Key benchmark indices pared intraday losses after hitting fresh intradday low in early afternoon trade. The barometer index, BSE Sensex, was down 5.12 points or 0.03%, up 23.99 points from the day`s low and off 41.93 points from the day`s high. Weakness in Asian stocks hurt investor sentiment adversely. Index heavyweight ITC edged lower. Another index heavyweight Reliance Industries (RIL) retained positive zone. Most Asian shares declined on Monday, 13 August 2012, after disappointing economic data from Japan.
Realty major DLF edged higher on reports the company has sold its 17.5-acre plot at Lower Parel in Mumbai to Lodha Developers for Rs 2750 crore. Cairn India rose as crude oil futures traded higher in Asian trading on Monday, 13 August 2012. PSU OMCs were mostly higher on reports they have sought an immediate hike in petrol price. Glaxosmithkline Pharmaceuticals rose after good Q2 June 2012 earnings. The market breadth was positive.
The market edged higher amid initial volatility. The Sensex slipped into the red later. The key benchmark indices regained positive zone in morning trade. Key benchmark indices alternatively swung between gains and losses in mid-morning trade to trade. Key benchmark indices pared intraday losses after hitting fresh intradday low in early afternoon trade.
At 12:16 IST, the BSE Sensex was down 5.12 points or 0.03% to 17,552.62. The index rose 36.81 points at the day`s high of 17,594.55 in early trade, its highest level since 9 August 2012. The index fell 29.11 points at the day`s low of 17,528.63 in early afternoon trade.
The S&P CNX Nifty was down 4.50 points or 0.08% to 5,315.90. The Nifty hit high of 5,330.05. The Nifty hit an intraday low of 5,310.35
The market breadth, indicating the overall health of the market, was positive. On BSE, 1,222 shares rose and 1,198 shares fell. A total of 122 shares were unchanged.
The total turnover on the BSE amounted to Rs 780 crore by 12:25 IST compared with Rs 605 crore by 11:25 IST.
From the 30-share Sensex pack, 16 stocks fell and rest of them rose.
Index heavyweight and cigarette maker ITC shed 1.03% to Rs 265. The stock had hit a record high of Rs 268.90 in intraday trade on Friday, 10 August 2012. The company`s net profit jumped 20.21% to Rs 1602.14 crore on 15.34% growth in net sales to Rs 6652.21 crore in Q1 June 2012 over Q1 June 2011. Despite series of tax hikes, ITC`s performance in cigarettes business remains robust and displays pricing power for the company.
Index heavyweight Reliance Industries (RIL) rose 0.51% to Rs 786. The stock hit a high of Rs 790 and a low of Rs 779.95 so far during the day. RIL last week said it has bought back 3.88 crore shares for about of Rs 2776.78 crore till 7 August 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. RIL chairman Mukesh Ambani said at the company`s Annual General Meeting in June 2012 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.
India`s largest oil exploration firm by sales ONGC was up 0.82% to Rs 281.60. The stock came off day`s high of Rs 290.75. The company on Saturday, 11 August 2012, said its net profit jumped 48.42% to Rs 6077.70 crore on 23.87% growth in income from operations (net) to Rs 20177.78 crore in Q1 June 2012 over Q1 June 2011. ONGC gave a subsidy discount of Rs 12346 crore in Q1 June 2012, higher than Rs 12046 crore in Q1 June 2011. This impacted the profit before tax (PBT) by Rs 10583 crore and profit after tax (PAT) by Rs 7149 crore in Q1 June 2012. State-run upstream oil firms share part of the under-recoveries of state-run oil refining-cum-market firms arising from the government-imposed price caps on three key fuels -- diesel, LPG for domestic use and kerosene sold through the public distribution system.
ONGC said in a statement that while carrying out development drilling in D1 Field, the company discovered a new pool of reserves which may catapult D1 to become the third largest field in Western Offshore after prolific Mumbai high and Heera. Earlier, the D1 was known to have IOIP (Initial Oil In-place) to the order of 600 million barrel (82.20 million tonne oil equivalent). After the discovery of the new pool, its total IOIP is expected to be in excess of One Billion Barrel (140 mtoe).
