ॐ ह्रीं श्रीं लक्ष्मीभयो नमः॥
Mid-Session-2(31-12-2010)
Nifty is trading above 6100 since morning today and also crossed resistance of 6120. Rally is very much on to test last tesistance of rally(6250-6320). Risky players may may ride on running horse and safe players may wait slowing down or stopping of horse(minor intraday cotrrection) for riding.
Mid-Session(31-12-2010)
Market heated immediately after opening today and will be safer to buy after some intraday correction
Pre-Open Market Outlook(31-12-2010)
Following lines were told yesterday:-
"6100 expected within 2/3 sessions"
Nifty traded most of the time within 6070-6085 and tested 6100 in last half hour yesterday as well as closed above 6100 but Nifty Jan Fut did not responded this last half hour sharp surge. Although Nifty Jan Fut moved up in last hour but completely under performed Nifty spot yesterday. Mentioned surge was seen in resistance range(6080-6100) and Nifty Jan Fut intraday charts of yesterday are indicating selling signals also therefore more consolidation required within 6080-6120 for fresh up moves. As most of the pivotal stocks intraday charts of yesterday are suggesting buying formations therefore more up moves are expected after some more consolidation today.
As more consolidation is fresh rally demand therefore it will be seen first within 6080-6120 today and fresh rally above 6100 expected in next Session,Week,Month & Year.
"6100 expected within 2/3 sessions"
Nifty traded most of the time within 6070-6085 and tested 6100 in last half hour yesterday as well as closed above 6100 but Nifty Jan Fut did not responded this last half hour sharp surge. Although Nifty Jan Fut moved up in last hour but completely under performed Nifty spot yesterday. Mentioned surge was seen in resistance range(6080-6100) and Nifty Jan Fut intraday charts of yesterday are indicating selling signals also therefore more consolidation required within 6080-6120 for fresh up moves. As most of the pivotal stocks intraday charts of yesterday are suggesting buying formations therefore more up moves are expected after some more consolidation today.
As more consolidation is fresh rally demand therefore it will be seen first within 6080-6120 today and fresh rally above 6100 expected in next Session,Week,Month & Year.
Trading Levels for 31-12-10
Nifty Spot Levels for 31-12-10
R3 6162
R2 6134
R1 6118
AVG 6090
S1 6074
S2 6046
S3 6030
Nifty Jan Futures Levels for 31-12-10
R3 6180
R2 6160
R1 6145
AVG 6125
S1 6110
S2 6090
S3 6075
Bank Nifty Jan Futures Levels for 31-12-10
R3 11842
R2 11790
R1 11735
AVG 11683
S1 11628
S2 11576
S3 11521
R3 6162
R2 6134
R1 6118
AVG 6090
S1 6074
S2 6046
S3 6030
Nifty Jan Futures Levels for 31-12-10
R3 6180
R2 6160
R1 6145
AVG 6125
S1 6110
S2 6090
S3 6075
Bank Nifty Jan Futures Levels for 31-12-10
R3 11842
R2 11790
R1 11735
AVG 11683
S1 11628
S2 11576
S3 11521
Mid-Session Outlook(30-12-2010)
Market slipped from higher levels on expected therefore following lines were told in Pre-Open Outlook:-
1- Voltality and little profit booking at higher levels may be seen
2- Fresh long positions should be created after completion of intraday corrections
Sentiment was heated today morning therefore cooling down was consolidation requirement and it is being happened. Intraday charts not showing distribution formation despite Nifty intraday trading low formation. Fresh consolidation expected and its signals are being seen also. As market has to prepare to cross next resistance(6080-6120) therefore trading near its lower band and fresh up moves are expected after 1/2 sessions fresh consolidations.
1- Voltality and little profit booking at higher levels may be seen
2- Fresh long positions should be created after completion of intraday corrections
Sentiment was heated today morning therefore cooling down was consolidation requirement and it is being happened. Intraday charts not showing distribution formation despite Nifty intraday trading low formation. Fresh consolidation expected and its signals are being seen also. As market has to prepare to cross next resistance(6080-6120) therefore trading near its lower band and fresh up moves are expected after 1/2 sessions fresh consolidations.
