Markets on a roll

It’s been so far so good for the markets in 2012. There is no sign of a reversal yet, and this is being read as a sign of good times to come. The Supreme Court judgment cancelling 122 licenses issues of telecom players did threaten to spoil the environment, but that too was largely overlooked by the market.

Overall, it has been a fairly decent fortnight, with both the Sensex and Nifty going up by four per cent. All the other broader indices too were up by an average five per cent over the fortnight. Mid- and Small-Cap stocks have particularly been in favour, which is visible in the six per cent rise of the BSE Mid-Cap Index and the seven per cent rise of the BSE Small-Cap Index.

Contrary to expectations, the European market seems to be on a pretty strong footing. The FTSE was among the best performers during the past fortnight, with almost a three per cent rise. Japan followed closely, with the Nikkei rising by 2.62 per cent, while the Dow Jones Industrial Average rose by 1.33 per cent over the fortnight. China too fared reasonably, the Shanghai Composite having gone up by 1.23 per cent.

The corporate results are almost all done with, without making any remarkable impact on the markets. The state elections, the Union Budget and of course, the happenings in Europe will be the next set of triggers for the market. For now it looks like all’s well that ends well.

In Comes LEIPS III

Encouraged by the positive response and the robust performance of the Liquidity Enhancement Incentive Programme (LEIPS) of the bourse for its Derivatives segment, the BSE (formerly Bombay Stock Exchange) is now focussing on developing its Options market. It has announced a separate liquidity enhancement programme (LEIPS-III) for its Options sub-segment.

LEIPS III, the third programme in the series, focusses on Options contracts on the Sensex (India’s most tracked market index), with a view to building a healthy Options book in the Sensex. *The programme defines two levels of market making. Level 1 Quote Obligations is similar to the Market Maker obligations in the prevailing LEIPS programme. In addition, the Market Maker can also maintain Level 2 Quote Obligations, wherein the Market Maker will be required to make markets for 95 per cent of the trading time, with tighter spreads. The intention is to create a deep and tight order book in the Sensex Options contracts. The Market Makers fulfilling the Level 2 Quote Obligations will be entitled to receive up to Rs 2 lakh per day. The methodology of incentive payments has been changed from ‘first come first serve’ basis to ‘pro-rata’ basis.

Additionally, to attract greater retail customer participation, a sum of Rs 100 is being paid to each registered customer (registered UCC) trading for the first time in the BSE F&O segment. These payments are made to the members based on distinct customers who have traded. The BSE has also started circulating information brochures, flyers, etc. to retail brokers through DPs as a part of its enhanced marketing efforts.

To extend its footprint, the BSE has deployed representatives in Tier II and III cities like Surat and Jaipur, and plans to increase its presence in a few other cities. The bourse already has regional investor service centres in Delhi, Ahmedabad, Chennai, Kochi, Kolkata, Hyderabad and Rajkot, which is one of the initiatives taken to meet investors’ needs across various regions of India.

The exchange has been regularly amending the terms and conditions of the LEIPS programme based on its overall progress, market feedback and policy changes. Watch this space for the latest at BSE.

*To know more about LEIPS, log on to - http://www.bseindia.com/deri/HotLinks/AboutLeips.aspx?L=2&id=hd5&Lid=0