Auto shares advance after mixed July sales data

A rally in world stocks triggered by US President Barack Obama's announcement over the weekend that he and Senate leaders had agreed on a "framework" debt deal to cut spending and raise the debt ceiling, helped Indian shares recover from a recent steep slide triggered by worries that higher interest rates will crimp corporate profit growth. US is the world's biggest economy. The BSE Sensex jumped 117.13 points or 0.64%, up close to 95 points from the day's low off close to 125 points from the day's high. The market snapped a four-day losing streak. Index heavyweight Reliance Industries (RIL) recovered in choppy trade after hitting 52-week low.



Metal stocks declined after weak Chinese manufacturing data. China is the world's largest consumer of copper and aluminum. Jindal Steel & Power hit 52-week low as the stock declined for the second day in a row after weak Q1 result. Steel giant Sail, too, hit 52 week low after poor Q1 result. JSW Steel hit 52-week low even as the company said its iron-ore purchasing and other transactions in Karnataka were done legally, refuting allegations made by an anti-corruption ombudsman.

Most IT stocks rose after Obama on Sunday, 31 July 2011, announced a deal between Republicans and Democrats to cut spending and raise US debt limit, easing worries about the likely damage that a failure to reach an agreement would have inflicted. US is the key market for the Indian IT firms. Telecom majors Bharti Airtel and Idea Cellular hit 52-week highs. Auto stocks rose on bargain hunting after mixed July vehicle sales data. The market breadth, indicating the overall health of the market, was negative.

The market jumped in early trade after Obama on Sunday, 31 July 2011, announced a deal between Republicans and Democrats to cut spending and raise US debt limit, easing worries about the likely damage that a failure to reach an agreement would have inflicted. The market pared gains to hit fresh intraday low in morning trade. The market held firm in mid-morning trade. A bout of volatility was witnessed in early afternoon trade as the key benchmark hit fresh intraday lows. The market was sharply off the day's high in afternoon trade. The market regained strength in mid-afternoon trade.

The BSE Sensex was up 117.13 points or 0.64% to 18,314.33, its highest closing level since 27 July 2011. The index gained 22.05 points at the day's low of 18,219.25 in afternoon trade. The Sensex jumped 242.87 points at the day's high of 18,440.07 in early trade.

The S&P CNX Nifty was up 34.80 points or 0.63% to 5,516.80, its highest closing level since 27 July 2011.. The Nifty hit a high of 5,551.90 in intraday trade. The Nifty hit a low of 5,486.45 in intraday trade.

The BSE Mid-Cap index fell 0.02% and the BSE Small-Cap index shed 0.26%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 2425 crore, lower than Rs 2968.26 crore on Friday, 29 July 2011.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,653 shares fell and 1,203 shares rose. A total of 123 shares remained unchanged. The breadth was positive earlier in the day.

From the 30 share Sensex pack, 23 stocks rose and the rest declined.

Index heavyweight Reliance Industries (RIL) rose 0.39% to Rs 830.90. The stock was volatile. The stock hit 52-week low of Rs 822.80 today. The stock hit a high of Rs 837.95. The stock snapped recent losses triggered by weak Q1 operational performance. RIL's operating profit margin (OPM) declined sharply to 12.25% in Q1 June 2011 from 16.04% in Q1 June 2010 as weak performance from the oil & gas and petrochemicals businesses offset strong performance from the refining segment.

RIL's net profit rose 16.69% to Rs 5661 crore on 39.1% increase in net sales to Rs 81018 crore in Q1 June 2011 over Q1 June 2010. The growth in both net profit and net sales topped market expectations. RIL was seen reporting 15.44% growth in net profit to Rs 5600.35 crore on 28.7% growth in net sales to Rs 74951.47 crore in Q1 June 2011 over Q1 June 2010, as per average estimate of 10 brokerages. The result was announced early this week.

RIL's gross refining margin (GRM) surged to $10.3 a barrel from $7.3 a barrel in Q1 June 2010. Gas production from RIL's KG-D6 field off the east coast declined 18% to 156.2 BCF in Q1 June 2011 over Q1 June 2010. Production of gas condensate from the filed jumped 81.6% to 0.21 million barrels in Q1 June 2011 over Q1 June 2010. The company said gas sales have been prioritized as per government's directive with effect from 9 May 2011.