Rally after Correction Completion
Pre-Open Market Outlook(30-12-2010)
Intermediate term correction which begun from Deepawali Muhurrat session finished yesterday after 27 days range bound moves between 5690-6069. Although Nifty could not closed above range but last 2 sessions intraday consolidations and up moves patterns are suggesting that Nifty will sustain finally above 6069 and fresh rally will be seen now to test follwing resistances:-
1- 6080-6120
2- 6180-6195
3- 6250-6320(strong resistance)
As 27 sessions range bound move is being broken out therefore decisive rally and above mentioned 3rd resistance testing possibility can not be ruled out.
All trends are up now and 5th impulsive sub wave of wave 3 is confirmed yesterday and its targets are much above all time high but its calculations will be disclosed after crossing crucial resistances. Mentioned Waves structutes of Wave 3 is clearly shown in following EOD chart:-
1- Waves structutes of Wave 3 Chart:-
Sentiment will be heated today morning and Nifty has to cross immediate resistance range(6080-6120) for any fresh rally therefore consolidation requires within mentioned range. Voltality and little profit booking at higher levels may be seen but finally fresh rally above 6100 expected within 2/3 sessions. Fresh long positions should be created after completion of intraday corrections.
Today Green/Red/flat closing can not be guaranteed but fresh rally above 6100 expected within 2/3 sessions.
Intermediate term correction which begun from Deepawali Muhurrat session finished yesterday after 27 days range bound moves between 5690-6069. Although Nifty could not closed above range but last 2 sessions intraday consolidations and up moves patterns are suggesting that Nifty will sustain finally above 6069 and fresh rally will be seen now to test follwing resistances:-
1- 6080-6120
2- 6180-6195
3- 6250-6320(strong resistance)
As 27 sessions range bound move is being broken out therefore decisive rally and above mentioned 3rd resistance testing possibility can not be ruled out.
All trends are up now and 5th impulsive sub wave of wave 3 is confirmed yesterday and its targets are much above all time high but its calculations will be disclosed after crossing crucial resistances. Mentioned Waves structutes of Wave 3 is clearly shown in following EOD chart:-
1- Waves structutes of Wave 3 Chart:-
(Just click on chart for enlarged view)
Sentiment will be heated today morning and Nifty has to cross immediate resistance range(6080-6120) for any fresh rally therefore consolidation requires within mentioned range. Voltality and little profit booking at higher levels may be seen but finally fresh rally above 6100 expected within 2/3 sessions. Fresh long positions should be created after completion of intraday corrections.
Today Green/Red/flat closing can not be guaranteed but fresh rally above 6100 expected within 2/3 sessions.
Trading Levels for 30-12-10
Nifty Spot Levels for 30-12-10
R3 6149
R2 6108
R1 6084
AVG 6043
S1 6019
S2 5978
S3 5954
Nifty Dec Futures Levels for 30-12-10
R3 6149
R2 6111
R1 6090
AVG 6052
S1 6031
S2 5993
S3 5972
Bank Nifty Dec Futures Levels for 30-12-10
R3 11876
R2 11758
R1 11691
AVG 11573
S1 11506
S2 11388
S3 11321
R3 6149
R2 6108
R1 6084
AVG 6043
S1 6019
S2 5978
S3 5954
Nifty Dec Futures Levels for 30-12-10
R3 6149
R2 6111
R1 6090
AVG 6052
S1 6031
S2 5993
S3 5972
Bank Nifty Dec Futures Levels for 30-12-10
R3 11876
R2 11758
R1 11691
AVG 11573
S1 11506
S2 11388
S3 11321
Mid-Session Outlook-2(29-12-2010)
Following lines were told for today market:-
"As per my view Indian markets are well prepared for upmoves and sustaining above 6040 will be confirmation of next rally. Expected that rally will begin today and nifty will cross as well as sustain above 6040 now. Green closing after positive opening expected today"
Nifty is trading above 6040 with intraday consolidation patterns today therefore it is confirming correction completion within 27 sessions range bound moves and fresh rally as well.
