Key benchmark retained positive zone in mid-afternoon trade. Higher global stocks and data showing sustained buying of Indian stocks by foreign funds this month supported sentiment on domestic bourses. The barometer index, BSE Sensex, was up 27.48 points or 0.16%, off 105.29 points from the day`s high and up 127.77 points from the day`s low. The market breadth was weak.
Index heavyweights Reliance Industries (RIL) edged higher in volatile trade. Another index heavyweight and cigarette maker ITC was firm. Pharma stocks rose for the second day in a row on defensive buying. Axis Bank dropped as the bank`s latest results showed its gross non-performing assets rose in Q1 June 2012. Sugar stocks declined after Monday`s gains.
Foreign institutional investors (FIIs) bought shares worth a net Rs 257.17 crore on Monday, 16 July 2012, as per provisional data released by the stock exchanges. Earlier, FIIs bought shares worth a net Rs 3723 crore in nine trading sessions from 3 July 2012 to 13 July 2012.
The market opened on a firm note on higher Asian stocks. Firmness continued on the bourses in morning trade. The market pared gains in mid-morning trade. A bout of volatility was witnessed as key benchmark indices further pared intraday gains to hit fresh intraday lows in early afternoon trade. Volatility continued as key benchmark indices recovered soon after erasing almost entire intraday gains in afternoon trade. The market retained positive zone in mid-afternoon trade.
Global stocks edged higher on Tuesday, 17 July 2012, with investors expecting that Federal Reserve Chairman Ben Bernanke will suggest in his semi-annual testimony to the Congress that fresh policy-easing moves are expected soon.
At 14:20 IST, the BSE Sensex was up 27.48 points or 0.16% to 17,130.79. The index jumped 132.77 points at the day`s high of 17,236.08 at the onset of the trading session. The index gained 5 points at the day`s low of 17,108.31 in afternoon trade.
The S&P CNX Nifty was up 3.10 points or 0.06% to 5,200.35. The index hit a high of 5,236.70 and a low of 5,195.90 in intraday trade.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,634 shares declined and 1,031 shares gained. A total of 127 shares were unchanged.
The total turnover on BSE amounted to Rs 1212 crore by 14:20 IST
From the 30-share Sensex pack, 21 stocks gained and the rest of them fell. Tata Motors (down 1%), Bhel (down 0.65%) and Sterlite Industries India (down 0.69%) edged lower from the Sensex pack.
Index heavyweight Reliance Industries (RIL) rose 0.1% to Rs 721. The stock was volatile. The scrip hit high of Rs 727.85 and low of Rs 718.35 so far during the day. RIL has bought back 3.47 crore shares for about Rs 2484 crore till 10 July 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. 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. Last month, RIL chairman Mukesh Ambani said at the company`s Annual General Meeting in Mumbai 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.
Index heavyweight and cigarette maker ITC rose 1.23% to Rs 255
India`s second largest motorcycle maker by sales Bajaj Auto lost 2.44% to Rs 1447 ahead of its Q1 June 2012 result announcement tomorrow, 18 July 2012.
Pharmaceutical stocks rose on defensive buying in a choppy market. Dr Reddy`s Laboratories (up 2.54%), Sun Pharmaceutical Industries (up 1.80%), Ranbaxy Laboratories (up 1.46%), Ipca Laboratories (up 1.44%), Divis Laboratories (up 1.23%), Glenmark Pharmaceuticals (up 0.68%), Piramal Healthcare (up 0.63%), Cipla (up 0.13%), Lupin (up 0.16%) edged higher.
Axis Bank dropped 2.13% as the bank`s gross non-performing assets (NPA) stood at 1.06% of gross advances as on 30 June 2012, higher than 0.94% as on 31 March 2012. The net NPA ratio remained low. The NPA ratio was at 0.31% of net advances as on 30 June 2012, higher than 0.25% as on 31 March 2012.
The bank`s net profit rose 22.4% to Rs 1153.52 crore on 29.24% increase in total income to Rs 7,818.37 crore in Q1 June 2012 over Q1 June 2011. The surge in net profit was despite a 47.2% jump in provisions and contingencies to Rs 258.84 crore in Q1 June 2012 over Q1 June 2012. The bank announced the first quarter result during trading hours today, 17 July 2012.
Axis Bank`s capital adequacy ratio (CAR) stood at 13.03% as on 30 June 2012, lower than 13.66% as on 31 March 2012 and higher than 12.53% as on 30 June 2011.
