Key benchmark indices trimmed losses in afternoon trade. The barometer index, BSE Sensex, was down 35.68 points or 0.22%, up 68.27 points from the day`s low and off 26.62 points from the day`s high. Weakness in Asian stocks weighed on sentiment. Shares of the upstream oil firms and PSU OMCs fell after oil secretary G C Chaturvedi on Thursday, 24 May 2012 said that the empowered group of ministers (EGoM) meeting to decide raising diesel, kerosene and cooking gas rates is unlikely to be held on Friday, 25 May 2012. But, GAIL (India) bucked the trend after the company said it has signed a gas sales & purchase agreement (GSPA) for purchase of gas from Turkmenistan to be transported through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline.
Metal stocks were mixed. Realty shares rose after recent fall. Index heavyweight Reliance Industries (RIL) hovered in negative zone. Small-car maker Maruti Suzuki India fell for second straight session on worries the latest steep hike in petrol prices may hit car sales. The market breadth was positive.
The market edged lower amid initial volatility. The market trimmed losses later. Intraday recovery witnessed in early trade proved short lived as key benchmark indices dropped to hit fresh intraday lows in morning trade. A bout of volatility was witnessed as key benchmark indices cut losses after hitting fresh intraday lows in mid-morning trade. The market further came off lows in early afternoon trade.
At 12:25 IST, the BSE Sensex was down 35.68 points or 0.22% to 16,186.62. The index fell 103.95 points at the day`s low of 16,118.35 in mid-morning trade. The index declined 9.06 points at the day`s high of 16,213.24 in opening trade.
The S&P CNX Nifty was down 7.35 points or 0.01% to 4,914.05. The index hit a high of 4,915.25 and a low of 4,889.35 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,308 shares advanced and 1,121 shares declined. A total of 129 shares were unchanged.
The total turnover on the BSE amounted to Rs 766 crore by 12:20 IST compared with Rs 562 crore by 11:20 IST
Among the 30-share Sensex pack, 16 declined while the rest gained. M&M India (down 1.71%), HDFC (down 1.37%) and Hindustan Unilever (down 0.75%) edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) shed 0.81% to Rs 690.80. The company early this week said it has selected Phillips 66`s E-Gas technology for its planned gasification plants at Jamnagar in Gujarat. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas utilizing the E-Gas technology, RIL said in a statement. The synthesis gas will be used as a feedstock for a new chemical complex and will fuel the Jamnagar refinery`s existing gas turbine power generation units, RIL said in a statement.
RIL last week said that as of 15 May 2012, the company bought back 1.41 crore shares for a total consideration of Rs 1028.71 crore.
Moody`s Investors Service on 14 May 2012, said that the cut by RIL in its proven gas reserves estimate is credit negative for the company as it confirms the technical difficulties it faces in the exploration and production business from declining output and lower cash flows. RIL had last week revised downward its assessment of its proven natural gas reserves by 6.7% and its proven developed reserves by 36.2%. The revisions follow nearly two years of declining production at its largest gas field, KG-D6, a deep-sea gas field in the Krishna-Godavari (KG) basin on the east coast of India.
NTPC rose 0.14%. During market hours today, 25 May 2012, the company said that the unit 2 of 660 megawatts (MW) of Sipat Super Thermal Power Station Stage-I is declared for commercial operation with effect from midnight, 25 May 2012. With this the commercial capacity of Sipat Stage-I is 1,320 megawatts and that of NTPC group is 36,014 megawatts.
Metal stocks were mixed. Sterlite Industries India (up 1.57%), Tata Steel (up 1.37%), Sail (up 0.93%), Sesa Goa (up 0.86%) and Hindustan Zinc (up 0.78%), gained.
Jindal Steel & Power (down 1.55%), Nalco (down 0.09%) and JSW Steel (down 0.73%), declined.
