Friday blockbuster on the Street as Govt kicks off long-stalled reforms

Key benchmark indices logged smart gains for eight straight session of trade after the government signaled pushing long pending reforms on the fast track after hiking steeply diesel prices by Rs 5 per liter on Thursday. The BSE Sensex settled at its highest closing since 26 July 2011 and the NSE Nifty settled at its highest closing since 21 February 2012. Markets across the globe surged after the US central bank on Thursday initiated another aggressive stimulus program to stimulate growth in the world's largest economy. The Sensex was up 443.11 points or 2.46%, up 179.52 points from the day's low and off 34.27 points from the day's high. The market breadth was positive. Optimism the Indian government will reportedly unveil a series of fiscal policy decisions and hopes of further stimulus measures from the world's top central banks triggered gains in the market for eight straight session of trade. The government will reportedly consider big bang foreign direct investment (FDI) reform in a Cabinet meeting scheduled to be held today, 14 September 2012. The items on agenda reportedly includes a decision on 51% FDI in multi-brand retail. The government may also consider allowing foreign airlines to pick up stakes in Indian airlines. The government could also announce a relaxation in the single brand policy to facilitate easier investment. Metal shares rallied as prices of industrial metals rallied after the US Federal Reserve launched a new round of aggressive stimulus that could boost demand for industrial metals. Interest rate sensitive banking stocks were in demand ahead of the RBI monetary policy review on Monday, 17 September 2012. Interest rate sensitive auto, banking and realty stocks rose ahead of RBI's monetary policy review on Monday, 17 September 2012. Motorcycle makers rose as the government left the petrol prices unchanged. Shares of select state-run firms edged higher ahead of the cabinet meet today, 14 September 2012, to consider divesting some of the government's stake. State-run oil marketing firms reversed initial gains on profit booking. Shares of state-run upstream firms gained as their subsidy burden will reduce after the latest diesel price hike. Airline stocks gained on reports the cabinet will today, 14 September 2012 consider a proposal to allow foreign airlines to buy stakes in local carriers. Shares of organised retailers rose on speculation the Cabinet may consider proposal to allow foreign direct investment (FDI) in multi-brand retail at its meeting today, 14 September 2012. Engineering and construction conglomerate L&T extended 2-day gains triggered by the firm's division securing an order for manufacture & installation of ITER's Cryostat for International Fusion Energy Project. Index heavyweight Reliance Industries (RIL) surged in late trade. FMCG major, Hindustan Unilever (HUL) was marginally higher after hitting a record high. Index heavyweight and cigarette maker ITC reversed direction after scaling a record high. Foreign institutional investors (FIIs) bought shares worth a net Rs 361.48 crore on Thursday, 13 September 2012, as per the provisional data from the stock exchange. The BSE Sensex was up 443.11 points or 2.46% to 18,464.27, its highest closing since 26 July 2011. The index surged 477.38 points at the day's high of 18,498.54 in late trade. The index rose 263.59 points at the day's low of 18,284.75 in early trade. The S&P CNX Nifty was up 142.30 points or 2.62% to 5,577.65, its highest closing since 21 February 2012. The index hit an intraday high of 5,586.65 and an intraday low of 5,526.95. The total turnover on BSE amounted to Rs 2734 crore, higher than Rs 1938 crore clocked on Thursday. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,540 shares rose and 1,455 shares fell. A total of 136 shares were unchanged. Among the 30-share Sensex pack, 24 gained and only six of them declined. Index heavyweight and cigarette maker ITC fell 0.69% to Rs 267.85 after scaling a record high of Rs 272.50 in intraday trade today, 14 September 2012. ITC had reported strong Q1 June 2012 results. ITC'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. FMCG major, Hindustan Unilever (HUL) rose 0.18% to Rs 547.60. The stock hit a record high of Rs 554.35 in intraday trade today. Index heavyweight Reliance Industries (RIL) gained 5.05% to Rs 838.60. RIL has bought back 3.9 crore shares for about of Rs 2793.51 crore till 4 September 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. RIL on 27 August 2012 said it has scheduled a planned maintenance turnaround of one of the diesel hydrotreater units of the DTA refinery at its Jamnagar, Gujarat complex for a period of approximately two and half