Thursday March 22, 03:30 PM
Bulls back with vengeance! |
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By Equitymaster.com
Amidst sustained buying interest amongst participants, the markets managed to hold on to their gains during the final hour of trade. Buying was witnessed across the board with only 7 of the Nifty stocks ending in the red.
The BSE Sensex closed at 13,308 (up 362 points) while the NSE Nifty closed at 3,876 (up 111 points). The rupee was trading at 43.63 to the dollar.
Following positive global clues, benchmark indices opened on a firm note and inched upward with every trading hour. Today's session was a rather smooth sailing for the markets with significantly lower volatility as compared to the recent past. The market breadth was positive with gainers outnumbering losers in the ratio of 2.4:1 on the overall NSE. The Indian indices mirrored strong trends in the Asian markets, where key benchmark Asian indices closed in the green today. European markets have also opened on a firm note.
As per a leading business daily, the country's ten largest banks have indicated to the RBI that the continued tightness in liquidity might compel them to slow down credit growth substantially in FY08. This outlook was manifested in the fact that the overnight call money rates rose to a decade's high of 75% last week, before closing at 40%. These highs follow the demand for funds to meet advance tax payments, government bond auctions and the impact of increases in the cash reserve ratio (CRR). To ease liquidity exigencies at some banks, the RBI has allowed banks with excess investment in government bonds (SLR) to borrow from it through the repo route. Although the RBI has been targeting a credit growth of 20% for FY07, the same has sustained at 29% YoY until February 2007. However, banking stocks across the board closed on a firm note with PNB (up as much as 7%), SBI (5%) and OBC (up 6%).
According to a leading newspaper, Oil and Natural Gas Corporation Ltd (ONGC) has hired five offshore support vessels from the Shipping Corporation of India (SCI) for US$ 7,700 per day to support its drilling and production activities. The total value of the five-year contract is estimated to be in excess of Rs 3 bn. Each of these offshore support vessels (OSVs) have a pulling power of 60 tonnes and can anchor in deep water and maintain stability even in rough sea conditions. ONGC further wants to hire five more OSVs to expand its exploration and production activities in the country. The company is negotiating with the key players in the industry. Though day rates for support vessels have gone up in the global market, ONGC has been able to get rates that are lower than the prevailing market rates. The stock of ONGC closed firm (up 5%), while its peer Cairn India closed weak down 1%.
Telecom stocks closed firm with VSNL (up as much as 10%) Reliance (RELI.BO, news) Communication (up 4%) and Bharti Airtel (up 3%) being the key gainers. Buoyancy in these stocks was seemingly due to the TRAI's (the telecom regulator) announcement of a reduction in access deficit charges (ADC), which were paid by these service providers to BSNL for funding rural telephony. The total amount of ADC for 2007-08 has been reduced to Rs 20 bn, from the existing level of Rs 32 bn. Especially for the ILD major, VSNL, ADC on outgoing international long distance calls has been reduced to zero from existing level of 80 paise per minute and ADC on incoming international long distance calls has been reduced to Re 1 per minute from existing Rs 1.60 per minute. The TRAI has also reduced the ADC on percentage revenue share on domestic calls to 0.75% from existing 1.50% of Adjusted Gross Revenue (AGR) of all service providers. The reduced ADC should see tariffs come down for both domestic and international calls making mobile phones all the more affordable. The move to reduce the ADC is in keeping with TRAI's earlier proposal (in February 2006) of phasing out the ADC by 2008-09 or merging it with the USO (Universal Service Obligation).
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