A bout of volatility was witnessed as key benchmark indices regained strength after paring gains to hit fresh intraday lows in mid-morning trade. The barometer index, BSE Sensex, alternatively swung above and below the psychological 17,000 mark. The Sensex was currently trading below that mark. The Sensex was up 81.81 points or 0.48%, off 40.88 points from the day`s high and up 22.09 points from the day`s low. Market expectations are that the government will kick-start economic reforms after Prime Minister Manmohan Singh took additional charge of the finance ministry after Pranab Mukherjee on Tuesday resigned as finance minister to contest the presidential polls next month.
Gains in Asian stocks also supported Indian shares. Asian stocks rose after upbeat data on housing market in the United States, the word`s biggest economy.
Index heavyweight Reliance Industries (RIL) slipped to fresh intraday low. Bhel extended Tuesday`s gains triggered by new order win. Auto stocks were mixed. Shares of power financing firms were in demand. Media shares rose for the second day in a row. Sugar shares rose as world sugar prices rose.
The market opened on a firm note on reports Prime Minister Manmohan Singh will take charge of the Finance Ministry portfolio after Pranab Mukherjee on Tuesday, 26 June 2012, resigned his post as finance minister to contest the presidential polls next month. The market pared gains in morning trade. The market held positive zone in mid-morning trade. A bout of volatility was witnessed as key benchmark indices regained strength after paring gains to hit fresh intraday lows in mid-morning trade.
Prime Minister Manmohan Singh has decided to take additional charge of the finance ministry after Pranab Mukherjee on Tuesday resigned as finance minister to contest the presidential polls next month. The shift comes at a time when the economy is going through a slowdown amid deteriorating domestic conditions and euro-zone troubles.
Mr. Singh, who is highly regarded for initiating India`s first major economic overhauls as then-finance minister in 1991, may take some politically tough decisions, such as raising fuel prices to cut subsidies that are straining government finances. Easing rules on foreign direct investment in sectors such as retail and civil aviation could also be high on his agenda as the government looks to revive its sagging image ahead of general elections in 2014.
Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post.
The stock market may remain volatile in the near term as traders roll over positions from the near-month June 2012 series to July 2012 series. The June 2012 derivatives contracts expire tomorrow, 28 June 2012.
At 12:19 IST, the BSE Sensex was up 81.81 points or 0.48% to 16,988.39. The index gained 122.69 points at the day`s high of 17,029.27 at the onset of the trading session, its highest level since 25 June 2012. The index rose 59.72 points at the day`s low of 16,966.30 in mid-morning trade.
The S&P CNX Nifty was up 27.65 points or 0.54% to 5,148.45. The index hit a high of 5,159.10 in intraday trade, its highest level since 25 June 2012. The Nifty hit a low of 5,142.80 in intraday trade.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,457 shares gained and 992 shares declined. A total of 151 shares were unchanged.
The total turnover on BSE amounted to Rs 690 crore by 12:20 IST compared with Rs 525 crore by 10:20 IST
Among the 30-share Sensex pack, 22 advanced while the rest of them declined.
Index heavyweight Reliance Industries (RIL) shed 0.28% to Rs 721.70. The stock moved in a range of Rs 728.60 and Rs 721.50 so far during the day. RIL today, 27 June 2012, said it has bought back 3 crore shares for Rs 2144.73 crore till 22 June 2012. Under the ongoing share buyback program, RIL has set a maximum buyback price of Rs 870. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013.
RIL chairman Mukesh Ambani said at the company`s Annual General Meeting in Mumbai early this month that the company`s buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future.
Auto stocks were mixed. India`s largest utility vehicles maker Mahindra & Mahindra (M&M) shed 0.55%. The company early this month said it has received an overwhelming 7,200 plus bookings for its cheetah-inspired XUV500 from customers within just 2 days of opening all India bookings for the vehicle. All India bookings for the XUV500 were opened from 8 June 2012.
India`s largest truck maker by sales Tata Motors declined 1.24% to Rs 243.55 on ongoing euro-zone debt worries. The company derives almost two-third of its revenue from its British unit Jaguar Land Rover.