weeks starting 28 August 2012. This opportunity will also be utilised to carry out other maintenance and inspection jobs during the shutdown period, RIL said in a statement. During the period the other diesel hydrotreating unit of the DTA refinery along with other units including crude processing levels are planned at normal levels, RIL said. Cairn India surged 3.86% as US crude oil futures rose to the highest level in 4 months on speculation that economic stimulus in the US will boost fuel demand. US crude oil futures for October 2012 delivery were up $1.76 at $100.07 a barrel in electronic trading today, 14 September 2012. The contract had surged $1.30 or 1.34% to settle at $98.31 a barrel on the New York Mercantile Exchange on Thursday, 13 September 2012, its highest closing level since 4 May 2012. Prices are up 3.1% this week. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms such as Cairn India. State-run oil marketing firms (PSU OMCs) HPCL (down 2.63%), BPCL (down 1.73%) and Indian Oil Corporation (down 2.12%), declined after initial gains on profit booking. A Cabinet committee raised price of heavily subsidised diesel by Rs 5 per liter on Thursday to balance its fiscal deficit situation. The diesel price hike will reduce the projected massive under-recoveries of Rs 1,87,127 crore by about Rs 20300 crore of oil marketing firms for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of rupee against dollar. PSU OMCs had suffered under-recovery of Rs 1,38,541 crore during 2011-12. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on Thursday to balance its fiscal deficit situation. The diesel price hike will reduce the projected massive under-recoveries of Rs 1,87,127 crore by about Rs 20300 crore of oil marketing firms for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of rupee against dollar. PSU OMCs had suffered under-recovery of Rs 1,38,541 crore during 2011-12. The CCPA left the petrol and kerosene prices unchanged. It also restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum. Shares of state-run upstream firms GAIL (India) (up 1.26%), and Oil India (up 0.71%), gained as their subsidy burden will reduce after the latest diesel price hike. ONGC shed 0.60%. The stock turned ex-dividend today, 14 September 2012, for final dividend of Rs 2 per share for the year ended 31 March 2012. Before turning ex-dividend, the stock offered a dividend yield of 0.7% based on the closing price of Rs 283.05 on Thursday, 13 September 2012. Essar Oil surged 7.24% after the Supreme Court on Thursday, 13 September 2012, directed the company to pay sales tax dues of Rs 5165 crore in eight quarterly installments to the Gujarat Government. The announcement was made after market hours on Thursday, 13 September 2012. Interest rate sensitive realty stocks rose ahead of RBI's monetary policy review on Monday, 17 September 2012. DLF (up 8.03%), Unitech (up 5.43%), HDIL (up 4.68%), and Indiabulls Real Estate (up 7.09%), gained. Purchases of both residential and commercial property are largely driven by finance. Interest rate sensitive auto stocks also rose ahead of RBI's monetary policy review on Monday, 17 September 2012. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. Auto stocks shrugged off government's move to hike diesel prices by Rs 5 per liter on Thursday. Maruti Suzuki India (up 3.77%), Ashok Leyland (up 3.07%), Tata Motors (up 4.21%), and M&M (up 3.19%) gained. Motorcycle makers rose as the government left the petrol prices unchanged. India's biggest bike maker by sales Hero MotoCorp (HMCL) gained 1.77%. The company on Thursday announced yet another global partnership in keeping with its ongoing endeavor to fast augment its in-house technological and designing capabilities. The company has roped in the renowned Italian two-wheeler design firm “Engines Engineering” to partner with it in bringing HMCL's next-generation product line-up. The Bologna-based firm will impart technological know-how in terms of superior designing for the future products to be launched by HMCL. Among other two wheeler stocks, Bajaj Auto rose 1.06% and TVS Motor Company gained 2.98%. Interest rate sensitive banking stocks were in demand ahead of the RBI monetary policy review on Monday, 17 September 2012. ICICI Bank surged 4.76% after the private sector bank cut deposit rates by 50 basis points and the revised rates were effective 11 September 2012. The bank cut rates across maturities ranging from 91 days to less than five years. HDFC Bank (up 2.43%) and Axis Bank (up 6.27%), gained. Both these private sector banks have reportedly cut interest rates on retail fixed deposits by up to 50 basis points for various maturities. India's largest bank by branch network SBI spurted 5.61%. Metal shares gained as prices