STOCK MARKET DESK

Moving ahead with financial reform measures, the Securities and Exchange Board of India (SEBI) has given a green signal to short selling by institutional investors (foreign as well as domestic) in Indian bourses. Simultaneously, SEBI has also mandated that all the institutional trades in cash market would be subject to payment of margins as applicable to the retail investors. Currently, institutions do not have to pay margin money for their stock market trades. The introduction of full-fledged Securities Lending and Borrowing (SLB) scheme will go with the introduction of short selling by the institutional investors. These proposals would come into play from April 21 onwards.

Reliance Industries will shut down nearly two-third of its 1,400 petrol pumps in next couple of weeks as it is unable to match the fuel price offered by state-run retailers, who get subsidy for selling fuel below the cost.

The company plans not to replenish petrol and diesel stocks once the existing lot at its retail outlets get exhausted. Reliance will close about 900 company operated petrol pumps and according to industry sources has sent internal mails for a phased closure.

The owner of nation's largest refinery suffered huge losses despite selling petrol and diesel at prices higher than the state-run retailers Indian Oil, Hindustan Petroleum and Bharat Petroleum. On an average, petrol from Reliance outlets costed between Rs 4 and 5 a litre more than the PSU pumps.

Reliance still lost Rs 3.4 a litre on petrol and Rs 5.8 per litre on diesel and had seen its market share fall from 14.3% to less than 1% in diesel.

Public sector retailers too lose Rs 10.93 on sale of every litre of petrol and Rs 14.66 per litre on diesel but the losses are made up by issue of oil bonds by the Government and discounts from ONGC, GAIL and Oil India. The same compensation is not given to the private retailers like Reliance and Essar.

The company had invested about Rs 4,000 crore in setting up close to 1,400 retail outlets for selling petrol and diesel in the country. Out of these, Reliance owns and operate about 900 outlets. The remaining 500 dealer operated pumps would continue to operate. Essar Oil which has set up 1,100 petrol stations in the country is not closing shop as yet, so is Shell which operates a handful of outlets in the southern India.

Taking a loss is not a pleasant task. No one likes to do it at all. If one is to be an active trader it will become necessary to take a loss from to time to time. It is inevitable that the necessity of taking a loss will face the individual trader.If the decision has been made to take the loss, this is not the time to try and get something a little extra to soften the blow. There are novice investors who have decided to take a loss on a stock and at the last minute place a limit sell order just above the current trading range. In most cases, the order is never filled and the stock either just sits there or drops lower. As time passes the numbers of these limits sell orders, just above the current market price, begin to grow in number.

This gathering of limit sell orders creates a phenomenon called overhead supply. Even if good news is forthcoming, the stock will have a difficult time rallying through all of those limit sell orders. It is possible that the overhead supply will begin to drift lower. The members of other traders realize the difficulty of the situation and begin to lower their limit prices. Some of these sell orders are executed and the price is driven even lower. This predicament can become time consuming and frustrating for the trader.

The solution is simple. Once the decision has been made to sell and take the loss it should be done as quickly as possible the money will then be available for purchasing better choices. The market sell order will accomplish this with the greatest speed.

The volatility in stock markets has forced investors across the world to pull out over US$700 million from funds focused on Asian market last week, while there was an outflow of as much as two billion dollars from the emerging market equity funds, says a report.

According to the emerging market fund tracking firm, Emerging Portfolio Fund Research (EPFR), global investors have pulled out from most of the emerging markets during the second week of March, as investors fretted about the loss of export competitiveness in the face of a slumping dollar and showed little confidence in the view that growth in key emerging markets is decoupled from the US economic cycle.

Investors pulled out US$ 2.01 billion of the diversified Global Emerging Markets (GEM) Funds, US$ 714 million out of Asia (ex-Japan) Funds and modest amounts -- around 0.1 per cent of assets under management -- from EMEA and Latin America Equity Funds for the week ended March 12 , the EPFR report said.

Among BRIC (Brazil, Russia, India and China) country funds, Russia was the only one to post an inflow during the reviewed period, while the funds focused on the BRIC region recorded outflows for the third time in four weeks.

However, strong commodities story provided some protection and flows out of Brazil and Latin America regional funds were a minimal 0.01 per cent and 0.02 per cent of assets under management, reflecting the regions close correlation with commodity prices, the report added.

Although experts and analysts tout that Indian economy being domestic led it is relatively insulated from the US led recession but financial liberalization has helped a great deal in maintaining an average growth rate of 9 per cent during the 3 years between 2005 and 2008.

Anil Ambani group's financial services arm Reliance Capital today launched its microfinance initiative here with tie-ups for two states, which it said would be followed by a national rollout soon.

Reliance Capital said it is joining hands with two Gujarat-based microfinance institutions -- MAS Financial Services Ltd and Vardan Trust -- as part of its initiative to enhance penetration of microfinance in the country.

The initiative was launched by group chairman Anil Ambani's wife Tina Ambani, who handed over the first disbursement cheques.

Reliance Capital said it plans to fund MFIs in Gujarat and Maharashtra in the first phase, and subsequently have a national presence.

"Our vision is to provide access to finance at the grassroot level by partnering with MFIs serving the rural and semi-urban areas. This initiative is in line with the groups commitment to play a serious role in bringing value to the lives of the underprivileged and the aged in India," Tina Ambani told reporters.

"The initiative envisages lending to MFIs, which would then be on-lending finances to Self Help Groups, Individuals and Joint Liability Groups as per their norms," Reliance Consumer Finance' Deputy CEO K V Srinivasan said.

Steel Authority of India Limited (SAIL) signed a shareholder’s agreement with Jaypee Associates Limited (JAL) to form a joint venture company called Bokaro Jaypee Cement Limited (BJCL), for setting up a 2.1 million tonne capacity cement plant at Bokaro.

Equity participation by JAL and SAIL in BJCL will be in the ratio of 74:26. The initial authorised paid-up capital of the company will be Rs 500 million raised through a debt-equity ratio of 70:30. The proposed plant will come up in two years’ time at an estimated cost of Rs 4.05 billion. It will manufacture cement using the slag generated by BSL’s blast furnaces. SAIL has decided to diversify into cement production in a phased manner.