State-run power equipment maker Bharat Heavy Electricals (Bhel) fell 0.73% to Rs 1824.95, off day's high of Rs 1861. The scrip extended recent sharp losses triggered by disappointing Q1 results. The stock had hit 52-week low of Rs 1802 in intraday trade on 28 July 2011. The company's net profit rose 22.15% to Rs 815.51 crore on 9.97% increase in net sales to Rs 7125.68 crore in Q1 June 2011 over Q1 June 2010. The net profit was boosted by a steep 52.12% jump in non-operational income to Rs 248.65 crore in Q1 June 2011 over Q1 June 2010. The result was announced during trading hours on 26 July 2011.

The top line growth fell short of market expectations. Analysts were expecting a much stronger revenue growth in Q1 June 2011 from Bhel on expectations of a strong execution of the large order book of the power equipment major. The company's outstanding order book was Rs 159600 crore as on 30 June 2011.

Engineering & construction bellwether Larsen & Toubro rose 2.14% to Rs 1762.90. The stock was the top gainer from the Sensex pack. The company's unit L&T Finance Holdings has priced its recently concluded initial public offer (IPO) at Rs 52 a share, near the lower end of the Rs 51-59 price band. The issue closed on Friday, 29 July 2011. The IPO was subscribed 5.34 times. The IPO is an important part of Larsen & Toubro's plan to spin off some of its non-core businesses into self-sustaining units with independent access to capital markets.

India's largest truck maker by sales Tata Motors gained 1.36%, with the stock snapping four-day losses on bargain after the latest data showed that total sales fell 6% to 63,761 units in July 2011 over July 2010. Tata Motors' domestic sales of Tata commercial and passenger vehicles fell 9% to 57,990 in July 2011 over July 2010. The company's commercial vehicle sales increased 14% to 40,798 units. LCV sales were 24,962 units, a growth of 22% over July last year. M&HCV sales stood at 15,836 units, a growth of 4% over July last year. The monthly sales data was released during trading hours today.

Tata Motors' domestic car and sport-utility vehicle sales plunged 38% to 17,192 units in July 2011 over July 2010.

Utility vehicles and tractors major Mahindra & Mahindra (M&M) rose 1.71% after total automobile sales jumped 41% to 39,633 units in July 2011 over July 2010. Domestic sales increased 42% to 37,323 units and exports rose 32.30% to 2310 units in July 2011 over July 2010. The Verito sedan registered a strong growth of 117% having clocked 1630 units in July 2011, as against 752 units in July 2010, maintaining its upward growth trend since Mahindra took over the brand.

The Passenger Vehicles segment (which includes utility vehicles and Verito) registered a growth of 35%, having sold 17312 units in July 2011, as against 12825 units during July 2010. The 4 wheeler commercial segment which includes the passenger and load categories has registered a phenomenal growth of 91%. Speaking on the monthly sales data, Rajesh Jejurikar, Chief Executive, Automotive Division, Mahindra & Mahindra said, "We are delighted with the 41% growth in our Automotive Business in July 2011 and the record for highest ever sales. All our brands have been doing very well and Verito continues its very strong demand momentum." The monthly sales data was released during trading hours today.

India's largest bike maker by sales Hero MotoCorp rose 0.6%. India's second largest motorcycle maker by sales Bajaj Auto gained 1.72%

India's largest car maker by sales Maruti Suzuki India rose 0.07%, reversing initial losses triggered by weak sales in July 2011. The company announced during market hours today that total sales fell 25.3% to 73,500 units in July 2011 over July 2010. The company said sales was negatively impacted to the extent of about 17,000 units due to discontinuation of old Swift and due shifting of Swift Dzire from Manesar plant to Gurgaon plant. The company said new Swift being manufactured at the Manesar plant will be launched nationally in mid-August 2011.

TVS Motor Company surged 8.31% after net profit surged 45.7% to Rs 58.80 crore on 24.7% rise in net sales to Rs 1707.27 crore in Q1 June 2011 over Q1 June 2010. The company today, 1 August 2011, reported a 14% growth in total sales to 1.89 lakh units in July 2011 over July 2010. Scooter sales grew 22% to 49,333 units, while motorcycle sales increased 15% to 70,170 units, said India's third-biggest two-wheeler maker by sales.