"As per my view Indian markets are well prepared for upmoves and sustaining above 6040 will be confirmation of next rally. Expected that rally will begin today and nifty will cross as well as sustain above 6040 now. Green closing after positive opening expected today"
Nifty is trading above 6040 with intraday consolidation patterns today therefore it is confirming correction completion within 27 sessions range bound moves and fresh rally as well.
Mid-Session Outlook(29-12-2010)
As Indian markets are trading within resistance ranges therefore under performing Asian markets. Intraday patterns are suggesting consolidations at this moment and expected that resistances will be cleared and fresh upmoves will be seen now after some more buying today and tomorrow.
NIFTY-DEC F&O-1ST BUYING TRADE OF 28-12-2010-COVERING
NIFTY DEC F & O(BOUGHT ON 28-12-2010)-COVER AND BOOK PROFIT IMMEDIATELY-CMP-6033(WE MAY BUY AGAIN BUT FIRST COVER NOW)
Rally above 6000 Expected
Pre-Open Market Outlook(29-12-2010)
Nifty is hovering around 5980-6040 for the last 6 sessions and it has been seen that Nifty traded more than 200 points after breaking out of this range 6 times previously therefore minimum such moves should be expected after its break out. Meaning on mentioned range break out is as follows:-
1- Breaking down and sustaining below 5980 will mean continuation of correction to test those lower support and fibonacci retracement levels which has already been posted in last 3 sessions outlooks.
2-Breaking out and firstly sustaining above 6040 and then sustaining above will mean correction completion confirmation to test those resistances which have already been posted in last 3 sessions outlooks.
1-6 Times Trend Decider Range- 5980-6040 chart:-
(Just click on chart for enlarged view)
Intraday charts showed consolidation patterns immediately after opening yesterday therefore following lines were told after 1st hour yesterday in Mid-session outlook:-
"intraday charts of first hour showed consolidation patterns. Up moves will be considered after sustaining above 6000 today"
Although Nifty could not sustain above 6000 yesterday but intraday charts of yesterday are suggesting whole day consolidation and expected that Nifty will cross and sustain above 6000 today. As good consolidation therefore yesterday intraday range(5988-6005) will proove strong support in the coming sessions.
1- Intaday Buying Patterns on 28-12-2010 chart:-
(Just click on chart for enlarged view)
Following technical indicators are also signalling upmoves:-
1- All the short term EMA(8,21,55,200) are above longer term EMA.
2- MACD line is above Average line and both are rising.
3- ROC & RSI- Both are in positive zone.
4- Short term indicators have cooled down in overbought zone.
As per my view Indian markets are well prepared for upmoves and sustaining above 6040 will be confirmation of next rally. Expected that rally will begin today and nifty will cross as well as sustain above 6040 now. Green closing after positive opening expected today.
Nifty is hovering around 5980-6040 for the last 6 sessions and it has been seen that Nifty traded more than 200 points after breaking out of this range 6 times previously therefore minimum such moves should be expected after its break out. Meaning on mentioned range break out is as follows:-
1- Breaking down and sustaining below 5980 will mean continuation of correction to test those lower support and fibonacci retracement levels which has already been posted in last 3 sessions outlooks.
2-Breaking out and firstly sustaining above 6040 and then sustaining above will mean correction completion confirmation to test those resistances which have already been posted in last 3 sessions outlooks.
1-6 Times Trend Decider Range- 5980-6040 chart:-
Intraday charts showed consolidation patterns immediately after opening yesterday therefore following lines were told after 1st hour yesterday in Mid-session outlook:-
"intraday charts of first hour showed consolidation patterns. Up moves will be considered after sustaining above 6000 today"
Although Nifty could not sustain above 6000 yesterday but intraday charts of yesterday are suggesting whole day consolidation and expected that Nifty will cross and sustain above 6000 today. As good consolidation therefore yesterday intraday range(5988-6005) will proove strong support in the coming sessions.
1- Intaday Buying Patterns on 28-12-2010 chart:-
Following technical indicators are also signalling upmoves:-
1- All the short term EMA(8,21,55,200) are above longer term EMA.
2- MACD line is above Average line and both are rising.
