Jun 30, 2001|
Markets: Ringing in the new
The next week marks the beginning of a new trading system, which is expected to reduce the speculation in the cash markets. The bourses seem to be hopeful, as they bid the old system farewell with the BSE Sensex and NSE Nifty rising by 2.2% and 1.9% respectively for the week.
Under the new system the cash and forward markets will be segregated. The Securities & Exchange Board of India (SEBI) has announced the list of scrips in which stock options will be permitted. The list includes 31 stocks of which 24 are part of the Sensex. The scrips, which are part of the Sensex but not included for options are Castrol, Colgate, Glaxo, Nestle, NIIT and Zee. The close link between the Sensex and option scrips could signify a close correlation between the cash and options market. Therefore, any volatility in the options market could get reflected onto the cash markets. The SEBI has also announced a new set of circuit filters applicable to stocks. As per the latest announcement, stocks, which are part of the options list or indices, which offer index derivatives, will not have any circuits. There will be index-based circuits. Stocks not part of this list included in rolling settlement will have a circuit filter of 20%. For stocks not included in any of the above categories, the current filters of 8% and 16% will apply. More on circuit filters.
The net outstanding position on the BSE has declined to Rs 2.4 bn from Rs 3.2 bn in the previous week. These outstanding positions are to be closed by September 2, 2001. In other news, the Central Statistical Organization (CSO) has released the revised estimates for the Indian economy. However, the numbers do not portray a pretty picture.
Nothing to cheer about
|* Priliminary estimates
|** Revised estimates
Key sectors have registered lower growth rates in FY01. In fact, growth in most sectors has decelerated further in 4QFY01 and in the new fiscal, as the slowdown takes a tighter grip on the economy. Industrial output grew by only 2.7% in April '01 as compared to 7.2% in April '00. Growth in the manufacturing and services sector for 4QFY01 was 3.5% and 9.3% respectively, which is lower compared to 4QFY00. Estimated GDP growth in the fourth quarter was 3.8% compared to 6% in the same period of the previous year. The slowdown has gained momentum in 4QFY01 and has permeated into FY02. Consequently, performance of Corporate India could remain subdued, at least in the first half of the current fiscal, as a revival does not seem to be in sight. As a result markets may not have a reason to cheer.
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