BOC India rose 1.03% after the company said it has commissioned a 2,550 tonnes per day air separation unit at Tata Steel`s Jamshedpur unit. The company made this announcement during trading hours today, 17 July 2012.
Tata Coffee rose 1.36% after consolidated net profit jumped 112.7% to Rs 28.18 crore on 23% growth in net sales to Rs 407.74 crore in Q1 June 2012 over Q1 June 2011. The company announced the results after market hours on Monday, 16 July 2012.
Exide Industries fell 2.18% after net profit fell 6.9% to Rs 152.03 crore on 24.8% growth in net sales to Rs 1551.08 crore in Q1 June 2012 over Q1 June 2011. The result was announced after market hours on Monday, 16 July 2012.
The prevalent depressed conditions in the automotive original equipment segment somewhat eroded the beneficial impact of higher sales volume achieved in the replacement market, Exide Industries said in a statement. Prices of lead which is a key raw material in the manufacture of lead acid batteries continued to remain under check in the international market in Q1 June 2012, Exide said. However, depreciation of the rupee against the dollar negated most of the resulting advantages, Exide said.
Exide said its range of home UPS systems have been well received in the market and that the company is now in the process of raising production capacity of the product. The company is using its exiting network of nationwide dealers to market the product.
Exide has budgeted capital expenditure of Rs 270 crore for the year ending 31 March 2013 (FY 2013)
Tata Communications fell 0.1%. The company on Monday said its Video Connect Network has been extended into Nigeria through a partnership with Main One Cable Company, Nigeria`s premier broadband internet services provider. The company made this announcement after market hours on Monday, 16 July 2012.
Bajaj Finance rose 1.85% to Rs 982.50 after net profit jumped 53% to Rs 139 crore on 56% growth in total income to Rs 703 crore in Q1 June 2012 over Q1 June 2011. The company announced the results after market hours on Monday, 16 July 2012.
Sugar stocks declined after Monday`s gains triggered on reports the Food Ministry has proposed imposing 10% import duty on sugar. Oudh Sugar Mills (down 4.46%), Sakthi Sugars (down 6.33%), Dwarikesh Sugar Industries (down 4.01%), Balrampur Chini Mills (down 1.78%), Bajaj Hindustan (down 3.97%) and Shree Renuka Sugars (down 4.57%), edged lower.
The Food Ministry has reportedly proposed imposing 10% import duty on sugar as the country has surplus domestic production. The zero import duty regime expired on 30 June 2012. The government had scrapped import duty on sugar in February 2009 to boost domestic supply. Prior to that the import duty was 60%, suggest reports.
Axis Bank was the top traded counter on the BSE with turnover of Rs 54.73 crore followed by TCS (Rs 42.42 crore), SBI (Rs 41.04 crore), Tata Motors (Rs 38.73 crore) and Infosys (Rs 38.06 crore).
On the macro front, the annual rate of inflation based on monthly wholesale price index (WPI) eased to 7.25% (provisional) for the month of June 2012 (over June, 2011) from 7.55% (provisional) for the previous month and 9.51% during the corresponding month of the previous year. Build up inflation in the financial year so far (April-June 2012) was 1.99% compared to a build up of 2.41% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in a statement. The official WPI for All Commodities for the month June 2012 rose 0.2% to 164.2 (provisional) from 163.9 (provisional) for the previous month, it said.
For the month of April 2012, the final WPI for All Commodities stood at 163.50, higher than the provisional figure of 163.1. The annual rate of inflation in April 2012 based on final index stood at 7.5%, higher than provisional 7.23% reported on 14 May 2012.
Inflation is way above the desired threshold level of Reserve Bank of India, central bank governor D Subbarao said on Monday. He added that the RBI stance of monetary policy is aimed at restraining demand and managing inflation expectations. "There is a threshold level of inflation. Below the threshold, may be, there is a trade-off between growth and inflation. But above the threshold, there is definitely no trade-off between growth and inflation," he said. "The Reserve Bank of India is sacrificing growth only in the short-term and there is no growth-inflation trade off in the medium term," he said. The RBI`s threshold level for inflation is around 5%, he said. However , the governor did issue a disclaimer that his statements did not imply RBI`s decision in its July 31 policy.
