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What is circuit breaker?
Investors richer by Rs 6.5 lakh cr in a minute
India Inc not surprised by surge
Cut lending rates, RBI tells banks
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Golden Monday: Sensex zooms 2,111
Mumbai, May 18 In the very first minute of opening at 9.55 am this morning, the Sensex hit the upper circuit forcing trading to be halted for two hours. After re-opening at 11.55 am, the markets hit the upper circuit again forcing trading to be halted for the entire day. Riding on the back of slim volumes, today’s Sensex movement resulted in investor wealth zooming up by Rs 6.5 lakh crore on paper. Investor wealth, measured in terms of the combined market capitalisation of all the listed companies, was pegged at Rs 44,63,420.97 crore at today’s closing prices. However, the value of shares traded in today’s truncated trading was just about Rs 3,000 crore. Volumes were measly: Just 41,096 shares of Reliance, 33,544 shares of Larsen and Toubro, 25,059 shares of SBI to name a few, were traded this morning. Usually, the amount of shares traded in these scrips run into millions. While the Sensex zoomed 2,111 points to hit the circuit breaker at 14,284.21, the Nifty was shut for the day at 4,308, up 17.3 per cent. The Sensex scrips gained the most with BHEL gaining 32.7 per cent to Rs 2,266 while L&T shot up 29.5 per cent at Rs 1,280. DLF and ICICI Bank also closed more than 25 per cent higher. Reliance Industries gained 22.8 per cent at Rs 2,393. However, the surge was not broad-based and stocks not part of the Sensex or Nifty did not gain as much. The BSE Midcap was up just 11.75 per cent or 447 points while the Smallcap Index rose 9.05 per cent or 387 points. Among the sectoral indices, the BSE realty index shot up 23.45 per cent while the BSE bankex gained 13.6 per cent. The BSE capital goods index and the BSE metal index also closed more than 12.3 per cent each. Globally, the markets have been roiled by fears of the financial crisis continuing. Japan’s Nikkei was down 2.4 per cent while South Korea’s Kospi fell 0.3 per cent. However, Hong Kong’s Hang Seng and China’s Shanghai Composite traded in the green. |
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According to the rules in force, trading is halted if the circuits in either the BSE or NSE are breached. In case of a 10 per cent movement, either up or down of the Sensex or the Nifty before 1 pm, trading would be halted for an hour. If this occurs after 1 pm, but before 2.30 pm, trading would halt for 90 minutes. If the 10 per cent movement happens on or after 2.30 pm trading would continue without a halt. On the other hand, if there is a 15 per cent trigger of either the Sensex or the Nifty before 1 pm, trading would be suspended for two hours and if the movement happens after 1 pm, but before 2 pm, markets would be halted for an hour. If the 15 per cent circuit is breached on or after 2 pm, trading would halt for the rest of the day. Trading would halt for the day if one or both indexes move 20 per cent either way. The percentages are calculated on the closing index value of the quarter. These percentages are translated into absolute points of index variations. At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter. The 10 per cent circuit breaker is presently fixed at 975 points while the 15 per cent circuit breaker is 1,450 points. The 20 per cent circuit breaker is 1,950 points.
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Investors richer by Rs 6.5 lakh cr in a minute
Mumbai, May 18 Investor wealth, measured in terms of the combined market capitalisation of all the listed companies, increased by over Rs 6,56,477 crore in a minute, in the first 30 seconds and then after the resumption of trading at 1155 hours, to Rs 44,63,420.97 crore. The 30-share Bombay Stock Exchange Sensex zoomed 1,305.97 points at 13,479.39, hitting the upper circuit within seconds of opening of trade, following which trading was halted for two hours. After trading resumed the Sensex soared 806 points at 14,284.21, following which trading was halted for the day. The combined market capitalisation of the 30 blue-chip stocks rose to Rs 21,53,590.09 crore today, from Rs 18,36,841.33 crore at the end of trade on Friday. Reliance Industries was the major contributor to today's increase in market capitalisation for regaining the 14,000-level along with other heavy-weight stocks like BHEL and Bharti Airtel. Corporate behemoth RIL gained over Rs 70,136 crore in today's trade, with its valuation crossing the Rs 3 lakh crore mark.
— PTI |
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India Inc not surprised by surge
New Delhi, May 18 “It was expected that markets will do well and that is what we saw in the morning today. Market regulator SEBI is keeping a watch on the situation and we will see how it plays out tomorrow,” said Finance Secretary Ashok Chawla. “Monday’s euphoria of stock market is totally justified in the wake of stable government leading India,” said Assocham’s president Sajjan Jindal. “The new government will be independent in taking reform-friendly decisions in insurance, banking and labour sector. The issue of disinvestment will also be taken up with logical conclusion and investor’s confidence in the Indian stock would increase by leaps and bounds since reforms-friendly government is now in place led by Dr Manmohan Singh,” Jindal added. According to Satish Bagrodia, president, PHD Chamber, this bull run is an initial reaction of the market. Gradually markets will stabilise and start functioning based on the ground realities. This kind of swing in the Sensex is unlikely to adversely affect the common man. He feels that with the bulls taking over on early trade and the automatic circuit-breaker coming into force, is the safety mechanism that has been designed to build confidence of investors in the operations of bourses. Ficci president Harsh Pati Singhania said: “The market is euphoric and there has been a decisive voting for a stable and pro-reform government and pending economic reform agenda will now be put on fast track.”
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Cut lending rates, RBI tells banks
Hyderabad, May 18 The banks, he said, had indeed brought down lending rates by as much as 250 basis points, which helped in the monetary transmission and credit markets got a boost resulting in a 17.5 per cent credit off-take. As the business confidence gets restored, the Indian economy may recover swiftly, the Governor said. "Unlike China, India is not a demand constrained economy. Once global recovery takes place, the country's growth would be swift and sharp," he said. "The challenge lies in implementing the fiscal stimulus measures rigorously," Subbarao said. The transmission mechanism of the monetary policy has been weak in India but it had not collapsed completely, he noted. Pointing out that improved productivity and rising savings were the facets of the country's economic growth, the Governor said: “There are several factors attributed to India's high growth in the recent period — improved productivity, growing entrepreneurial spirit, rising savings to name just the most important." He called upon the banks to pass on the benefit of lower costs from technology-based products and services to their customers. "I was surprised to note that transfer of funds from one branch of a bank to another, both under the Core Banking System, entailed a service charge for the remitting customer. It does not make sense that the charge for such funds movement within a bank is much more than for the inter-bank funds transfers," Subbarao said. Delivering a keynote address at an awards function held by the Institute for Development and Research in Banking Technology here, he warned that banks face the risk of losing customer trust by imposing charges not commensurate with the cost of service provided. He also wanted the financial sector leaders to take greater advantage of new technologies as they would reduce the costs of financial transactions, improve the allocation of financial resources and increase the competitiveness and efficiency of financial institutions. In this context, he said, banks could now take advantage of the expanded reach of the telecom by using the mobile communication technology.
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