Telecom stocks extended recent gains triggered by Bharti Airtel, Idea cellular and Vodafone-Essar recently hiking tariffs on prepaid plans in some circles. Reliance Communications gained 0.94%.

Bharti Airtel rose 0.74% to Rs 440.25. The stock hit 52-week high of Rs 444.70 today. Bharti's consolidated net profit as per International Financial Reporting Standards (IFRS) is seen rising 8.21% to Rs 1515.81 crore on 3.83% growth in sales to Rs 16888.87 crore in Q1 June 2011 over Q4 March 2011 according to average estimate of 12 brokerages. Revenue growth will be driven by volume growth in both India and Africa operations. Bottom line growth will be driven by expansion in operating profit margin at both India and Africa operations, analysts reckon. Bharti unveils Q1 results on Wednesday, 3 August 2011.

Bharti Airtel's chairman and managing director Sunil Mittal said that consolidation in India's telecommunications industry is imminent even as competition eases and call tariffs stabilize. Hyper competition in the market with 12-13 players, many of whom happened to be new entrants, is clearly abating, Mittal said in Bharti's annual report for the year ended March 2011, which was released today.

Bharti, the country's largest mobile-phone operator by users, expects stable tariffs to help in "the return of reasonable growth," Mittal said. He, however, cautioned that regulatory uncertainty continues over the allocation and pricing of second-generation radio bandwidth.

Idea Cellular hit 52-week high, extending Friday's rally triggered by strong Q1 operational performance. The stock was up 4.13% to Rs 98.25. The stock hit 52 week high of Rs 98.60 today. Idea's earnings before interest, taxation, depreciation and amortization (EBITDA) rose 11.97% to Rs 1204 crore on 6.7% increase in total revenue to Rs 4520.70 crore in Q1 June 2011 over Q4 March 2011. The EBITDA margin improved to 26.6% from 25.4% in Q4 March 2011.

Consolidated net profit fell 35.43% to Rs 177.26 crore in Q1 June 2011 over Q4 March 2011, mainly due to capitalization of interest costs due to the roll out of 3G services. The result was announced during trading hours on Friday.

First State Investment Management (UK) said Monday it has raised its stake in Indian mobile-phone operator Idea Cellular as part of its focus on equities in the Asia-Pacific region and emerging markets. In a filing with the local stock exchanges, the unit of the asset management division of the Commonwealth Bank of Australia said it increased its stake in Idea to 5.022% on 28 July from 3.295% earlier. The disclosure to the exchanges was also made on behalf of First State Investments International, the filing said.

Sun TV Network fell 3.68% to Rs 309.75, as the company's first quarter results fell short of market expectations. The company announced during market hours today that net profit rose 9.75% to Rs 187.62 crore on 3.07% growth in net sales to Rs 453.99 crore in Q1 June 2011 over Q1 June 2010. Both top line and bottom line growth fell short of market expectations. The company was seen reporting 14.95% growth in net profit to Rs 196.52 crore on 7.53% growth in net sales to Rs 473.60 crore in Q1 June 2011 over Q1 June 2010 according to average estimate of 13 brokerages.

Sun TV said the growth in revenue in Q1 June 2011 was largely a function of the sustained advertising growth and subscription revenue contributed through a well-diversified mix of clients (national, regional and local) across multiple product categories. The company's EBITDA margin declined to 80.8% from 81.7% in Q1 June 2010.

Metal stocks declined after weak Chinese manufacturing data. China is the world's largest consumer of copper and aluminum. Hindustan Zinc, Sterlite Industries, and Nalco shed by between 1.28% to 5.56%.

JSW Steel slumped 10.26% to Rs 694.80, extending Friday's 5.49% loses. The stock hit 52-week low of Rs 672 today. The stock tumbled today, 1 August 2011, even as the company said its iron-ore purchasing and other transactions in Karnataka were done legally, refuting allegations made by an anti-corruption ombudsman. "We would like to clarify that all the transactions have been done in a legally compliant manner," JSW Steel said in a statement after trading hours on Friday, 29 July 2011.