India`s second largest motorcycle maker by sales Bajaj Auto rose 0.12%. The company early this month said its total sales fell 2% to 3,52,219 units in May 2012 over May 2011, as exports to Sri Lanka were nil in May 2012 against a typical monthly average of 10,000 motorcycles and 3-wheelers each per month. The company expects recovery in Sri Lankan exports from July 2012 onwards. The company`s exports rose 3% to 1,30,573 units in May 2012 over May 2011.
India`s largest motorcycle maker by sales Hero MotoCorp (HMCL) slipped 0.12%.
India`s top small-car maker by sales Maruti Suzuki India rose 0.08%.
Bhel extended Tuesday`s gains triggered by new order win. The stock was up 0.52%. Bhel said during trading hours on Tuesday, 26 June 2012, it has won a contract for the electro-mechanical equipment package for a 1,020 megawatts (MW) hydroelectric project in Bhutan. The contract is valued at Rs 950 crore. This contract will further strengthen Bhel`s presence in the overseas hydro business segment, Bhel said in a statement. Bhel`s globalisation strategy is already yielding rich dividends and the company has established its footprints in six continents of the world spanning over 75 countries, Bhel said.
Shares of Power financing firms were in demand. Power Finance Corporation gained 3.66%. Rural Electrification Corporation rose 3.52%.
Private sector aluminium major Hindalco Industries rose 1.65% ahead of its audited consolidated results for the year ended 31 March 2012 today, 27 June 2012.
Media shares rose for second day in a row. Zee Entertainment Enterprises (up 1.18%), Dish TV India (up 2.08%), NDTV (up 4.40%), T V Today Network (up 2.79%) and Raj Television Network (up 1.16%), edged higher.
The sunset date for conversion of cable systems from analogue to digital has been postponed by four months to 31 October 2012. The earlier deadline for Phase I digitisation in four metros -- New Delhi, Mumbai, Kolkata and Chennai -- was 30 June 2012.
Sugar shares rose as world sugar prices rose. Oudh Sugar Mills (up 1.95%), Sakthi Sugars (up 0.19%), Shree Renuka Sugars (up 2.16%), Dhampur Sugar Mills (up 4.05%), Bajaj Hindusthan (up 1.06%), and Balrampur Chini Mills (up 1.14%), edged higher.
Raw-sugar futures for October delivery rose 1.5% to 20.23 cents a pound in New York on Tuesday, the biggest gain in a week. Output in Brazil`s Center South, the world`s largest producing region, tumbled 32 percent in the first half of this month after rain hindered harvesting, Unica, an industry group, said on Wednesday, 27 June 2012.
Foreign institutional investors (FIIs) bought shares worth a net Rs 13.03 crore on Tuesday, 26 June 2012, as per provisional data from the stock exchanges.
The Reserve Bank of India (RBI) on Monday, 25 June 2012, announced hike of the foreign investment cap on government bonds by $5 billion and hike of limit on overseas commercial borrowings by $10 billion. The RBI also allowed sovereign wealth funds, multilateral agencies, endowment funds, insurance and pension funds as well as foreign central banks to invest in government bonds. These measures are aimed at attracting foreign funds and arresting the recent sharp slide of the rupee against the US dollar.
The government also said on Monday, 25 June 2012, that the withholding tax would be liberalized as announced in the 2012-13 Budget. In Budget 2012-13, Finance Minister Pranab Mukherjee had proposed to reduce the rate of withholding tax on interest payments on external commercial borrowing (ECBs) from 20% to 5% for three years, for certain stressed infrastructure sectors.
Moody`s Investors Service on Monday, 25 June 2012, said it is maintaining its stable outlook on India`s sovereign rating as the growth slowdown and deteriorating business sentiment in the economy are likely to be temporary. Moody`s said India`s Baa3 rating already reflected challenges such as a weak fiscal performance of the government, high inflation and an uncertain investment policy environment, which have characterized the economy for decades.
Moody`s said the slowdown in growth and high inflation will hurt India`s credit profile, but not enough to lead to a revision in its rating. India`s limited foreign currency debt is also likely to shield the government from any significant increase in its external debt burden due to the sharp fall in the rupee, the ratings firm added.