D1, primarily an oil producing field, is situated about 200 km West of Mumbai city in Deep Continental Shelf at a water depth of 85m-90m. The Field comprises of 4 blocks viz. D1-4, D1-12, D1-14 and D1-2/5.
Apart from D-1, ONGC has notified three more discoveries in the past one month, ONGC said.
Cairn India rose 1.14% as US crude oil futures traded higher in Asian trading on Monday on reports Israeli leaders are leaning toward a strike on Israeli leaders are leaning toward a strike on Iran amid the latter`s nuclear program. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms such as Cairn India.
PSU OMCs were mostly higher on reports they have sought an immediate hike in petrol price. BPCL (up 0.54%) and Indian Oil Corporation (up 1.02%) gained. But, HPCL fell 0.59%.
The Petroleum Planning and Analysis Cell (PPAC), under the Ministry of Petroleum and Natural Gas, announced 1 August 2012 that the under-recovery on HSD (High Speed Diesel) applicable for 1st fortnight of August effective 1 August 2012 increased substantially to Rs 12.13 per litre. This is higher than Rs 9.95/litre prevailing during previous fortnight. In case of PDS Kerosene also the under-recovery is higher at Rs 28.54/litre for the month of August 2012 than Rs 27.20/litre for July 2012. Under-recovery on Domestic LPG for August 2012 at Rs 231/cylinder continues to rule at high. OMCs are currently (effective 1 August 2012) incurring daily under-recovery of about Rs 402 crore on the sale of Diesel, PDS Kerosene and Domestic LPG.
Realty stocks were in demand. Realty major DLF gained 0.95% on reports the company has sold its 17.5-acre plot at Lower Parel in Mumbai to Lodha Developers for Rs 2750 crore. The deal is a part of the DLF`s decision to sell non-core businesses to reduce debt.
Among other realty shares, HDIL (up 2.13%), Unitech (up 1.19%), Sobha Developers (up 2.24%), Godrej Properties (up 0.09%) and Orbit Corporation (up 0.22%) edged higher.
India`s second biggest private sector bank in terms of branch network HDFC Bank rose 0.11%. During market hours today, 13 August 2012, the bank said it has issued on a private placement basis unsecured, redeemable, non-convertible, subordinated bonds towards tier- II capital bonds for an amount aggregating Rs 3477 crore.
Glaxosmithkline Pharmaceuticals rose 0.86%. During market hours today, 13 August 2012, the company reported 10.83% growth in net profit to Rs 163.52 crore on 15.93% growth in total income to Rs 699.88 crore in Q2 June 2012 over Q2 June 2011.
Ashoka Buildcon jumped 5.31% after the company said that two private equity funds managed by the State Bank of India and Macquarie, will together invest $150 million in the firm`s 100% subsidiary, Ashoka Concessions. The company made this announcement during trading hours today, 13 August 2012.
Foreign institutional investors (FIIs) bought shares worth net Rs 83.16 crore on Friday, 10 August 2012, as per provisional figures from the stock exchanges. Earlier, FIIs bought shares worth a net Rs 3704.70 crore from the secondary equity markets in 7 trading sessions from 1 to 9 August 2012 as per data from Securities & Exchange Board of India (Sebi). The inflow this month comes on the top of substantial purchases last month. FIIs bought shares worth net Rs 9691 crore from the secondary equity markets in July 2012.
Prime Minister Dr. Manmohan Singh on Saturday, 11 August 2012, said the fundamentals of the economy remain strong. "We have the highest savings and investments rate in the world," Dr. Singh said. This year we will see better than 6.5% (gross domestic product) growth of last year, he said.
Industrial production declined 1.8% in June 2012 compared to the level in the month of June 2011, data released by the Ministry of Statistics & Programme Implementation on Thursday, 9 August 2012, showed. Manufacturing output, which has a 75.5% weight in the index of industrial production, fell 3.2% in June 2012 compared to the level in the month of June 2011. Capital-goods production shrank 27.9% in June 2012 compared to the level in the month of June 2011.