"The company will suitably respond at an appropriate time to the authorities concerned as may be required after examining the said Lokayukta report in detail." A report by the anti-corruption ombudsman--called the Karnataka Lokayukta--alleged widespread corruption in the mineral-rich districts of Karnataka state that had resulted in the government losing billions in revenue. The ombudsman said that JSW Steel illegally received 1.29 million metric tonnes of iron-ore from April 2009 to July 2010 for which it didn't pay royalties to the state government. It said a penalty of Rs 324 crore ($73.5 million) should be levied on the company, equivalent to the market price of the ore on which it evaded taxes, since minerals are by definition the property of the government.

There is also the possibility of a donation of Rs 10 crore paid by JSW Steel through a unit to a charity called Prerana Educational Trust to speed up a mining grant, the report said.

Jindal Steel & Power (JSPL) lost 2.26% to Rs 573.10, extending Friday's 4.17% slide triggered by weak Q1 results. The stock hit a 52-week low of Rs 557 today. Consolidated net profit after tax fell 2.5% to Rs 933.03 crore on 31.4% increase turnover to Rs 3944.10 crore in Q1 June 2011 over Q1 June 2010. The Q1 result was announced after market hours on Thursday, 28 July 2011.

Steel Authority of India (Sail) fell 5.07% to Rs 119.95 after company announced after market hours on Friday that the net profit fell 28.77% to Rs 838.06 crore on 19.63% rise in total income to Rs 11389.04 crore in Q1 June 2011 over Q1 June 2010. The stock hit 52-week low of Rs 119 today.

Most IT stocks rose after Obama on Sunday, 31 July 2011, announced a deal between Republicans and Democrats to cut spending and raise US debt limit, easing worries about the likely damage that a failure to reach an agreement would have inflicted. US is the key market for the Indian IT firms. Infosys, Wipro, HCL Tech, Tech Mahindra and iGate Patni rose by between 0.13% to 1.53%.

ACC rose 0.04%, reversing initial losses, as the company's cement shipments rose 28% to 2 million tonnes in July 2011 over July 2010. Production jumped 30.96% to 2.03 million tonnes.

Adani Enterprises rose 8.82% after the company denied on Saturday any links to alleged illegal mining in Karnataka and said the company had never had any interest in mining iron ore anywhere in India. The stock had plunged as much as 21% on Friday hit by Karnataka Lokayukta's report.

Cigarette major ITC rose 0.29% to Rs 208.90 on strong Q1 results. The stock had hit a record high of Rs 211.35 on Friday. ITC's net profit jumped 24.51% to Rs 1332.72 crore on 20.57% rise in operating income to Rs 5860.18 crore in Q1 June 2011 over Q1 June 2010. A stronger-than-expected top line growth aided strong bottom line growth. The core operating profit margin declined to 33.72% from 33.81% in Q1 June 2010. The result was announced during trading hours on 28 July 2011.

Bank stocks rose as many banks raised lending rates which could help protect net interest margins. A number of banks have raised lending rates after the central bank raised its key lending rate by 50 basis points at a policy review early last week. India's largest commercial bank by branch network State Bank of India (SBI) added 0.1%.

India's largest private sector bank by market capitalisation ICICI Bank rose 0.57%, extending Friday's near 2% gains triggered by strong Q1 results. Consolidated net profit jumped 53% to Rs 1667 crore on 8.9% growth in total income to Rs 14749.79 crore in Q1 June 2011 over Q1 June 2010. Standalone net profit increased 30% to Rs 1332 crore in Q1 June 2011 over Q1 June 2010. Net interest income increased 21% to Rs 2411 crore and fee income increased 12% to Rs 1578 crore in Q1 June 2011 over Q1 June 2010. The result hit the market during trading hours on Friday, 29 July 2011.

The bank's ratio of net non-performing assets (NPAs) as on 30 June 2011 was 0.91%, lower than 0.94% as on 31 March 2011. The bank's provisions declined 43% to Rs 454 crore in Q1 June 2011 over Q1 June 2010. The bank's provisioning coverage ratio computed in accordance with RBI guidelines was 76.9% as at 30 June 2011, higher than 76% as at 31 March 2011.

The bank's advances increased by 20% year-on-year to Rs 220693 crore at 30 June 2011 from Rs 184378 crore at 30 June 2010. The bank's savings deposits increased by 18% year-on-year to Rs 66858 crore at 30 June 2011 from Rs 56546 crore at 30 June 2010. The CASA ratio at 30 June 2011 was 41.9%, despite the systemic decline in demand deposits, ICICI Bank said in a statement.

