlier, but it did not work out very well but now we want to reintroduce them.'
A decade ago, the first Capital Indexed Bond (CIB) also known as inflation indexed bond was issued on December 1997. However, no more issuance was made for want of response from market participants from both the market. The idea of inflation-indexed bond was formally floated in late 1990s by the formal Deputy Governor Rakesh Mohan. Afterward, an RBI technical committee had proposed introduction of fully inflation indexed bonds for institutional investors with maturities of 10-12 years.
In the existing yield norms governing bonds, there is only fixed rate of return and for an issue that was bought when inflation was down does not guarantee higher returns to investor when the inflation goes up. As per the RBI's discussion paper, the CIB would help meet the diverse investment and hedging needs of investors and to impart depth to the bond market in general.
The top gainers of the Nifty were JP Associate up 7.24%, Ambuja Cement up 6.32%, ACC up 5.09%, SAIL up 4.97% and Tata Power up 3.60%.
On the flip side, M&M down 1.30%, ITC down 1.13%, TCS down 0.76%, Infosys down 0.72% and Dr Reddy down 0.65% were the top losers on the index.
The European markets were trading in green. France's CAC 40 jumped 2.53%, Britain's FTSE 100 increased by 1.89% and Germany's DAX surged by 2.67%.
Most of the Asian equity indices finished their day's trade in the negative terrain on Tuesday on fears that Europe's sovereign debt troubles are worsening and could trigger a second, full-blown banking crisis. European stocks tumbled 4 per cent on Monday, with financial shares falling to their lowest in more than two years. Moreover, Japanese Nikkei tumbled over two percent as investors remained worried that upcoming US job measures will not be enough to boost confidence in the slowing US economy. In Tokyo, Nomura Holdings tumbled 3.3 percent, National Australia Bank fell 1.6 percent in Sydney and HSBC lost 2.8 percent in Hong Kong.
Back home, the start of the markets was in positive terrain tracking the gains in the regional peers and the late hour bounce back in the US markets on unexpectedly better services sector data, however they closed in red but gave a reason for other markets to rejoice that the recovery was not floundering at the worlds' largest economy. The local markets initially lacked confidence and dithered a bit in morning trade but with the progress of trade gained momentum and started moving higher with the support of gains in realty and banking stocks. The banks were in jubilant mood today after the Reserve Bank of India (RBI) governor Duvvuri Subbarao said that the minimum mandatory amount of deposits that banks need to set aside to invest in government bonds need to come down gradually. The governor is of the view that the CRR, a portion of deposits that the banks have to keep as cash with RBI and SLR the percentage of deposits that banks have to invest in government securities, currently at 6 and 24 percent respectively, needs to be reduced in calibrated manner so that bank can have more money to lend. The other sectors that flared today include power and capital goods. It was in noon trade after the buoyant opening of the European markets that indices gathered stem and went past their psychological levels, however some last hour profit booking cut the gains and the indices slipped from the high points of the day, still managing to gain over a percent for the day. The markets surged on slightly lower volume of around Rs 1.18 lakh crore while the turnover for NSE F&O segment too remained on lower side as compared to Tuesday at over 1.02 lakh crore. The market breadth remained strongly in favour of advances with 1939 shares on the gaining side against 912 shares on the losing side while 109 shares remained unchanged.
Finally, the BSE Sensex surged by 202.19 points or 1.20% to settle at 17,065.00, while the S&P CNX Nifty soared by 60.35 points or 1.19% to close at 5,124.65.
The BSE Sensex touched a high and a low of 17,157.21 and 16,922.31 respectively. The BSE Mid cap and Small cap indices were up by 1.24% and 1.53% respectively.
The top gainers on the Sensex were Jaiprakash Associated up 7.70%, HDFC Bank up by 3.42%, Coal India up by 3.38%, Tata Power up by 3.38% and NTPC up by 2.95%.