Union Finance Minister P. Chidambaram last week said that a path of financial consolidation will be unveiled shortly. Government finances are under pressure as expenses exceed revenue, mainly because of subsidies doled out for cheaper supplies of food, fuel and fertilizer. Mr. Chidambaram said that the fiscal-deficit target for the current financial year will be reassessed after a mid-year review later this financial year depending on the pace of expenditure and the resource position of the government. The government is aiming to restrict spending on subsidies, the finance minister said. The government has already taken some steps to reduce expenditure. In late May, the finance ministry asked government departments to reduce their non-plan spending -- expenditure that won`t create long-term assets -- by 10% this fiscal year as part of its efforts to keep the fiscal deficit under check.
The government intends to fine tune policies and procedures that will facilitate capital flows into India, Mr. Chidambaram said last week. Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary will provide great assurance to investors, Mr. Chidambaram said. The government has recently appointed two committees -- one to examine anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) legal provisions and guidelines and the other to review taxation of the IT sector and Development Centres. Mr. Chidambaram said he has also directed a review of tax provisions that have a retrospective effect in order to find fair and reasonable solutions to pending as well as likely disputes between the Tax Departments and the Assessees concerned.
Mr. Chidambaram said that the government has received requests to put off plans to implement the General Anti-Avoidance Rules (GAAR) which aim to check tax avoidance. The implementation of GAAR was postponed by one year in order to provide an opportunity of wider consultation before such a legislation is implemented, Mr. Chidambaram said in the lower house of parliament while replying to lawmakers` questions. The provisions of GAAR are directed toward preventing tax avoidance by way of aggressive tax planning, he added. The implementation of GAAR proposal introduced in the Union Budget 2012-13 in March 2012 by then-finance minister Pranab Mukherjee has been deferred to 1 April 2013. This came after heavy criticism from foreign investors who fear that GAAR would give the authorities arbitrary powers to examine any deal that they feel is designed to avoid tax. Prime Minister Dr. Manmohan Singh last month constituted 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.
Dr. Singh last month also decided to refer the issue of implications on FIIs and portfolio investors of the amendment made to the Income Tax Act relating to the taxation of non-resident transfer of assets where the underlying asset is in India to the Expert Committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR). "It is necessary to have clarity on the tax liability of portfolio investors and foreign institutional investors as a result of this amendment particularly when the investment is made through a registered stock exchange in accordance with SEBI guidelines and purely in the form of portfolio investment", the Prime Minister`s Office (PMO) said in a statement issued on 30 July 2012. Any clarification needs to be harmonised with the GAAR guidelines and will have to address any residual concerns outside of GAAR, the PMO said.
In the next few weeks, the government will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments, Mr. Chidambaram said last week.
On the macro front, inflation based on the monthly wholesale price index (WPI) is seen inching up to 7.4% in July 2012 from 7.25% (provisional) for the month of June 2012, as per the median estimate of a poll of economists carried out by Capital Market. The data is due for release at 11:30 IST tomorrow, 14 August 2012.
The Central Statistics Office (CSO) will unveil data on consumer price index (Agricultural Labourers/ Rural Labourers) on Friday, 17 August 2012.
The India Meteorological Department (IMD) expects normal rains in August -- a critical month for summer crops. It expects rainfall to be 5-6% below average in September due to the possibility of El Nino. The weather office expects rainfall during August-September to be 91% of the long-term average.
The monsoon has been less than average during the current year. Quantitatively, monsoon season rainfall for the country as a whole was deficient by 19% till 3 August 2012. Nineteen out of 35 states/union territories received less than the average rainfall till the end of July 2012. A panel of Indian ministers last week approved steps to contain the impact of a near-drought situation. The steps include providing a diesel-price subsidy to farmers, increasing the subsidy on seed supplies and removal of the import tax on oilmeals.
Rice sowing has picked up according to the latest data released by the Ministry of Agriculture. Rice was sown in 264.39 lakh hectares (lh) till Thursday, 9 August 2012, compared with 233.68 lh until 3 August 2012. Rice sowing so far has been below the normal area of 272.58 lh for the summer sown crop by this time of the year. Cumulative sowing of coarse cereals totaled 140.89 lh till 9 August 2012, compared with 135.75 lh until 3 August 2012. Sowing of coarse cereals remains much lower than 181.24 lh of normal area for the crop this time of the year.