India`s potential growth rate may have fallen to around 7.5% as the uncertainty surrounding economic activity has increased after the financial crisis of 2008-09, Subbarao said in a speech on Tuesday.
The Reserve Bank of India (RBI) announces first quarter review of the Monetary Policy 2012-13 on 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns.
The Central Statistics Office (CSO) will announce data on consumer price index (rural)/consumer price index (urban)/consumer price index (combined) for June 2012 tomorrow, 18 July 2012. On Friday, 20 July 2012, CSO will announce data on consumer price index (agricultural labourers/rural labourers) for June 2012.
Rainfall in the country till July 15 was 22% short of the long-term average, raising concerns that farm output may be hurt and could lead to a rise in food prices. It is a challenge for farmers to maintain the same performance compared with the last two years, Farm Minister Sharad Pawar said on Monday, 16 July 2012. The key agricultural states of Karnataka, Maharashtra and Andhra Pradesh have experienced the worst shortage of rain, Mr. Pawar said. Maharashtra is the country`s largest producer of sugar and second-biggest producer of soybeans, while Karnataka is the largest coffee producer and Andhra Pradesh one of the biggest rice producers.
The government has prepared contingency plans to help farmers increase output, Mr. Pawar said. The agriculture ministry has sent seeds for late sowing to areas that have received insufficient rain, he said. Steps have also been taken to provide sufficient quantities of seeds of rabi pulses to compensate for any loss in pulses production in the kharif season, he said.
According to data released by the Ministry of Agriculture, rice was sown in 96.79 lakh hectare (ha) till 13 July 2012, compared with 55.4 lakh ha a week back, but it still remains lower than 111.63 lakh ha during the corresponding period last year. Cumulative sowing of coarse cereals totaled 39.76 lakh ha as on 13 July 2012, sharply lower than 79.82 lakh ha during the corresponding period last year.
Sowing of pulses totaled 20.54 lakh ha as on 13 July 2012, much lower than 32.88 lakh ha during the corresponding period last year. Sowing of oilseeds totaled 67.7 lakh ha, lower than 78.33 lakh ha during the corresponding period last year. Sugarcane and cotton have been sown in more area than the area covered by these crops this time last year.
The monsoon rains--which make up around 70% of India`s annual rainfall--are crucial to the nation`s agriculture sector and broader economy. More than 60% of the country`s farmland is rain-fed. The timing, distribution and quantity of rainfall are all important for crops.
Prime Minister Dr. Manmohan Singh on Friday, 13 July 2012, approved the constitution of an expert committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) to undertake stakeholder consultations and finalise the guidelines for GAAR by 30 September 2012.
Foreign direct investments in India fell 38% in the April-May period, according to central bank data which reflect the battering the country`s appeal has taken in the past few months. FDI flows into India in the first two months of the fiscal year which began April 1 dropped to $3.2 billion from $5.15 billion a year earlier. In May alone, net foreign direct investment more than halved from a year earlier to $1.38 billion, adding to worries about India`s current account deficit. India depends on capital inflows to finance its current account deficit, which widened to a record 4.5% of gross domestic product in the January-March period.
India`s trade deficit narrowed in June, helped by a sharp fall in imports, director-general of foreign trade Anup Pujari said on Friday, 13 July 2012. The trade deficit was $10.3 billion during the month, down from $14.4 billion a year earlier. Exports in June fell 5.45% from a year earlier to $25.1 billion while imports declined 13.46% to $35.3 billion due slide in crude oil prices.
An India-Mauritius joint panel will in August discuss a series of proposals to review the double taxation avoidance treaty between the two nations, Mauritius Foreign Minister Arvin Boolell said on Thursday, 5 July 2012. India has been looking to negotiate the double taxation avoidance agreement with Mauritius for the past few years to check so-called round tripping and other potential abuses. Round tripping entails moving money out of one country to another, and getting it back under the garb of foreign capital. Capital gains tax is close to zero in Mauritius and almost 40% of investments into India come through the island nation.
Under the bilateral agreement, capital gains from sale of securities can be taxed only in Mauritius. India and Mauritius will discuss the renegotiation of the tax pact between 22-24 August in Mauritius. The India-Mauritius joint working group will also discuss the inclusion of a so-called limitation of benefit clause, similar to the Singapore tax treaty with India, to ensure only genuine Mauritius-based companies are benefited. India`s tax agreement with Singapore says that only those companies that spend a minimum of $200,000 (about Rs 1 crore) in Singapore can avail the benefits of the treaty.