3- ROC & RSI- Both are in positive zone.
4- Short term indicators have cooled down in overbought zone.
As per my view Indian markets are well prepared for upmoves and sustaining above 6040 will be confirmation of next rally. Expected that rally will begin today and nifty will cross as well as sustain above 6040 now. Green closing after positive opening expected today.
Trading Levels for 29-12-10
Nifty Spot Levels for 29-12-10
R3 6039
R2 6025
R1 6010
AVG 5996
S1 5981
S2 5967
S3 5952
Nifty Dec Futures Levels for 29-12-10
R3 6058
R2 6042
R1 6028
AVG 6012
S1 5998
S2 5982
S3 5968
Bank Nifty Dec Futures Levels for 29-12-10
R3 11586
R2 11548
R1 11506
AVG 11468
S1 11426
S2 11388
S3 11346
R3 6039
R2 6025
R1 6010
AVG 5996
S1 5981
S2 5967
S3 5952
Nifty Dec Futures Levels for 29-12-10
R3 6058
R2 6042
R1 6028
AVG 6012
S1 5998
S2 5982
S3 5968
Bank Nifty Dec Futures Levels for 29-12-10
R3 11586
R2 11548
R1 11506
AVG 11468
S1 11426
S2 11388
S3 11346
NIFTY-DEC F&O-1ST BUYING TRADE OF 28-12-2010-TRADE
NIFTY(DEC FUT-BUY-POSITIONAL)SL-5987-TGT-6074-CMP-6014
NIFTY(DEC CALL OPTION-BUY-POSITIONAL)-S.P.FOR CALL-6000-NIFTY(DEC FUT)-RATES ARE FOR-SL-5987-TGT-6074 FOR ALL OPTIONS-CMP-6014
NIFTY(DEC CALL OPTION-BUY-POSITIONAL)-S.P.FOR CALL-6000-NIFTY(DEC FUT)-RATES ARE FOR-SL-5987-TGT-6074 FOR ALL OPTIONS-CMP-6014
Mid-Session Outlook(28-12-2010)
Indian markets out performing global markets today morning and intraday charts of first hour showed consolidation patterns. Up moves will be considered after sustaining above 6000 today.
Pre-Open Market Outlook(28-12-2010)
Indian markets moved up last Friday despite 3 previous sessions selling patterns( 5958-6024) on following bullish news:-
"Finance ministry fresh missive to the labour ministry for investment a part of the Rs 5 lakh crore corpus of the employees’ provident fund in stock markets"
As mentioned up move was news based after ignoring selling formations therefore following lines were told for yesterday:-
"As last Friday up move was on the back of positive news therefore sustaining above the top(6069) of last 25 sessions is must for confirmation of break out"
As doubt was shown and same was seen yesterday. Indian markets slipped and closed within last week 3 selling sessions range at 5998 and last 26 sessions range bound move of 5690-6069 is still maintained. Selling patterns within 6020-6045 yesterday and selling was already seen in the last week therefore next trend confirmation first range is 5940-6045. Until fresh consolidation will not happen till then firstly 6045 and then 6069 will not cross to confirm decisive up trend. As selling patterns exists therefore down moves will be faster and sustaining above the top(6069) of last 26 sessions is must for confirmation of break out and up move"
Long term and short term trends are up and intermediate term is sideways for the last 26 sessions. As selling therefore firstly down move within last 5 sessions range(5940-60450) expected and also whole day trading within this range will be seen today. Although market is not sustaining beyond previous short term ranges but breaking out/down daily. As moved up was seen after breaking down last Friday and moved down after breaking out yesterday therefore technical positions changes sharply in such intraday volatile moves. Until market does not sustain beyond any crucial levels till then short term views within mentioned ranges should be maintained. Follwing ranges and levels should be watched for next immediate confirmations:-
1- For up move- Firstly closing above 6015 and then sustaining above 6069.
2- For up move- First break out range is 5940-6045
3- For down move- 1st break down range is 5960-6045
4- For down move- 2nd support at- 5870
5- For down move- 3rd support at- 5820
6- For down move- 4th support at- 5730
7- For down move- 5th support at- 5690
Firstly down move expected and then next moves will be decided according to break out/down and intraday charts formations.