Sowing of pulses totaled 74.48 lh till 9 August 2012, compared with 72.79 lh until 3 August 2012. Sowing of pulses remains lower than 92.81 lh of normal area for this time of the year. Sowing of oilseeds totaled 151.82 lh till 9 August 2012, compared with 145.17 lh until 3 August 2012. It is slightly lower than the normal area of 153.39 lh for oilseeds by this time of the year. Sowing of cotton totaled 109.23 lh till 9 August 2012, compared with 100.14 lh until 3 August 2012. The normal cotton sowing area of 99.9 lh by this time of the year has already been surpassed. Sowing of jute and mesta totaled 8.41 lh as on 9 August 2012, exceeding the normal area of 8.23 lk for the crop by this time of the 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. The four-month southwest monsoon season that starts from June accounts for almost 70% of total annual moisture that Indian soil receives in a year.
A comprehensive Land Acquisition, Rehabilitation and Resettlement Bill is among the 31 Bills the government has lined up for consideration and passing during the ongoing monsoon on session of Parliament. Among the other bills include those on Forward Contracts, Banking laws, whistle-blowers and women`s reservation as also the Prevention of Bribery of Foreign Public Officials bill. The monsoon session of Parliament will conclude on September 7.
An India-Mauritius joint panel will discuss a series of proposals to review the double taxation avoidance treaty between the two nations on 22-24 August in Mauritius. 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. 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.
The Q1 June 2012 earnings season is drawing towards a close. Hindalco Industries, Reliance Infrastructure and IDFC will unveil Q1 results tomorrow, 14 August 2012. Hindalco Industries` US unit -- Novelis Inc. -- unveils Q1 June 2012 results on Tuesday, 14 August 2012.
Most Asian shares declined on Monday, 13 August 2012, after disappointing data from Japan. Key benchmark indices in Hong Kong, China, Indonesia, Japan, South Korea and Taiwan were down by 0.05% to 0.98%. Singapore`s Straits Times index rose 0.17%.
Japan`s economy grew at an annualized pace of 1.4% in the second quarter -- lower than analysts` expectations of 2.7% rise -- as exports slowed and a domestic-demand led recovery showed signs of faltering. That marked a steep slowdown from an upwardly revised advance of 5.5% in the first quarter.
Trading in US index futures indicated that the Dow could slide 41 points at the opening bell on Monday, 13 August 2012. US stocks ended higher on Friday, 10 August 2012, as expectations grew from euro zone policymakers to come up with reforms to bring Europe out of debt crisis. The Dow Jones Industrial average rose 42.76 points, or 0.3%, to 13207.95. The Standard & Poor`s 500-stock index added 3.07 points, or 0.2%, to 1405.87 and the Nasdaq Composite index rose 2.22 points, or 0.1%, to 3020.86.
Data on US retail sales for July 2012 is due for release on Tuesday, 14 August 2012. The data will be watched closely as an indicator of economic health in the world`s biggest economy. US retailer Home Depot Inc. unveils its quarterly results on Tuesday, 14 August 2012.
Data on US July consumer-price index and the August Empire State index will be out on Wednesday, 15 August 2012. The NY Empire State Index is a regional economic indicator published by the Federal Reserve Bank of New York. It is considered to be an indicator of economic conditions in one of the most populated states in the US. The National Association of Home Builders will also release its August housing market index -- a measure of home builder confidence -- on Wednesday, 15 August 2012.
The July housing starts report and the August Philadelphia Fed index will be released on Thursday, 16 August 2012. Data on initial weekly jobless claims will be released on the same day. US retailer Wal-Mart Stores Inc. unveils its quarterly results on Thursday, 16 August 2012. The University of Michigan will release its preliminary consumer sentiment survey for August on Friday, 17 August 2012.
Election for a new president in the United States, the world`s biggest economy, is scheduled on 6 November 2012.
European Central Bank (ECB) governing council member Christian Noyer last week said that the ECB is determined to bring down the excessive borrowing costs hurting Spain and Italy and should be ready to intervene decisively in bond markets very soon, adding that a Greek exit from the euro zone was not envisaged.
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.
Euro zone second quarter GDP data is due for release tomorrow, 14 August 2012. Stronger German growth in the first quarter lifted the overall euro-zone GDP reading to 0% quarter-on-quarter, contrary to the forecasts for 0.2% quarter-on-quarter decline.
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