of industrial metals rallied after the US Federal Reserve launched a new round of aggressive stimulus that could boost demand for industrial metals. Jindal Steel & Power (up 7.40%), Hindalco Industries (up 7.32%), Sesa Goa (up 5.59%), Sterlite Industries (up 4.72%), Hindustan Zinc (up 4.24%), Tata Steel (up 3.95%), Sail (up 4.10%) and JSW Steel (up 3.64%) edged higher. In Shanghai, commodities futures, from copper to zinc, jumped between 3% and 5% on hopes the Fed's move would bolster global demand for manufacturing and building materials. Three-month copper on the London Metal Exchange rose 3.7% to a session high of $8,371 a tonne, the highest since 2 May 2012, before giving up some gains. Engineering and construction conglomerate L&T jumped 5%, with the stock extending 2-day 3.52% gains triggered by the firm's division securing an order for manufacture & installation of ITER's Cryostat for International Fusion Energy Project. During market hours today, 14 September 2012 L&T said has restructured its IT and engineering businesses with a view to accelerate growth in the technology space. L&T Infotech has been reorganised around two business clusters, “industrial” and “services”. L&T Integrated Engineering Services (IES) will be rebranded as L&T Technology Services. As a part of this strategy, it has inducted three US-based professionals - Keshab Panda, Mukesh Aghi and Vivek Chopra will join as directors on the L&T Infotech board. L&T believes this restructure will help the company in growing these businesses, the company said in a press release. Bharti Airtel rose 0.37%. During market hours today, 14 September 2012, the company said its subsidiary Bharti Infratel has filed its Draft Red Herring Prospectus with the Securities and Exchange Board of India (Sebi) on 14 September 2012 in relation to its initial public offer of equity shares (the "Issue"). The Issue constitutes a fresh issue of equity shares by Bharti Infratel and an offer for sale portion by Compassvale Investments Pte., GS Strategic Investments, Anadale and Nomura Asia Investment (IB) Pte. Airline stocks gained on reports the cabinet will today, 14 September 2012 consider a proposal to allow foreign airlines to buy stakes in local carriers. Jet Airways India (up 1.70%), SpiceJet (up 4.69%) and Kingfisher Airlines (up 7.68%), gained. Under current rules, foreign airlines are barred from buying stakes in domestic carriers, although foreign investors are allowed to hold a cumulative 49%. Shares of organised retailers rose on speculation the Cabinet may consider proposal to allow foreign direct investment (FDI) in multi-brand retail at its meeting today, 14 September 2012. Pantaloon Retail India (up 5.77%), Trent (up 2.29%) and Shoppers Stop (up 2.67%) gained. Shares of state-run firms National Aluminium Company (Nalco) (up 1.69%), Neyveli Lignite Corporation (up 1.19%), Hindustan Copper (up 0.11%), and Oil India (up 0.71%), edged higher while MMTC shed 0.45% ahead of the cabinet meet today, 14 September 2012, to consider selling some of the government's stake in these companies to meet disinvestment target of Rs 30000 crore set in the Union Budget for the financial year ending March 2013. As on 30 June 2012, the government's share in Hindustan Copper was 99.59%. The government held 93.56% stake in Neyveli Lignite Corporation, 99.33% in MMTC, 87.15% in Nalco and 78.43% in Oil India. Grasim Industries rose 2.56% to Rs 3,113.90 after striking a 52-week high of Rs 3,119.80 in intraday trade today, 14 September 2012. The firm and Omikenshi Co. on Thursday, 13 September 2012 said they have entered into an agreement to jointly develop new international markets for several functional rayon products. The announcement was made after market hours on Thursday, 13 September 2012. Orissa Minerals Development Company hit a lower circuit limit of 10% at Rs 47,887.25 after the company said its board at the meeting held on Thursday, 13 September 2012, rejected the proposed bonus issue of shares. The announcement was made after market hours on Thursday, 13 September 2012. India's wholesale price index (WPI) rose to a higher-than-expected 7.55% in August 2012 from a year earlier, mainly driven by higher food prices due to deficient monsoon, government data showed on Friday. This compares with provisional figure of 6.87% for July and 9.78% during the corresponding month of the previous year. The government also revised upwards June inflation to 7.58% from 7.25%. The Reserve Bank of India (RBI) is scheduled to undertake a mid-quarter review of the monetary policy on Monday, 17 September 2012. The RBI is expected to maintain status quo on short term lending rates in its policy review on 17 September 2012, as per the poll of economists carried out by Capital Market. RBI last cut rates by 0.5 percentage point to 8% from 8.5% in April, its first move to reverse a 20-month rate-tightening cycle. It then held rates steady in June and at its last rate-setting meeting on July 31, saying that a cut would exacerbate inflationary pressures. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on Thursday to balance its fiscal deficit situation. The diesel price hike will reduce the projected massive under-recoveries of Rs 1,87,127 crore by about Rs 20300 crore of oil marketing firms for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of rupee against dollar. PSU OMCs had suffered under-recovery of Rs 1,38,541 crore during 2011-12. The CCPA left the petrol and kerosene prices unchanged. It also restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum. Advance tax data for the 2nd installment due on 15 September 2012 could provide cues on the likely corporate earnings for Q2 September 2012. Merchandise exports declined for the fourth month in a row in August at $22.3 billion, down 9.7% over $24.7 billion in same month last year, provisional trade data released on Thursday showed. Imports in August declined 5.08% to $38 billion ($40 billion), resulting in a marginal increase in trade deficit of $15.7 billion ($15.3 billion). Government data released on Wednesday, 12 September 2012, showed the index of industrial production (IIP) grew at 0.1% in July 2012 as against 3.7% in the same month last year. The index, a key measure of industrial output, contracted by 1.8% in June 2012 after growing at 0.1% in April 2012. Expressing disappointment over the industrial output numbers, Finance Minister P Chidambaram said the government is actively engaged with the industry on ways to boost investment. The Reserve Bank of India (RBI) on Tuesday eased the external commercial borrowing (ECB) rules and hiked the maximum limit to $3 billion for one company. RBI also hiked the overseas borrowing cap to 75% of the company's last three-year average forex earnings. The foreign loan cap has also been raised to 75% of last three-year average forex earnings. ECB refers to commercial loans in the form of bank loans, buyers' credit, suppliers' credit, securitised instruments availed of from non-resident lenders with a minimum average maturity of three years. Last month, the Finance Ministry had liberalised the norms for raising funds through ECBs by domestic firms, particularly those in the realty sector. The High Level Committee on ECBs also permitted FIIs to invest up to $5 billion in rupee bonds within the overall corporate bond limit of $45 billion. Finance Minister P. Chidambaram early this month said that India is making consistent efforts to check the abuse of a double-taxation-avoidance pact it has with Mauritius. India has in the past said it is considering a review of the treaty in an effort to boost tax revenue. An India-Mauritius joint working panel was set up in 2006 to put in place adequate safeguards for preventing the misuse of the double-taxation-avoidance agreement between the two countries. India, in the past, has said that Mauritius was unwilling to cooperate on this issue. Mauritius says it has taken India's concerns seriously. Traditionally, Mauritius has accounted for nearly 40% of India's foreign investment. Under the avoidance of double taxation treaty, companies that invest through Mauritius do not have to pay tax in India but only have to pay tax in the island. But capital gains tax is close to zero in Mauritius, making it a popular investment hub. India wants to renegotiate the double taxation treaty with Mauritius to check round-tripping, in which money is moved out of one country to another and brought back under the garb of foreign capital, taking advantage of tax breaks. Meanwhile, a committee appointed by the government to review the controversial general anti-avoidance rules (GAAR) early this month suggested deferring the implementation of anti-avoidance rules by three years. "Where Circular No. 789 of 2000 with respect to Mauritius is applicable, GAAR provisions shall not apply to examine the genuineness of the residency of an entity set up in Mauritius," the committee said. The committee has also recommended that the government should abolish the tax on gains arising from transfer of listed securities, whether in the nature of capital gains or business income, to both residents as well as non-residents. The panel has said the government might consider increasing the rate of Securities Transaction Tax (STT) appropriately to make the proposal tax neutral. At present, short-term capital gains on equities are taxable at the rate of 15%. Holding period of less than one year is considered as short term. There is no long term capital gains tax on