Sanctity of tax residency certificates issued by a country to companies operating in its jurisdiction to enable the firms to claim tax benefits under various treaties is another issue between India and Mauritius. While India in this year`s national budget said the certificates are a necessary but not sufficient condition, Mauritius wants those issued by it honoured.
Draft guidelines issued by Indian government for implementing the controversial anti-avoidance tax proposal viz. the GAAR state that GAAR provisions should be invoked on a foreign institutional investor (FII), if it chooses to take a treaty benefit, but would not in any case be invoked in the case of the non-resident investors of the FII. The draft guidelines suggested that the onus of proving wrongdoing should be on the authorities.
Prime Minister Dr. Manmohan Singh said in a newspaper interview this month that he has identified controlling the fiscal deficit, achieving clarity on tax matters, reviving the mutual funds and insurance industries, clearing a backlog of foreign investment proposals and boosting infrastructure as his focus areas in the short term. Singh said there will be no arbitrariness in tax matters. The statement assumes significance in the context of a raging controversy over the Income Tax amendment to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad to avoid taxes.
Singh last month said he is chalking out plan for the country`s economic revival. Singh last month took additional charge at the finance ministry after Pranab Mukherjee resigned as finance minister on 26 June 2012 to contest the presidential polls scheduled on Thursday, 19 July 2012. 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.
Corporate affairs minister Veerappa Moily said in a newspaper interview published on 11 July 2012 that the government is hopeful of the passage of the pension bill in the monsoon session of parliament. The monsoon session of parliament begins on 7 August 2012.
The first quarter June 2012 earnings season has just begun. In the next one month, investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year or the next year. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth.
Bajaj Auto reports Q1 results tomorrow, 18 July 2012. Kotak Mahindra Bank, Hero MotoCorp and Dr Reddy`s Laboratories unveil Q1 results on Thursday, 19 July 2012. Reliance Industries and Asian Paints unveil Q1 results on Friday, 20 July 2012. Hindustan Unilever, L&T and Cairn India unveil Q1 results on 23 July 2012. Wipro, Sesa Goa and Jindal Steel & Power unveil Q1 results on 24 July 2012. GAIL (India) and Power Grid Corporation of India unveil Q1 results on 25 July 2012. HCL Technologies announces Q4 June 2012 results on the same day.
ITC, Bhel and Sterlite Industries (India) unveil Q1 results on 26 July 2012. Cement majors ACC and Ambuja Cements unveil Q2 June 2012 results on the same day. ICICI Bank, Grasim Industries, NTPC and Punjab National Bank unveil Q1 results on 27 July 2012. Maruti Suzuki India announces Q1 results on 28 July 2012. Mahindra & Mahindra announces Q1 results on 8 August 2012. Ranbaxy Laboratories announces Q2 June 2012 results on 9 August 2012. BPCL announces Q1 results on 10 August 2012. Hindalco Industries announces Q1 results on 14 August 2012.
European stock markets edged higher on Thursday, with banks and energy companies leading the gainers as investors awaited the German ZEW index. Key benchmark indices in France, Germany and UK rose by between 0.12% to 0.59%.
The European Central Bank (ECB) has reportedly advocated imposing losses on holders of senior bonds issued by Spain`s most troubled banks. But, European finance ministers have reportedly rejected ECB`s advice on Spain out of fear financial markets would react badly. As per reports, ECB`s new position was presented by ECB President Mario Draghi at a meeting of euro-zone finance ministers on July 9. The position is a turnaround from the ECB`s position in 2010, when it successfully insisted that senior bondholders of Irish banks shouldn`t suffer losses.
Germany`s Federal Constitutional Court will announce a decision on lawsuits challenging the country`s participation in the permanent euro-zone rescue fund, the European Stability Mechanism, and the fiscal pact on 12 September 2012. The court held a public hearing earlier this month to examine complaints that participation in the fund and the fiscal pact violated German law by taking some authority over the national budget away from parliament.
Spain and France are scheduled to hold bond auctions on Thursday, 19 July 2012, ahead of a meeting of European officials scheduled on Friday, 20 July 2012, to hammer out the final details of the Spanish bank bailout.
Asian stocks edge higher on Tuesday, 17 July 2012, with investors expecting that Federal Reserve Chairman Ben Bernanke will suggest in his semi-annual testimony to the Congress that fresh policy-easing moves are expected soon. Key benchmark indices in Singapore, Japan, China, Taiwan, South Korea, Hong Kong and Indonesia were up by 0.23% to 1.75%.