The CASA (current and savings account) ratio is the ratio of deposits in the current and savings accounts of a bank to its total deposits. A high CASA ratio indicates that a higher portion of the banks' deposits come from current and savings accounts. This means that the bank is getting money at low cost, since no interest is paid on the current accounts and the interest paid on savings account is usually low.

As at 30 June 2011, ICICI Bank had 2,533 branches and 6,245 ATMs, the largest branch network among private sector banks in the country.

India's second largest private sector bank by net profit HDFC Bank gained 0.11%.

Kotak Mahindra Bank rose 1.6%. The bank said after market hours today that it revised base rate upwards by 25 basis points from 9.5% per annum (p.a.) to 9.75% p.a. with effect from 2 August 2011. It also revised its benchmark prime lending rate upwards by 25 basis points and its deposits across tenor buckets by 10 to 50 basis points.

Some realty stocks edged higher on bargain hunting. The realty stocks had fallen recently triggered by worries that higher interest rates could dent demand for residential and commercial properties. Purchases of both residential and commercial property are largely driven by finance. Phoenix Mills, Indiabulls Real Estate, Unitech, and HDIL rose by 0.45% to 2.61%.

Airline stocks fell after PSU OMCs raised jet fuel prices. SpiceJet and Jet Airways fell by between 0.95% to 3.64%. Kingfisher Airlines rose 0.58%. State-owned oil marketing companies hiked jet fuel, or ATF, prices by 2.7%, in line with firming rates in international markets. Aviation turbine fuel (ATF) price in Delhi has been hiked by Rs 1,520 per kilolitre (kl), or 2.69%, to Rs 57,844 per kl with effect from Sunday, 31 July 2011, midnight.

Jet fuel accounts for over 50% of airlines' operating cost. State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight.

Cals Refineries clocked highest volume of 5.76 crore shares on BSE. Birla Cotsyn (60.47 lakh shares), Suzlon Energy (57.27 lakh shares), K Sera Sera (47.94 lakh shares) and Rushil Decor (47.07 lakh shares) were the other volume toppers in that order.

JSW Steel clocked highest turnover of Rs 168.62 crore on BSE. Adani Enterprises (Rs 112.18 crore), Rushil Decor (Rs 63.10 crore), State Bank of India (Rs 54.10 crore) and NESCO (Rs 49.86 crore) were the other turnover toppers in that order.

Investors' focus continues on Q1 corporate earnings. Investors are focusing on the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian firms are witnessing cost pressures amid rising interest rates and staff costs.

Power Grid Corporation unveils Q1 results tomorrow, 2 August 2011. Bharti Airtel and United Spirits unveil Q1 results on 3 August 2011. Adani Power, Mundra Port And Special Economic Zone and Indian Hotels announce Q1 results on 4 August 2011. Cipla and IL&FS Transportation Networks are set to announce Q1 results on 5 August 2011.

M&M announces Q1 results on 8 August 2011. ABB, Tata Communications, Mahindra Satyam, GMR Infrastructure and VIP Industries announce quarterly results on 9 August 2011. Tata Power and Rural Electrification Corporation unveil Q1 results on 10 August 2011. Tata Motors, Castrol India and Shipping Corporation of India unveil quarterly results on 11 August 2011. Tata Steel, Hindalco, Coal India, National Aluminium Company and HPCL unveil Q1 results on 12 August 2011. Aditya Birla Nuvo unveils Q1 results on 13 August 2011.

The economy will grow at 8.2% in the year to March 2012, but it faces a challenge in achieving the fiscal targets set in the annual budget, a top economic advisory panel said in a report released on Monday. Headline inflation would remain close to 9% till October, before beginning to ease, and would be at 6.5% in March, the prime minister's Economic Advisory Council said.

Exports grew by an impressive 46% to $29 billion in June 2011, despite uncertainty in the US and European markets. Merchandise exports had aggregated to $20 billion in June 2010. During the April-June quarter, overseas shipments grew by 46% to $79 billion, according to Commerce Ministry data released today. Though imports grew by 42% to $37 billion in June, the trade deficit of $7.6 billion was almost half the level of $15 billion seen in May, lessening concerns over the country's balance of payments situation.

