Nifty futures on Chicago bourse from Monday

Come Monday, two futures contracts on the NSE nifty and denominated in US dollar will start trading on the Chicago Mercantile Exchange (CME). While one contract, E-mini Nifty Futures, will be valued at $10 times the current value of nifty index on the NSE, the other one, E-micro nifty futures, will be valued at $2 times the nifty index value at that time.

Investors globally will have the option to trade in nifty contracts for almost 23 hours on all trading days, an NSE release said. In addition, since nifty contracts are also traded on the Singapore Exchange (SGX) and it has a mutual offset agreement with CME, investors can take a position on any of the two bourses and offset it at the other exchange, releases from CME and NSE said.

These two new contracts are intended to give global investors a more efficient means to gain exposure to India-related asset classes. They can also trade the contracts to hedge their risks from existing exposure to the Indian stock market, a release from NSE said.

SEBI revises exposure margin on equity derivatives

Based on the feedback received from market participants, capital market regulator SEBI has decided that exposure margin shall be higher of 5% or 1.5 times the standard deviation (of daily logarithmic returns of the stock price). This circular shall come into force from July 15. This is in modification of SEBI Circular dated October 15, 2008 which specified that the exposure margin shall be higher of 10% or 1.5 times the standard deviation (of daily logarithmic returns of the stock price) of the notional value of the gross open position in single stock futures and gross short open position in stock options in a particular underlying. This measure is aimed at reducing the effect of higher costs of F&O contracts on retail traders and to lure them back. Only a reduction in the exposure margins could bring in more retail traders as the SPAM margins cannot be touched. Most retail investors have reduced their exposure to F&O stocks as the market has been volatile and range bound alternatively for quite some time now.

COAL INDIA largest IPO of Rs 15,000 cr

State-run Coal India is likely to hit the market by the third week of October with India's largest ever public offer to raise up to Rs 15,000 crore.

The government is disinvesting 10 per cent of its stake in Coal India (CIL), the world's largest coal miner, through the IPO.

"As of now, it seems that CIL initial public offer will open on October 18 and closes on October 21. The 10 per cent disinvestment will see the government raising Rs 12,000- 15,000 crore," a person in the know of the development told PTI.

Coal ministry may cancel two linkages

The blue-print of the IPO was finalised last evening at a meeting between Finance Minister Pranab Mukherjee and Coal Minister Sriprakash Jaiswal. The meeting was also attended by Additional Secretary Coal Alok Perti and Department of Disinvestment Secretary Sumit Bose and Coal India Chairman P S Bhattacharyya, the source said.

Coal India, the largest global coal miner, sells the dry fuel 50 per cent cheaper at around USD 25 a tonne than the prices prevailing in the international market.

Although CIL's IPO was planned in August-September, it was delayed due to opposition to the government's 10 per cent stake sale move from trade unions and political parties.

 
CIL profit jumps 300%

"The Department of Disinvestment has finalised the issue date. The company will now file the Draft Red Herring Prospectus of the IPO by the first week of August," the source added.

The government is selling 10 per cent of its stake in CIL disinvestment. It currently holds 100 per cent equity in the coal major. CIL had earlier said it will issue over 63 crore shares in the IPO.

The Union Cabinet had last month approved to disinvest 10 per cent of the government's holding in CIL. The Centre holds 100 per cent equity in the company.

Coal India produced 431.5 million tonnes of coal in the last fiscal. The country's coal output stood at 531.5 million tonnes in 2009-10.

Anil Dhirubhai Ambani Group firm Reliance Power, in January 2008, raised Rs 11,500 crore through IPO -- the biggest in India till date.

Aiming to raise Rs 40,000 crore through disinvestment in this fiscal, so far sell off in Satluj Jal Vidyut Nigam has fetched the exchequer over Rs 1,000 crore. The government is likely to sell its stake in 10 PSUs, including MMTC, SAIL and Hindustan Copper, this fiscal.

The government in 2009-10 had raised Rs 25,000 crore through stake sales in Oil India, NMDC, REC and NTPC. NMDC 8.38 per cent stake sale had fetched the government about Rs 10,000 crore.

Wall St rallies on earnings optimism

U.S. stocks logged their best one-day gain in about six weeks on Wednesday after a bullish forecast from financial company State Street Corp fueled optimism about the coming earnings season and helped the S&P 500 break above a major resistance level.

State Street shares closed 9.9 percent higher at $36.63 after the asset manager and custody firm said quarterly earnings would far exceed expectations, providing a lifeline to investors after several weeks of dismal economic reports.

Bank stocks led the way, but investors also scooped up beaten-down industrial and technology shares.