There are also expectations that China will cut its banks` reserve requirement ratio again soon. Chinese Premier Wen Jiabao said over the weekend that China`s economic rebound isn`t yet stable and hardship may continue for a period of time, according to a state-media report. Wen also pointed to China`s actions to address the economic deceleration. The economic growth rate is still within the government target range set early this year, and stabilization policies are working, Wen was quoted as saying in a Xinhua news agency report.
The comments followed government data released last week showing China`s second-quarter economic growth slowed to 7.6% from a year earlier, compared to 8.1% in the first quarter. It was the weakest rate of growth in more than three years.
China`s next step in its drive to allow market-based interest rates could be a raising of the ceiling on interest rates for medium- and long-term time deposits and big negotiated deposits, a central-bank official wrote in an essay. Liberalization of the nation`s deposit rates should start with rates on larger, longer-term deposits, Sheng Songcheng, director of the People`s Bank of China`s financial survey and statistics department said.
The minutes of the latest interest-rate meeting of the Reserve Bank of Australia sounded a more positive signal on the Australian economy and also said that financial market tensions have eased a bit.
Singapore`s export growth unexpectedly quickened in June as pharmaceutical shipments rebounded, countering a smaller increase in electronics sales. Non-oil domestic exports climbed 6.8% from a year earlier, after a 3.2% gain in May, the trade promotion agency said in a statement today.
Japanese Finance Minister Jun Azumi on Tuesday stepped up his vigilance in response to the yen`s rise to a one-month high against the dollar, which he considers driven by speculation, indicating he will consider intervening in the currency market should the rise continue. The yen`s recent rise "doesn`t reflect economic fundamentals," as speculators are building positions in response to the uncertain outlook of the US. economy, Mr. Azumi said at a regular press conference.
The Bank of Japan (BoJ), last week, left ultra-low interest rates unchanged at its policy meeting. The BoJ reaffirmed its commitment to steadily increasing the size of its asset purchase program, but didn`t announce any immediate increase in the overall size of the program.
The Asian Development Bank said in a report released on 12 July 2012 that weaker global demand is helping ease international oil and food prices in Asia, which is reducing inflationary pressures in the region. The bank trimmed its inflation forecast for developing Asia for this year to 4.4% from 4.6% previously. It cut its inflation forecast for China this year to 3.7% from 4% previously.
The World Bank last week revised down its 2013 Indonesia growth forecast to 6.4% from 6.5% a month ago, but said a severe global downturn could send growth tumbling even further to 4%.
Trading in US index futures indicated that the Dow could gain 60 points at the opening bell on Tuesday, 17 July 2012. US stocks fell on Monday after macro economic data showed an unexpected decline in retail sales in June. The Dow Jones Industrial Average fell 49.88 points, or 0.39%, to 12,727.21. The S&P 500 index dropped 3.14 points, or 0.23%, to 1,353.64 and the Nasdaq Composite index lost 11.53 points, or 0.40%, to 2,896.94. A Commerce Department report showed US retail sales fell 0.5% in June, below market expectations of a rise.
Data on US consumer price index for June 2012 and the July US home builders index are due for release later in the global day today, 17 July 2012.
Federal Reserve Chairman Ben Bernanke testifies before the Senate banking committee on Tuesday, 17 July 2012 and the House Financial Services committee on Wednesday, 18 July 2012. The Fed`s Beige Book report is slated for release on Wednesday, 18 July 2012. A report from Federal Reserve Bank of Philadelphia is due for release on Thursday, 19 July 2012.
Quite a few prominent US companies report Q2 June 2012 earnings this week. Johnson & Johnson Inc., Coca-Cola Co., Goldman Sachs Group Inc., Intel Corp., and Yahoo Inc. report Q2 results on Tuesday, 17 July 2012. Honeywell, Bank of America Corp., IBM and Qualcomm Inc. report Q2 results on Wednesday, 18 July 2012. Microsoft Corp. and Google Inc. report Q2 results on Thursday, 19 July 2012. Wrapping up the week, General Electric Co. reports Q2 results on Friday, 20 July 2012.
The International Monetary Fund on Monday reduced its outlook for 2013 global growth to 3.9% from an April forecast of 4.1%
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