Growth in manufacturing sector fell for the third month in a row in July as a long series of interest rate hikes and faltering global demand weighed on new orders and output growth, a survey showed on Monday, 1 August 2011. The HSBC Markit Business Activity Index, based on a survey of around 500 companies, fell to a 20-month low of 53.6 in July from 55.3 in June, though it remained above the 50 mark that separates growth from contraction for the 28th consecutive month.

The Reserve Bank of India (RBI) raised its key lending rates by 50 basis points at a policy review on 26 July 2011, to tame high inflation. The RBI has raised its end March 2012 inflation target to 7% as against the previous estimate of 6%, saying inflation has been higher than its expectations. It kept its economic growth forecast of 8% for this fiscal year. The RBI revised downwards non-food bank credit growth projection to 18% for the year ending March 2012 (FY 2012) from 19% earlier.

Although the impact of past monetary policy actions is still getting transmitted, considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance, the RBI said. Going forward, the monetary policy stance will depend on the evolving inflation trajectory, which, in turn, will be determined by trends in domestic growth and global commodity prices, the RBI said. A change in stance will be motivated by signs of a sustainable downturn in inflation, it added.

The uncertain global macro-economic environment poses a challenge for the domestic economy from the perspective of financing the current account deficit, RBI said. In this context, the composition of capital flows remains a concern. In recent months, some shift in composition of capital flows towards foreign direct investment (FDI) has been observed. This trend needs to be reinforced through policy actions to improve the quality of financing of the current account deficit, RBI said.

Reserve Bank of India governor D Subbarao today, 1 August 2011, interest rates need to be raised to rein in inflation. Restraining inflation will ensure medium-term economic growth is sustainable, he said in a speech on India and the global financial crisis.

The government on Friday suggested offering farmers as much as six times the price of their land when it is taken over for industrial use, as it released a draft of a law that may help fast-track industrialization in Asia's third-largest economy. The draft Land Acquisition Bill also proposes at least 80% of owners must consent to such acquisitions, which may calm widespread protests in India against the government's arbitrary takeover of land for industry at below-market rates. The bill will have to be approved by the cabinet and passed by parliament to become law.

European stock markets rose on Monday, 1 August 2011, in relief after news of a debt-deal agreement in the US over the weekend, with financials such as Commerzbank AG driving the gains. The key benchmark indices in UK, France and Germany were up by 0.59% to 1.38%.

The Eurozone manufacturing recovery lost further momentum in July. The final Markit Eurozone Manufacturing PMI fell to 50.4, below June's 52.0 and the weakest reading since the recovery began in October 2009.

Asian stock markets posted sharp gains on Monday, 1 August 2011, as US President Barack Obama's announcement of a framework agreement to lift the nation's debt ceiling and avert a sovereign default sparked a relief rally. The key benchmark indices in South Korea, Indonesia, Singapore, Hong Kong, Japan, and Taiwan rose by between 0.66% to 1.83%.

China' Shanghai Composite rose 0.08%. HSBC reported Monday that its China manufacturing purchasing managers' index fell to 49.3 during the month from 50.1 in June. A separate, official survey by the China Federation of Logistics and Purchasing showed the nation's PMI slipped to 50.7 in July from 50.9 in June, but remained above the expansion/contraction boundary of 50

HSBC data also showed Taiwan's PMI shrank to 46.1 in July from 49.9 in June, while the reading for South Korea was at 51.3, "broadly unchanged" from June's level.

US President Barack Obama on Sunday, 31 July 2011, announced a deal between Republicans and Democrats to cut spending and raise US debt limit, easing worries about the likely damage that a failure to reach an agreement would have inflicted. The Congress will still need to pass the relevant legislation into law by midnight Tuesday, 2 August 2011, or the US will breach its debt ceiling.

The White House and congressional leaders said the compromise would cut about $2.5 trillion from US government's fiscal deficit over the next 10 years. The plan involves a two-step process for reducing the US deficit. The first phase calls for about $900 billion in spending cuts over the next decade and the next $1.5 trillion in savings must be found by a special congressional committee. Congress must act by 23 December 2011, under the deal.

Trading in US index futures indicated that the Dow could surge 162 points at the opening bell on Monday, 1 August 2011.