Market may open higher on firm Asian stocks

The market may open higher on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 64.50 points at the opening bell. Asian shares jumped on Monday, 28 November 2011, as investors reacted to reports of European and international measures to get a grip on euro-zone debt crisis.

Reliance Industries (RIL) and its associate Reliance Industrial Infrastructure (RIIL) said on Friday that negotiations on contemplated acquisitions by RIL and RIIL of Bharti's 74% shareholding in Bharti AXA Life Insurance Company and Bharti AXA General Insurance Company were jointly terminated as parties were unable to reach agreement on the long-term vision and joint governance of the ventures with AXA. Reliance had said in June that it would buy out Bharti's stakes in joint ventures with France's AXA as it sought to build on moves beyond its core energy business. Bharti Enterprises, which controls leading Indian telecoms firm Bharti Airtel had set up the ventures -- Bharti AXA Life Insurance and Bharti AXA General Insurance -- with AXA, Europe's second biggest insurer, in 2006.



Key benchmark indices edged lower for the tenth time in the preceding twelve trading session on Friday, 25 November 2011, as data showing heavy selling by foreign funds recently and euro-zone debt worries hurt sentiment adversely. The BSE Sensex lost 163.06 points or 1.03% to 15,695.43, its lowest closing level since 3 November 2009.

Foreign institutional investors (FIIs) sold shares worth a massive Rs 805 crore on Friday, 25 November 2011, as per the provisional data from the stock exchanges. FIIs have pressed heavy sales of Indian shares over the past two weeks. Their outflow totaled Rs 7288.67 crore from 15 to 25 November 2011.

The government unveils Q2 September 2011 gross domestic product (GDP) data on Wednesday, 30 November 2011. The economy expanded 7.7% in Q1 June 2011 from a year earlier, helped by strong growth in the services sector.

Meanwhile, uproar in parliament on Friday, 25 November 2011, over the cabinet's decision to open up the retail market to global supermarket chains forced Trade Minister Anand Sharma to announce the details of the new FDI policy at a press conference instead of the government's plan of announcing the same in parliament. Sharma said the "India-specific" scheme would create tens of millions of jobs. The proposal sets a minimum investment limit of $100 million per chain -- 50% to go on developing rural infrastructure and establishing a cold-chain system -- and 50% on front-end retailing, or stores. The multi-brand retailers will be permitted only in cities with a population of one million or more.

Trinamool Congress cabinet member and Railway Minister Dinesh Trivedi said he had registered his dissent at the cabinet meeting on Thursday but was overruled.

The government's decision to allow foreign direct investment (FDI) in retail drew flak from opposition parties in parliament, forcing the adjournment of both houses till Monday and ending the first week of the winter session without any business being transacted. Besides FDI, the opposition was also out with their blazing guns to attack the government on the issue of price rise and corruption. Parliament did not run on the first three days of the session due to protests over rising prices and the demand of separate statehood for Telangana region in Andhra Pradesh. The winter session concludes on 21 December 2011.

Meanwhile, a latest government statement in parliament dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam on Wednesday, 23 November 2011, said the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.

Corporate earnings have been weak. The combined net profit of a total of 3,897 companies declined 36.3% to Rs 67112 crore on 20.5% growth in sales to Rs 1143432 crore in Q2 September 2011 over Q2 September 2010.

The Union Cabinet on Thursday, 24 November 2011, approved the long-awaited Companies Bill that will completely recast the key provisions of the decades-old Companies Act 1956. Following Cabinet clearance, it is now likely to be taken up for consideration and passage in the ongoing winter session of Parliament. The Bill suggests that profit-making companies above a certain threshold will have to spend at least 2% of the average profits in the preceding three years on corporate social responsibility (CSR) activities and make a disclosure to shareholders about the policy adopted in the process.

The government diluted the provision after stiff opposition from the industry and decided not to make 2% CSR spend mandatory. The Bill also seeks to provide for class action suits and a fixed term for independent directors. Among other things, it proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence. The Bill will give more powers to the Serious Frauds Investigation Office.

The Securities and Exchange Board of India (Sebi) on Thursday, 24 November 2011, tightened rules governing the issuance of warrants allotted along with public and rights offerings in a bid to prevent their misuse. Sebi said it has decided to specify a maximum tenure of 12 months for such warrants. Currently, Sebi regulations for public and rights offerings don't specify any tenure for warrants. The regulator added that the issuer of the public or rights offering will also have to disclose how the funds raised would be used, both in the offer document and on an ongoing basis. The regulator also decided to prescribe a minimum allotment size of Rs 5 crore to anchor investors during a share sale, and the maximum number of anchor investors allowed, in slabs. It didn't specify what the slabs would be.