As I have been busy therefore could not post Weekly of this week but above mentioned 7 levels and ranges will give direction in whole week.
"Finance ministry fresh missive to the labour ministry for investment a part of the Rs 5 lakh crore corpus of the employees’ provident fund in stock markets"
As mentioned up move was news based after ignoring selling formations therefore following lines were told for yesterday:-
"As last Friday up move was on the back of positive news therefore sustaining above the top(6069) of last 25 sessions is must for confirmation of break out"
As doubt was shown and same was seen yesterday. Indian markets slipped and closed within last week 3 selling sessions range at 5998 and last 26 sessions range bound move of 5690-6069 is still maintained. Selling patterns within 6020-6045 yesterday and selling was already seen in the last week therefore next trend confirmation first range is 5940-6045. Until fresh consolidation will not happen till then firstly 6045 and then 6069 will not cross to confirm decisive up trend. As selling patterns exists therefore down moves will be faster and sustaining above the top(6069) of last 26 sessions is must for confirmation of break out and up move"
Long term and short term trends are up and intermediate term is sideways for the last 26 sessions. As selling therefore firstly down move within last 5 sessions range(5940-60450) expected and also whole day trading within this range will be seen today. Although market is not sustaining beyond previous short term ranges but breaking out/down daily. As moved up was seen after breaking down last Friday and moved down after breaking out yesterday therefore technical positions changes sharply in such intraday volatile moves. Until market does not sustain beyond any crucial levels till then short term views within mentioned ranges should be maintained. Follwing ranges and levels should be watched for next immediate confirmations:-
1- For up move- Firstly closing above 6015 and then sustaining above 6069.
2- For up move- First break out range is 5940-6045
3- For down move- 1st break down range is 5960-6045
4- For down move- 2nd support at- 5870
5- For down move- 3rd support at- 5820
6- For down move- 4th support at- 5730
7- For down move- 5th support at- 5690
Firstly down move expected and then next moves will be decided according to break out/down and intraday charts formations.
As I have been busy therefore could not post Weekly of this week but above mentioned 7 levels and ranges will give direction in whole week.
Trading Levels for 28-12-10
Nifty Spot Levels for 28-12-10
R3 6087
R2 6066
R1 6032
AVG 6011
S1 5977
S2 5956
S3 5922
Nifty Dec Futures Levels for 28-12-10
R3 6104
R2 6083
R1 6047
AVG 6026
S1 5990
S2 5969
S3 5933
Bank Nifty Dec Futures Levels for 28-12-10
R3 11670
R2 11620
R1 11550
AVG 11500
S1 11430
S2 11380
S3 11310
R3 6087
R2 6066
R1 6032
AVG 6011
S1 5977
S2 5956
S3 5922
Nifty Dec Futures Levels for 28-12-10
R3 6104
R2 6083
R1 6047
AVG 6026
S1 5990
S2 5969
S3 5933
Bank Nifty Dec Futures Levels for 28-12-10
R3 11670
R2 11620
R1 11550
AVG 11500
S1 11430
S2 11380
S3 11310
Market Outlook(27-12-2010)
Nifty traded most of the time within 5955-6024 in last week. Selling seen in 3 days and Indian markets surged sharp last Friday after following news in media and Economic times website:-
News at 11:40am on 24-12-2010 economictimes.com:-"The finance ministry has shot off a fresh missive to the labour ministry asking it to invest a part of the Rs 5 lakh crore corpus of the employees’ provident fund savings in stock markets"
Link of the news is as follows:-
http://economictimes.indiatimes.com/news/economy/finance/finance-ministry-again-asks-labour-ministry-to-invest-part-of-epf-in-markets/articleshow/7153801.cms
As 3 days selling therefore Nifty firstly slipped,got support below 27% retracement level,almost tested and closed near the top of the week. As last Friday up move was on the back of positive news therefore sustaining above the top(6069) of last 25 sessions is must for confirmation of break out and intermediate term trend turning upward. Mentioned last Friday news is strong and its coming into being will mean strong rally in Indian markets after generation of huge investible funds. Break out will mean decisive strong rally toward all time high after clearing following reistances:-