sale of shares. Business income is taxed at 30%. Distinguishing capital gains and business income depends on several factors, and disagreements have resulted in numerous litigation cases between the Revenue Department and taxpayers, the committee said in its report. India's gross domestic product (GDP) rose 5.5% in Q1 June 2012, data released by the government on 31 August 2012 showed. The services sector grew 6.9%, industry grew 3.6% and agriculture sector grew 2.9%. Manufacturing output rose 0.2% while mining sector grew 0.1% in Q1 June 2012. India's economy has slowed sharply over the past year due to weak industrial activity as high interest rates crimped demand and made it hard for corporates to finance expansion plans. Global rating agencies Standard & Poor's and Fitch Ratings cut their outlooks on India's ratings to negative from stable earlier this year and warned that unless the government takes concrete action to improve the macro-economic environment, the country may lose its investment-grade status. The month-long Monsoon session of Parliament that ended on Friday 7 September 2012, was one of the least productive sessions by far with protests over Assam violence, CAG report on coal blocks allocation and finally the Bill over SC/ST quota in job promotions stalling the proceedings. No business could be transacted for days due to the daily ritual of slogan shouting and rushing to the Well of the House finally resulting in the Lok Sabha and the Rajya Sabha being adjourned sine die on Friday, 7 September 2012. Only four bills including the Protection of Women Against Sexual Harassment at Workplace Bill and the AIIMS Amendment Bill were passed during the Monsoon session, that had 30 bills pending. Of 15 bills listed for introduction, just five were introduced. It now remains to be seen whether Parliament will be able to pass the pending bills in the Winter session. Slamming the Opposition as Parliament adjourned sine die on the last day of the monsoon session on Friday, 7 September 2012, without conducting any major business, Prime Minister Dr. Manmohan Singh said that the regular disruptions by the Opposition were a negation of democracy and a violation of norms of Parliament and the Constitution. "We have great respect for the CAG. However, if we respect it, we should be willing to discuss its reports in the House and at the PAC. This is negation of democracy, violation of norms of Parliament and the Constitution as we have understood it," Dr. Singh said on Friday, 7 September 2012. He said that the time wasted by Parliament could have been better utilised in discussing more crucial problems grappling the country like terrorism and Naxalism. "On the economic front too we face major challenges. The world is passing through an exceptionally difficult phase. Our economy is also experiencing problems. We must work hard to ensure that the Indian economy returns to high growth. I have no doubt we can do it. We can rebuild our growth momentum and encourage entrepreneurship by stimulating investment in infrastructure, in power, in roads, ports, railways, and telecommunications. This will send a clear signal to the world that India is on the road to recovery. This in turn will bring back the momentum of growth, generate productive employment and also enable us to direct more resources to help the poor and weaker sections," Dr. Singh said. The Prime Minister said that the government must act wherever it can without the benefit of Parliamentary guidance. "I am instructing all Ministries to accelerate their consideration of critical issues where decisions are needed to get the economy moving again," Dr. Singh said. The Central Bureau of Investigation (CBI) early this month registered five separate cases against certain private companies, their directors and unknown public servants in connection with the allegations related to getting coal blocks allocated on the basis of misrepresentations and false claims in the applications, presentations and connivance/lack of due diligence on part of public servants. Promoters of some of these companies have allegedly sold their stakes in an irregular manner after allocation of coal blocks, CBI said in a statement issued on 4 September 2012. A preliminary enquiry to examine the irregularities, if any, in the allocation of coal blocks during the period 2006-09 was registered on a reference from CVC, in June this year. The Comptroller and Auditor General of India last month issued a report that said the government had lost as much as Rs 1.86 lakh crore in potential revenue because it awarded 57 coal blocks to private companies between 2004 and 2011 without competitive bidding. The report has created a furore, with opposition political parties stalling proceedings