RBI Brings Repo Rate Relief

The markets remained rather lacklustre for most part of the past fortnight. It has been more than a month now since the markets have witnessed any movement, mainly due to the lack of positive triggers. The Sensex and Nifty went down by 0.54 per cent and 0.43 per cent respectively.

In our last issue, we had mentioned that the markets will look forward to India Inc’s results for the fourth quarter and FY12. The initial results, like those of Infosys, have been a clear disappointment. The IT major not only presented a weak set of results for FY12, but also provided a lower guidance for the coming quarter and the year ahead.

However, the most significant event that occurred towards the end of the fortnight was the RBI’s move to cut the repo rate by 50 basis points to eight per cent. This was clearly against the consensus, which was expecting the rate to be cut by 25 basis points at the most. Though it brings in some much-sought relief for the markets, we are yet to see any meaningful impact on the positive side.

On the global front too, the markets have not witnessed any sharp movements, with the European and US markets having closed in the red during the last fortnight. Except for China, which closed in the green, there was little to cheer in Asia too.

As the corporate results trickle in, they will provide cues for the Indian markets going forward. 

BSE's LEIPS III Continues To Improve

The response to the BSE’s Liquidity Enhancement Incentive Programme (LEIPS III), which focusses on the Options contracts on the Sensex with a view to build a healthy Options book, has been excellent.

The objective behind this programme is to create a deep and tight order book in the Sensex Options contracts. As India’s premier Stock Exchange, the BSE has always tried to promote initiatives that help investors create wealth in an objective and meaningful manner.

The Sensex, which is India's bellwether index and the barometer of the Indian capital markets, is witnessing healthy participation in the Derivatives segment. The BSE’s LEIPS III initiative has seen a promising response, with the daily Sensex Futures & Options (F&O) volumes crossing Rs 18500 crore.

This is the first such attempt in India, aimed at creating lasting and self-sustaining liquidity in the BSE's Derivatives segment. The success of this programme can be gauged from the extremely positive and encouraging start that it has met. More than 400 members are now registered on the BSE derivatives segment, and over 120 brokers are participating in this programme on a daily basis.

Some highlights of the programme that reflect its success include the following:

• For the first time in the history of the BSE, the turnover in its Derivatives segment was more than that in the Equities segment.
• For the first time, the Sensex F&O volumes crossed Rs 18500 crore.
• An open interest of more than Rs 1350 crore reflects widespread participation.

With an end-of-month expiry cycle, investors can now avail various other benefits while trading in Sensex Options contracts:

• High liquidity - Comparable with other derivatives markets
• Assured liquidity - Two way quotes by Market Makers
• Lower transaction fees - An opportunity to save with every transaction

A vibrant and liquid F&O market on the BSE will certainly help investors in benefiting from trading in the Sensex, which is the most tracked index on the Indian market scene. Watch this space for more updates.

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