1- 6040-6070
2- 6080-6120
3- 6180-6195
4- 6250-6320(strong resistance)
News at 11:40am on 24-12-2010 economictimes.com:-"The finance ministry has shot off a fresh missive to the labour ministry asking it to invest a part of the Rs 5 lakh crore corpus of the employees’ provident fund savings in stock markets"
Link of the news is as follows:-
http://economictimes.indiatimes.com/news/economy/finance/finance-ministry-again-asks-labour-ministry-to-invest-part-of-epf-in-markets/articleshow/7153801.cms
As 3 days selling therefore Nifty firstly slipped,got support below 27% retracement level,almost tested and closed near the top of the week. As last Friday up move was on the back of positive news therefore sustaining above the top(6069) of last 25 sessions is must for confirmation of break out and intermediate term trend turning upward. Mentioned last Friday news is strong and its coming into being will mean strong rally in Indian markets after generation of huge investible funds. Break out will mean decisive strong rally toward all time high after clearing following reistances:-
1- 6040-6070
2- 6080-6120
3- 6180-6195
4- 6250-6320(strong resistance)
Trading Levels for 27-12-10 & Next Week
Nifty Spot Levels for 27-12-10
R3 6116
R2 6066
R1 6039
AVG 5989
S1 5962
S2 5912
S3 5885
Nifty Dec Futures Levels for 27-12-10
R3 6138
R2 6089
R1 6063
AVG 6014
S1 5988
S2 5939
S3 5913
Bank Nifty Dec Futures Levels for 27-12-10
R3 11748
R2 11656
R1 11595
AVG 11503
S1 11442
S2 11350
S3 11289
Nifty Spot Weekly Levels (27 Dec to 31 Dec 2010)
R3 6181
R2 6102
R1 6057
AVG 5978
S1 5933
S2 5854
S3 5809
R3 6116
R2 6066
R1 6039
AVG 5989
S1 5962
S2 5912
S3 5885
Nifty Dec Futures Levels for 27-12-10
R3 6138
R2 6089
R1 6063
AVG 6014
S1 5988
S2 5939
S3 5913
Bank Nifty Dec Futures Levels for 27-12-10
R3 11748
R2 11656
R1 11595
AVG 11503
S1 11442
S2 11350
S3 11289
Nifty Spot Weekly Levels (27 Dec to 31 Dec 2010)
R3 6181
R2 6102
R1 6057
AVG 5978
S1 5933
S2 5854
S3 5809
Rs 5 lakh crore Corpus Investment in Stock Markets News triggered Sharp Rally Today
The finance ministry has shot off a fresh missive to the labour ministry asking it to invest a part of the Rs 5 lakh crore corpus of the employees’ provident fund savings in stock markets.
Sharp surge in Indian markets was due to above news today
Full news with link of this news is posted below.
Sharp surge in Indian markets was due to above news today
Full news with link of this news is posted below.
Finance Ministry again asks labour ministry to invest part of EPF in markets
NEW DELHI: The finance ministry has shot off a fresh missive to the labour ministry asking it to invest a part of the Rs 5 lakh crore corpus of the employees’ provident fund savings in stock markets.
In a recent letter, North Block has categorically ruled out providing any guarantee on returns on such investments, but said safeguards could be built to minimise risks and maximise gains for subscribers.
“The finance ministry’s refusal to guarantee returns continues to worry us, but we are willing to look at the suggestions made,” a labour ministry official told ET. The official did not reveal the details of the investment pattern suggested by North Block.
The finance ministry had earlier proposed that the EPF organisation could set aside 15% of funds for investments in the stock market and need not seek a nod from the Central Board of Trustees, or CBT, the policymaking body of the employees’ provident fund organisation, or EPFO.
The labour ministry is, however, clear that it cannot decide on the issue unilaterally, sidestepping the Central Board of Trustees. The EPFO, which manages the provident fund savings of approximately 4.7 crore organised sector workers, has steadfastly declined to invest provident fund accumulations in equities.