of the Parliament and demanding the resignation of Prime Minister Dr. Manmohan Singh. Dr. Singh has denied allegations of impropriety in coal-block allocations and termed "clearly disputable" the Comptroller and Auditor General of India's (CAG) observations that the process followed to allot them deprived the government billions of dollars in revenue. In its report on the allocation of coal blocks, CAG said the government lost a maximum of Rs 1.86 lakh crore by allocating licenses for 57 coal-mining blocks between 2004 and 2011 to state-owned and private companies without a transparent auction. Dr. Singh on 27 August 2012 said the CAG's calculation of about Rs 1.86 lakh crore of financial gain to private parties can be questioned on a number of technical points. Dr. Singh also said since that the coal blocks were allocated to private companies only for captive purposes for specified end-uses, it will not be appropriate to link the allocated blocks to the price of coal set by CIL. The government has very limited time to take economic reform measures given that assembly elections in Gujarat and Himachal Pradesh (HP) are scheduled in December this year. It will difficult for the government to enact controversial measures close to the assembly polls. After elections in Gujarat and HP, assembly elections are planned in a total of 10 states during the period from March 2013 to January 2014. The next general election is due in May 2014. Reserve Bank of India (RBI) governor D Subbarao last month said India's inflation is still a challenge, but its growth story remains intact. "India has no space for a policy response to a crisis, we are more vulnerable," Subbarao said at an event in Cornell University in the United States. The country, he said, had room to react through monetary policy to the 2008-09 crisis, but this time around a litany of challenges--including moderating growth, persistent and high inflation, stress on balance of payments and twin deficits in the country's current account and fiscal budget--have left the central bank little room to negotiate the global slowdown. He noted that despite the depreciation of the Indian rupee by nearly 20% since last August, there has been no improvement in the country's current account deficit. He blamed the government's policy of fuel subsidies for protecting consumers from the effect of global commodity price rises. He noted despite higher prices, imports of oil into the country continue to increase due to rise in consumption, as consumers are protected from these price hikes. He added investors still should be confident of India's growth story and look at the positives including its attractive demographics, its growing middle-class and high savings rate. But he acknowledged there was a lot left to be done by various stakeholders to make the growth story happen. "India needs to grow at 10% for the next 15 years just to catch up," he said. A late pick-up in monsoon rains in August month will lead to a recovery in yields in summer-sown crops including rice and oilseeds, lessening the severity of a drought in several parts of the country following scanty rains for much of this year's June-September monsoon. Prolonged rains would also improve the prospects for winter-sown crops due to better soil moisture. An El Nino weather event, which usually disrupts rainfall, is expected to emerge at the tail-end of the monsoon in September. Farm Secretary Ashish Bahuguna late last month said the El Nino may not impact rainfall in September due to build-up of another weather phenomenon called the Indian Ocean Dipole. 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. Finance Minister P. Chidambaram last month said that the goods and services tax (GST) is a more effective and efficient substitute for a plethora of indirect taxes. The Finance Minister said that he is hopeful that the GST Bill would be passed before the end of the current financial year. The Finance Minister further said that though there are still some issues relating to GST and its Network (GSTN) to be resolved, yet they are not insurmountable. Union Minister of Commerce, Industry & Textiles Mr. Anand Sharma said 16 August 2012 that the government will come out with announcements pertaining to industrial environment that will address the subdued sentiment in the industry. Speaking after the fourth meeting of the Government-Industry Task Force Mr. Sharma said that there is a shared concern over the declining industrial production, particularly the manufacturing sector. European stock markets rallied Friday, after stimulus moves from the U.S. Federal Reserve the prior day. The Fed said it will buy mortgage-backed securities at a pace of $40 billion per month and keep short-term interest rates at