Hindalco Industries fell 0.23% after the company`s US unit Novelis reported a net loss of $107 million attributable to common shareholders for the quarter ended 31 March 2012 as against net profit of $50 million during the quarter ended 31 March 2011. Net sales declined 11.89% to $2.608 billion in Q4 March 2012 over Q4 March 2011.
Novelis said adjusted EBITDA declined 16.78% to $233 million in Q4 March 2012 over Q4 March 2011. The decrease in EBITDA for the quarter and the year were primarily driven by weaker demand, partially offset by higher conversion premiums, Novelis said in a statement. "As expected we saw demand recovery from the third quarter and expect this trend to continue into fiscal 2013," said Steve Fisher, Chief Financial Officer for Novelis.
Novelis said that the management continues to expect a market recovery going forward and as a result expects FY 2013 adjusted EBITDA to be above FY 2012 level of $1.05 billion. In addition, it expects FY 2013 free cash flow before capital expenditures to be between $600-700 million and capital expenditure of approximately $650-700 million primarily focused on its global expansion projects in Brazil, South Korea, China and the United States.
Realty shares rose after recent fall as realty major Unitech has issued a positive outlook at the time of announcement of Q4 March 2012 results last week. HDIL (up 1.85%), DLF (up 1.65%), Orbit Corporation (up 4.35%), Parsvnath Developers (up 0.56%), Indiabulls Real Estate (up 2.74%) and Unitech (up 0.47%) edged higher.
Shares of the upstream oil firms and PSU OMCs fell after oil secretary G C Chaturvedi on Thursday, 24 May 2012 said that the empowered group of ministers (EGoM) meeting to decide raising diesel, kerosene and cooking gas rates is unlikely to be held on Friday, 25 May 2012.
Oil exploration giant ONGC fell 0.29%, with the stock declining after Thursday`s 5.74% rally. Oil India fell 0.26%. Shares of upstream oil firms had risen across the board on Thursday as concerns about their subsidy sharing burden eased on reports an Empowered Group of Ministers (EGoM) will discuss raising diesel and liquified petroleum gas prices at a meeting on Friday, 25 May 2012.
GAIL (India) rose 1.09%. The company said it has signed a gas sales & purchase agreement (GSPA) for purchase of gas from Turkmenistan to be transported through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline. The gas source for the pipeline would be Galkynysh (formerly Osman-Yolotan) in Turkmenistan which is estimated to have gas reserves of 13 to 21 TCM (Best estimates of 16 TCM). The 1680 km, 56 inch diameter pipeline will originate at South Yolotan-Osman in Turkmenistan and will traverse 145 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan before entering India at Fazilka in Punjab.
Turkmenistan would be exporting 90 MMSCMD through this pipeline of which 14 MSCMD would be taken by Afghanistan and 38 MMSCMD each by India and Pakistan. The pipeline will be built at an estimated investment of about $7.6 billion, GAIL (India) said in a statement.
PSU OMCs fell after oil secretary G C Chaturvedi on Thursday, 24 May 2012, said that the empowered group of ministers (EGoM) meeting to decide raising diesel, kerosene and cooking gas rates is unlikely to be held on Friday, 25 May 2012. HPCL (down 1.68%) and Indian Oil Corporation (down 2.18%) declined. BPCL rose 0.43%.
"There is no EGoM meeting on Friday," Chaturvedi told reporters on Thursday putting rest the market speculation that the ministerial panel would raise prices of regulated fuels from Friday. Chaturvedi said PSU OMCs were incurring huge revenue losses due to high international crude oil prices and depreciation or the rupee and the ministerial panel would meet soon to consider revising rates of regulated fuel products. "No date has been fixed as yet," he said.
State-run oil marketing firms raised petrol prices by Rs 7.50 per litre to Rs 73 per litre effective midnight 24 May 2012. It was the steepest ever increase in petrol prices. The revision in petrol prices was due to a setback in rupee against the dollar which led to jump in oil import bill for state-run oil refining-cum-marketing firms. A weak rupee makes imports costlier. Both BJP and Left have reportedly called for a Bharat Bandh on 31 May 2012 to protest against the steep hike in petrol prices.