Food price index rose 9.01% and the fuel price index climbed 15.49% in the year to 12 November 2011, government data on Thursday, 24 November 2011, showed. In the previous week, annual food and fuel inflation stood at 10.63% and 15.49%, respectively. The primary articles price index was up 9.08%, compared with an annual rise of 10.39% a week earlier.

Over the past few weeks, the government has taken some steps to encourage foreign investment. It raised the amount of government bonds that foreigners can hold and the amount of corporate debt they can hold by $5 billion each, to $15 billion and $20 billion respectively. The Union Cabinet also recently approved a pension overhaul that is expected to have a provision added allowing foreign pension-management companies to hold up to 26% of Indian joint ventures, from zero today.

The Reserve Bank of India (RBI) on 22 November 2011 eased rules for overseas investors in infrastructure debt funds, allowing foreign buyers to purchase bonds issued by such funds. Foreign investors can now buy either local or foreign currency bonds issued by infrastructure debt funds, provided they hold them for three years, the Reserve Bank of India said in a statement. Under broad guidelines for infrastructure funds issued in June this year, a fund may be set up either as a trust or a company. Overseas investors were previously allowed to invest in infrastructure debt funds that were set up as a trust.

The central bank also said that foreign investors other than non-resident Indians can't collectively invest more than $10 billion in such funds. The limit of $10 billion is within the $25 billion cap on overseas investment in infrastructure sector bonds, or infrastructure finance firms.

The RBI on 23 November 2011 eased rules on overseas borrowings by Indian firms by raising the cap on the total cost of some such loans, in a move that could allow lower-rated firms to more easily tap offshore funds. Local firms can now raise external debt at a total spread of up to 3.5 percentage points over the London Interbank Offered Rate, or Libor, for overseas loans with a maturity of between three and five years, the Reserve Bank of India said in a notice. The previous cap was 3 percentage points over Libor. The total cost cap on loans with a maturity of more than five years, however, remains the same at 5 percentage points over Libor, the release said.

The new cost ceiling will be applicable immediately, and will be valid up to 31 March 2012. The RBI also noted that any funds raised through such overseas loans must be brought back into India immediately, unless meant for use offshore.

The RBI on 23 November 2011 also eased rules on currency swap hedges by companies, removing a cap on the net supply of foreign currency a bank can add to the market as a result of such swaps. The move will help banks sell more currency swaps to companies with overseas debt, to help them cope with the volatile currency market.

Monetary policy has a limited role in curbing food price pressures in India but such action may still be warranted if high food inflation persists, the central bank governor said Tuesday, 22 November 2011. "A lasting solution to food price pressures lies in a supply response that raises agricultural production and productivity, improves supply chain management and sets the right incentive framework for both producers and consumers," D Subbarao said, according to a copy of his speech at a conference released by the Reserve Bank of India.

Subbarao said that the supply measures taken to meet the growing demand for protein-rich foods have been inadequate. Food prices have been hovering at their highest levels in several months due to sustained demand from the growing middle class that is increasingly consuming more of high-protein diets like milk, fish and meats, offsetting price decline in other commodities.

RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.

Asian shares jumped on Monday, 28 November 2011, as investors reacted to reports of European and international measures to get a grip on euro-zone debt crisis. Key benchmark indices in China, Hong Kong, Indonesia, Malaysia, Japan, Singapore, South Korea and Taiwan were up by between 0.04% to 1.94%.

Reports emerged over the weekend that the International Monetary Fund may provide financial support for Italy, which saw its government bond yields surge again on Friday, 25 November 2011. Such a plan could give Italy Prime Minister Mario time to implement his reforms without having to refinance the country's existing debt. The coming week is an important one for European bond issuance, with Belgium, Italy, Spain and France all on course to issue up to a combined total of 19.5 billion euros ($26 billion) in bonds this week, as well as another 9 billion to 9.5 billion euros in bills.

US stocks posted seven straight sessions of losses on Friday, 25 November 2011, ending the worst week in two months, as the lack of a credible solution to Europe's debt crisis kept investors away from risky assets. US markets were open only for half-day on Friday, 25 November 2011.