The India Meteorological Department (IMD) on Friday, 22 June 2012, cut the expected quantum of total rainfall in the country for 2012. The timing, distribution and quantity of the rains are vital to India`s agricultural sector and economy, as more than 60% of the country`s farmland is rain-fed. IMD said monsoon rains in 2012 would be 96% of the long-term average overall, down from its April forecast of 99%. Rainfall in the northwestern grain bowl region is likely to be a slightly deficient at 93% of the long-term average this season.
The weather office has forecast normal rains in July and August, key months for planting and maturing of crops. July rains this year are likely to be 98% of the long period average, while the rainfall in August is forecast to be 96% of the average.
As per reports, sowing of most Kharif crops has been below last year`s level so far, except sugarcane where it increased. The monsoon rains -- which make up around 70% of India`s annual rainfall -- are crucial to the nation`s agriculture sector and broader economy.
The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. HDFC announces Q1 results on 11 July 2012. Infosys announces its Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Bajaj Auto reports Q1 results on 18 July 2012.
Prime Minister Manmohan Singh at the G20 Plenary Session last week said that the Indian government is determined to create an environment that will boost investor sentiment and promote an atmosphere conducive to enterprise and creativity. He said that the government`s policies will be transparent, stable and designed to provide a level playing field to both domestic and foreign investors.
Singh said that the government is focusing heavily on infrastructure investment and it has set ambitious targets to keep infrastructure investment on track and also put in place a problem resolution mechanism to overcome implementation bottlenecks. Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focussing on reversing the expansion. Singh said that the government is determined to take tough decisions, including on controlling subsidies.
Asian stocks edged higher on Wednesday, 27 June 2012, after upbeat data on housing market in the United States, the word`s biggest economy. Key benchmark indices in Singapore, Japan, Taiwan, Hong Kong, China and Indonesia were up by 0.03% to 1.12%. South Korea`s KOSPI Composite Index was down marginally by 0.01%.
Adding to this week`s raft of European developments, Egan-Jones Ratings on Tuesday lowered Germany`s sovereign rating from AA- to A+ and issued a negative watch on the rating on expectations the country will be left with significant uncollectable receivables due to its exposure to the euro zone. The ratings agency said that Chancellor Angela Merkel is fighting a losing battle in resisting calls for EU bonds and pushing for fiscal controls until euro-area countries agree to broad oversight of their budgets
Tuesday also saw the release of a document outlining a path to tighter fiscal integration across the euro zone and a European banking union. The seven-page document published on the EU`s website on Tuesday said euro-zone countries should be in a position to require changes in budgetary envelopes if they are in violation of fiscal rules, keeping in mind the need to ensure social fairness. The EU road map also calls for a criteria-based and phased process toward the issuance of common debt.
It also calls on euro-zone countries to turn oversight of banks over to a European regulator, such as the European Central Bank. In return a European deposit insurance program "would strengthen the credibility of the existing arrangements and serve as an important assurance that eligible deposits of all credit institutions are sufficiently insured," the report said. The EU outline calls for an interim report to be presented in October, with a final report on the road map due at a December summit meeting.
A key two-day summit of the European Union to discuss the ongoing European debt crisis begins tomorrow, 28 June 2012. German chancellor Angela Merkel on Monday, 25 June 2012, dashed any lingering hope in financial markets that Europe would issue common euro-zone bonds to underpin its single currency after Spain formally sought a financial rescue. Ms Merkel, who leads Europe`s biggest economy and the main contributor to its rescue funds, said sharing debt liability within the 17-nation euro-zone would be economically wrong and counterproductive.
Ahead of the European Union (EU) summit, more signs of distress in the region`s financial system emerged on Monday, 25 June 2012, when Cyprus joined the ranks of European countries seeking financial aid and Spain formally asked for help for its banking system.
European nations will take all necessary measures to safeguard the integrity and stability of the euro zone, improve the functioning of financial markets and break the feedback loop between sovereign debts and banks, according to the statement released at the end of the G20 summit in the Mexican resort of Los Cabos on 19 June 2012.
Trading in US index futures indicated that the Dow could slide 12 points at the opening bell on Wednesday, 27 June 2012. US markets ended higher on Tuesday after upbeat data on the housing market.
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