The Uttarakhand state government on Thursday decided to waive off VAT on the increased amount, providing a relief of Rs 1.87 per litre to the people of the state. The Congress led UDF government in Kerala has also waived the sales tax on the latest petrol price hike, saying it was committed to bringing some relief to the people affected by the latest increase.
Small-car maker Maruti Suzuki India lost 1.95% to Rs 112.90 and was the top loser from the Sensex pack. The stock extended Thursday`s 0.78% decline triggered by worries the latest steep hike in petrol prices may hit car sales.
Auto major Tata Motors slipped 0.82% on euro-zone debt worries. Tata Motors derives almost two-third of its revenue from its British unit Jaguar Land Rover. Tata Motors Group global sales, including Jaguar Land Rover, remained flat at 87,377 units in April 2012, Tata Motors said on 15 May 2012. Global sales of all commercial vehicles -- Tata, Tata Daewoo and the Tata Hispano Carrocera range -- were 38,008 units in April 2012, lower by 8%.
Global sales of all passenger vehicles were at 49,369 units in April 2012, higher by 7%. Global sales of Tata passenger vehicles and the distribution offtake in India of Fiat cars were at 24,226 units in April 2012, lower by 9%. Global sales of Jaguar Land Rover in April 2012 were at 25,143 vehicles, higher by 29% over April 2011. Jaguar sales for the month were 3,603 units, higher by 17%, while Land Rover sales were 21,540 units, higher by 32%.
Voltas jumped 8.28% after consolidated net profit rose 2.7% to Rs 103.81 crore on 5.8% decline in net sales to Rs 1573.46 crore in Q4 March 2012 over Q4 March 2011. The result was announced after trading hours on Thursday, 24 May 2012.
On the macro front, if the government raises diesel and cooking gas prices, the price hike will help lift some pressure over its weak finances, which are strained by high food and fuel subsidies. In Union Budget 2012-13 unveiled in parliament in mid-March 2012, Finance Minister Pranab Mukherjee had said that the government intends to bring down subsidy to 1.75% of GDP in the next 3 years. The government has proposed to keep the subsidy bill under 2% of GDP in 2012-13, he had said at that time.
Foreign institutional investors (FIIs) sold shares worth a net Rs 105.73 crore on Thursday, 24 May 2012, as per provisional figures.
Monsoon rains arrived over the Andaman Sea on Wednesday, 23 May 2012, after a delay of about three days, according to the India Meteorological Department. Conditions are favorable for a further advance of the southwest monsoon into more parts of the Bay of Bengal and remaining parts of the Andaman Sea during the next two to three days, the weather department said. The monsoon usually reaches the Andaman Sea by 20 May 2012, but this time rainfall was slightly delayed due to erratic weather patterns. After arriving over the southern state of Kerala, the monsoon gradually covers most of the central and northern grain- and oilseed-producing regions by July. Last month, the weather department forecast that rainfall this year would be normal.
The Organization for Economic Cooperation and Development (OECD) in a report released on Tuesday, 22 May 2012, suggested that it would be prudent for the Reserve Bank of India (RBI) to wait for clear signs that inflation is falling back to more comfortable levels before reducing interest rates. The OECD report said the government needs to narrow its fiscal deficit to support monetary policy and ensure a sustained drop in inflationary pressures. The government`s privatization program is way behind target and is now being held back by softening business confidence and falling equity prices, the report said. The report said India`s economic growth is likely to remain subdued given the weakening global economy.
In a White Paper on Black Money released by the government on Monday, 21 May 2012, the government said that money shifted out of India over the years through illicit outflows might have returned to India through foreign direct investment (FDI), participatory notes (PNs) and by way of misuse of global depository receipts (GDRs).