"There is some confidence now that there will be more positive surprises than negative during the earnings season," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

The Dow Jones industrial average rose 274.66 points, or 2.82 percent, to 10,018.28. The Standard & Poor's 500 Index gained 32.21 points, or 3.13 percent, to 1,060.27. The Nasdaq Composite Index advanced 65.59 points, or 3.13 percent, to 2,159.47.

It was the indexes' biggest percentage advance since May 27.

The KBW bank index climbed 5.6 percent, while State Street rivals Northern Trust Corp rose 6.9 percent to $49.14 and Bank of New York Mellon Corp was up 6.4 percent to $26.32.

European banks also rallied on optimism most would pass the European banking stress tests, giving a boost to the wider market.

When the benchmark S&P 500 index broke through 1,040, it fueled more buying by those who had put on short positions. The 1,040 level was viewed as a resistance level to further gains, according to Todd Salamone, vice president of research at Schaeffer's Investment Research.

"That creates a very crowded position that is very vulnerable to an unwind, and I think we're seeing that today," he said.

The S&P 500 closed around 1,060, the next resistance level that could prevent the index from rising further on Thursday. The index has reached the 23.6 percent retracement of the move from its 2010 high in April to its year low hit last week.

Industrial and technology stocks were also among the day's gainers with General Electric up 4.7 percent at $14.62

and Cisco System up 5.3 percent at $22.48. The two stocks were the top gainers on the Dow.

Energy shares also got a boost from August crude futures that advanced 3.4 percent to $74.43 a barrel, sending the S&P energy index up 3.2 percent.

Crude climbed on the expectation that upcoming data would show a drop in U.S. inventories, a positive sign for demand, as well as weakness in the U.S. dollar.

But analysts warned that the rally may be short-lived, considering the current economic conditions.

"We may see riskier behavior heading into the next couple of days. It's not uncommon to see a short term technical rally," said Tom Schrader, managing director at Stifel Nicolaus Capital Markets in Baltimore.

"(But) I don't think it's sustainable beyond about a week. The overall economic situation is not conducive to equities."

UBS lowered its full-year forecast on the S&P to 1,150 from 1,350. The firm said the reduced view reflected modestly weaker earnings growth and longer-term secular headwinds.

In earnings news, Family Dollar Stores Inc tumbled 8 percent to $36.26 after it forecast fourth-quarter earnings below expectations.

Among its discount retailer peers, Dollar Tree Inc slipped 3.1 percent to $41.61 while BJ's Wholesale Corp was off 1.1 percent at $42.72.

BP Plc Chief Executive Tony Hayward met with officials from Abu Dhabi's investment authority as speculation mounted the sovereign fund would make a fresh investment. BP's U.S.-listed shares rose 4 percent to $33.12.

Overall volume was tepid, with about 8.95 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by 2650 to 431, while on the Nasdaq, advancers beat decliners by 2080 to 588.

Gear up for 'Bharat bandh' on July 5

The issue of fuel price hike has brought almost the entire opposition together with the Bharatiya Janata Party-led National Democratic Alliance and Left parties giving a call for a nation-wide strike on July 5 demanding a rollback.
All essential services like supply of water, milk, electricity, hospital and emergency services will be exempt from the 'hartal'.
The NDA and the Left parties made separate announcements in this regard and Janata Dal-United chief Sharad Yadav claimed that it was the first such instance of opposition unity after the "JP movement" in the mid-seventies.
Sources said the impact of the bandh is likely to be the worst in at least 10 states where the opposition was holding reins. The bandh is also expected to have total impact in states like Maharashtra, where Shiv Sena -- an ally of the BJP --has announced their support to the bandh.

RNRL, Reliance Power to consider merger on July 4

The boards of directors of Reliance Natural Resources Ltd. (RNRL) and Reliance Power Ltd. will meet on July 4, to consider a merger of the two anil dhirubhai ambani group (ADAG) companies. Earlier, media reports had suggested that RNRL and Reliance Power could merge, sending the shares of the two companies higher. The announcement is significant as it comes close on the heels of the two Ambani siblings rescinding a long-standing non-compete agreement, allowing them to expand into each other's sectors.

Also, last week Reliance Industries Ltd. (RIL) and RNRL signed a new gas supply master agreement (GSMA) pursuant to the judgment of the Supreme Court, dated May 7. RNRL said that it would now take appropriate steps requesting the Government of India for expeditious allocation of natural gas to facilitate implementation of the same. The price, quantity and the tenure of the natural gas to be supplied by RIL to RNRL from its KG basin block will be decided by the Government. However, some reports suggest that the new GSMA between the two companies entails supply of 28 mmscmd natural gas for 17 years at US$4.20 per mmbtu. RIL said that the GSMA is compliant with the Gas Utilization Policy and EGoM decisions.