Following a decision by the trustees, Labour Secretary PC Chaturvedi had written to the finance ministry that it would be willing to do so, if the finance ministry guaranteed safety of investments and assured some minimum return on such investments. “We will place the suggestions made by the finance ministry before the CBT, which will take a final call on the matter,” the official said.
The EPFO has been giving 8.5% return on funds annually since 2005-06, which rose to 9.5% this year after it disbursed some unaccounted money in the fund. The fund has a corpus of Rs 3 lakh crore, and private trustees, which follow the fund’s investment pattern, have another Rs 2 lakh crore.
The finance ministry has argued investing a portion of the Rs 5 lakh crore EPF corpus in stocks would help the fund generate higher returns than the government-backed securities that the fund currently invests in. North Block had pointed out that the new pension scheme, or NPS, which invested part of the money in stock markets, earned a much higher 14.5% return last year.
The EPFO has reasoned that it cannot invest in equities because it is required to generate and credit income to account balances every year.
The labour ministry also argued that both schemes cannot be compared as NPS keeps money till retirement while employees are allowed to withdraw money from provident fund for various purposes like education, marriage, etc.
“These are real payouts we have to make. Roughly about Rs 20,000 crore is paid out every year to almost 60-80 lakh people,” the official said.
Dhirendra Kumar of Value Research does not buy the logic. “It is more risky not to invest in equities because returns on government-backed securities could go down to very low levels and it would be more difficult for the EPFO to explain a lower, say a 5.5%, return,” he said.
In a recent letter, North Block has categorically ruled out providing any guarantee on returns on such investments, but said safeguards could be built to minimise risks and maximise gains for subscribers.
“The finance ministry’s refusal to guarantee returns continues to worry us, but we are willing to look at the suggestions made,” a labour ministry official told ET. The official did not reveal the details of the investment pattern suggested by North Block.
The finance ministry had earlier proposed that the EPF organisation could set aside 15% of funds for investments in the stock market and need not seek a nod from the Central Board of Trustees, or CBT, the policymaking body of the employees’ provident fund organisation, or EPFO.
The labour ministry is, however, clear that it cannot decide on the issue unilaterally, sidestepping the Central Board of Trustees. The EPFO, which manages the provident fund savings of approximately 4.7 crore organised sector workers, has steadfastly declined to invest provident fund accumulations in equities.
Following a decision by the trustees, Labour Secretary PC Chaturvedi had written to the finance ministry that it would be willing to do so, if the finance ministry guaranteed safety of investments and assured some minimum return on such investments. “We will place the suggestions made by the finance ministry before the CBT, which will take a final call on the matter,” the official said.
The EPFO has been giving 8.5% return on funds annually since 2005-06, which rose to 9.5% this year after it disbursed some unaccounted money in the fund. The fund has a corpus of Rs 3 lakh crore, and private trustees, which follow the fund’s investment pattern, have another Rs 2 lakh crore.
The finance ministry has argued investing a portion of the Rs 5 lakh crore EPF corpus in stocks would help the fund generate higher returns than the government-backed securities that the fund currently invests in. North Block had pointed out that the new pension scheme, or NPS, which invested part of the money in stock markets, earned a much higher 14.5% return last year.
The EPFO has reasoned that it cannot invest in equities because it is required to generate and credit income to account balances every year.
The labour ministry also argued that both schemes cannot be compared as NPS keeps money till retirement while employees are allowed to withdraw money from provident fund for various purposes like education, marriage, etc.
“These are real payouts we have to make. Roughly about Rs 20,000 crore is paid out every year to almost 60-80 lakh people,” the official said.
Dhirendra Kumar of Value Research does not buy the logic. “It is more risky not to invest in equities because returns on government-backed securities could go down to very low levels and it would be more difficult for the EPFO to explain a lower, say a 5.5%, return,” he said.
NIFTY-DEC F&O-1ST SHORTING TRADE OF 23-12-2010-COVERING
NIFTY DEC F & O(SHORTED ON 23-12-2010)-COVER IMMEDIATELY(WE MAY SHORT AGAIN BUT FIRST COVER)-CMP-6010
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