Moody`s Investors Service on 14 May 2012 downgraded to Baa3 from Baa2 the foreign currency insurance financial strength rating of the Life Insurance Corporation of India (LIC) -- India`s biggest domestic institutional investor. The rating outlook is now stable. This revision takes place in the context of an ongoing global review affecting financial institutions whose ratings are higher than the rating of the government where they are domiciled, Moody`s said.
The consumer price inflation accelerated in April to 10.36% from 9.47% in March. The annual consumer price index (CPI) was launched in February and measures retail prices in major food groups, fuel, clothing, housing and education across rural and urban India.
The RBI`s monetary policy "has to act" even if inflation is driven by food prices, D Subbarao, the central bank governor, said on 16 May 2012. Inflation accelerated in April as prices of most commodities rose. The Wholesale Price Index (WPI) rose a faster-than-expected 7.23% in April from a year earlier, mainly driven by higher food prices and manufactured items, data released by the government on Monday, 14 May 2012, showed. However, there was a slowdown in price rises in the manufacturing sector -- a proxy for measuring price pressures excluding volatile food and fuel prices.
The Reserve Bank of India next reviews monetary policy on 18 June 2012. The central bank will have May inflation, April industrial output and Q4 March 2012 GDP data to study before then.
The Q4 March 2012 earnings season is drawing towards a close. Investor focus is on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook.
Coal India announces FY 2012 consolidated results on 28 May 2012. Tata Motors, ONGC, Steel Authority of India and Power Grid Corporation of India announce FY 2012 results on 29 May 2012. Sun Pharmaceuticals Industries announces Q4 results on 29 May 2012. DLF and GAIL (India) unveil Q4 results on 30 May 2012. Mahindra & Mahindra (M&M) and Jaiprakash Associates unveil FY 2012 results on the same day.
Most Asian stocks declined on Friday amid uncertainty over the European debt crisis and the future path of Chinese growth. Key benchmark indices in Singapore, Indonesia, China, Taiwan and Hong Kong were down by 0.14% to 2.31%. Key benchmark indices in Japan and South Korea rose 0.20% and 0.53%.
China`s manufacturing activity contracted at a faster pace in May 2012 than in April 2012 as conditions for exporters worsened during the month, the preliminary findings of a survey by HSBC showed Thursday. The "flash" reading of the manufacturing Purchasing Managers` Index dropped to 48.7 in May 2012 from a final print of 49.3 in April 2012, HSBC said. Hongbin Qu, chief economist for China at HSBC, said the soft data call for more aggressive policy easing, but added that Beijing has been and will further step up "easing efforts to stabilize growth."
The World Bank on Wednesday, 23 May 2011, cut its economic growth forecast for China this year to 8.2% from its prediction of 8.4% growth in its November report. Risks faced by China include the slowing domestic housing market and a sluggish global economy that offer little promise for a pick up in international trade, the World Bank said in a report released today, 23 May 2012. China is the world`s second biggest economy after the US.
Greek voters return to the polls on 17 June 2012 after the splintered results of a May 6 parliamentary election left no party able to put together a government. Strong support for anti-austerity parties has stirred fears that Greece won`t meet pledges it made in return for its second bailout, potentially leading to its exit from the shared-currency project.
Italian Prime Minister Mario Monti reportedly said on Thursday that Greece would probably remain in the euro zone, and also expressed optimism that the region was moving towards joint issuance of euro bonds.
The G8 world leaders on Saturday, 19 May 2012 affirmed they want Greece to remain in the euro zone. At a summit of the Group of Eight major economies at the US, G8 leaders failed to reach an agreement on how to calm the escalating economic crisis in Europe, though the meeting`s final statement did affirm that leaders wanted Greece to remain in the euro zone. Also in the joint statement, leaders said that they would take steps to boost their economies.
Trading in US index futures indicated that the Dow could fall 19 points at the opening bell on Friday, 25 May 2012.
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