On the flip side, ITC down 0.99%, Mahindra & Mahindra down 0.99%, Infosys down 0.53%, Bajaj Auto down 0.20% and Hindustan Unilever down 0.13% were the top losers on the index.
The top gainers on the BSE sectoral space were, Reality up 3.42%, Power up 2.43%, Capital Goods (CG) up 2.12%, Bankex up 2.12% and Metal up 2.02%. While, FMCG down 0.13% was the only loser on the BSE sectoral space.
Meanwhile, the Reserve Bank of India (RBI) is considering reintroducing Inflation-Indexed Bonds (IIBs), the RBI Governor Duvvuri Subbarao on August 6 said that the central bank is planning to introduce inflation-indexed bonds, under which an investor would get a return on the basis of the prevailing inflation at the time of maturity.
Expressing concern over the success of IIBs in present time, the RBI Governor said, 'One cause of concern is whether in a period of relative high inflation...whether they (inflation-indexed bonds) will be successful. We will think through this... but certainly we will introduce that.'
Under IIBs, bonds are indexed to inflation, and return on such bond will be linked to the ongoing rate of inflation at the maturity of instrument on both coupons and on the principle repayments at the time of maturity. Presently, the exiting bonds are capital-indexed and only protect the capital/principle against inflation, however, an IIB will be offering investors inflation-based returns. The index will be based on the Wholesale Price Index (WPI).
RBI Governor also noted the past experience from such instruments, he said, 'we have diversified the instruments for government borrowings now...The zero coupon bonds, capital indexed bonds and now there is a proposal to introduce inflation indexed-bonds. We tried those inflation indexed bonds earlier, but it did not work out very well but now we want to reintroduce them.'
A decade ago, the first Capital Indexed Bond (CIB) also known as inflation indexed bond was issued on December 1997. However, no more issuance was made for want of response from market participants from both the market. The idea of inflation-indexed bond was formally floated in late 1990s by the formal Deputy Governor Rakesh Mohan. Afterward, an RBI technical committee had proposed introduction of fully inflation indexed bonds for institutional investors with maturities of 10-12 years.
In the existing yield norms governing bonds, there is only fixed rate of return and for an issue that was bought when inflation was down does not guarantee higher returns to investor when the inflation goes up. As per the RBI's discussion paper, the CIB would help meet the diverse investment and hedging needs of investors and to impart depth to the bond market in general.
The
fundamental characteristic of CIBs or IIBs is that the coupon is
specified in real terms. Such real coupons will be used to
inflation-adjusted principle to calculate the periodic semi-annual
coupon payments. Not like existing capital indexed bonds, which
safeguard only the capital/principle against inflation. In this,
investor will gain if the inflation remains high at the time of maturity
from the rate when the bond was bought and investor will lose if
current rate inflation is less at the time of maturity from the time,
when bond was bought.
The S&P CNX Nifty touched high and low of 5,154.50 and 5,076.30, respectively. The top gainers of the Nifty were JP Associate up 7.24%, Ambuja Cement up 6.32%, ACC up 5.09%, SAIL up 4.97% and Tata Power up 3.60%.
On the flip side, M&M down 1.30%, ITC down 1.13%, TCS down 0.76%, Infosys down 0.72% and Dr Reddy down 0.65% were the top losers on the index.
The European markets were trading in green. France's CAC 40 jumped 2.53%, Britain's FTSE 100 increased by 1.89% and Germany's DAX surged by 2.67%.
Most of the Asian equity indices finished their day's trade in the negative terrain on Tuesday on fears that Europe's sovereign debt troubles are worsening and could trigger a second, full-blown banking crisis. European stocks tumbled 4 per cent on Monday, with financial shares falling to their lowest in more than two years. Moreover, Japanese Nikkei tumbled over two percent as investors remained worried that upcoming US job measures will not be enough to boost confidence in the slowing US economy. In Tokyo, Nomura Holdings tumbled 3.3 percent, National Australia Bank fell 1.6 percent in Sydney and HSBC lost 2.8 percent in Hong Kong.
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