nearly zero until mid-2015. Key benchmark indices in France, Germany and UK rose by between 1.54% to 2.14%. Germany's Federal Constitutional Court on Wednesday rejected calls to block the ratification of Europe's 500 billion euro ($643.7 billion) permanent rescue fund, the European Stability Mechanism, and the fiscal pact. As expected, the judges attached various conditions to the ESM, saying a total cap on Germany's liabilities under the ESM must be capped for the measure to conform to the country's Basic Law, or constitution. Europe moved a step closer to a banking union on Wednesday with a plan for the European Central Bank to supervise all euro zone banks, a cornerstone of closer fiscal integration designed to end years of financial turmoil in the region. European Commission President Jose Manuel Barroso outlined the proposal in his annual "state of the union" address, laying out a path to further economic integration that he said he hoped would underpin the future of the euro currency. The proposed banking reforms, which need to be approved by the European Union's member states, aim to break the link between banks and states, preventing heavily indebted countries being sucked further into difficulty by distressed lenders in need of rescue. The results of a detailed audit on the capitalisation needs of Spain's banks are expected in mid-September 2012. ECB President Mario Draghi on Thursday, 6 September 2012, said policy makers agreed to an unlimited bond-purchase program as they try to regain control of interest rates in the euro area. The program will target sovereign bonds with maturities of one to three years in its most ambitious plan yet to save the euro. The central bank also forecast a deeper economic contraction for 2012 than it did three months ago. Euro-area gross domestic product will drop 0.4% this year compared with an earlier 0.1% projection, it said. Asian stocks rose on Friday after the U.S. Federal Reserve announced an aggressive new stimulus plan to revive growth in the world's largest economy. Key benchmark indices in Japan, South Korea, Singapore, Taiwan China, Hong Kong and Indonesia were up by 0.64% to 2.92%. Japan's central bank, Bank of Japan, holds two-day policy meeting on interest rate in Japan on 18 and 19 September 2012. Data released on Wednesday showed that Japanese machinery orders climbed a seasonally adjusted 4.6% month-over-month in July, rising for the second straight month. The headline figure was sharply higher than forecasts following the 5.6% jump in June and the 14.8% plunge in May. China posted a wider-than-expected trade surplus in August as imports unexpectedly contracted during the month from the year-ago period, suggesting lackluster domestic demand, according to data released on Monday, 10 September 2012. Exports rose 2.7% in August 2012 from a year earlier, indicating relatively weak overseas demand. Imports surprised by dropping 2.6% from August 2011, against expectations for a small rise. China's top economic planners last week approved major infrastructure-investment projects, bolstering the more than two dozen subway and urban-rail initiatives. The National Development and Reform Commission gave the go-ahead to 13 highway projects and other municipal and port projects, according to reports. The measures follow announcement on 5 September 2012 of 25 new rail projects worth an estimated 800 billion yuan ($127 billion) over the next three to eight years. Standard & Poor's on Friday raised its long-term credit rating on South Korea to A+/AA- from A/A+ with a stable outlook. The credit-rating firm said that it made the upgrade to reflect a “less negative assessment of the geopolitical risks on the Korean peninsula” after what it called a smooth change of leadership in North Korea. “We believe that this transition has reduced risks that the North Korean regime could abruptly collapse or that it would escalate military confrontations,” S&P said. The central bank of South Korea on Thursday surprisingly left interest rates unchanged as against expectations of a quarter percentage point cut. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 3% after a surprise cut in July, the central bank said in a statement today in Seoul. South Korea on Monday, 10 September 2011, announced a five-billion-dollar economic stimulus package to support Asia's fourth-largest economy, which has been badly hit by the global downturn. The 5.9-trillion-won ($5.23 billion) package -- 4.6 trillion won of stimulus support for the remainder of this year and 1.3 trillion won for next year -- doesn't require a new national budget, the Ministry of Strategy and Finance said. The stimulus will take the form of reducing taxes on individual incomes and on purchases of homes or cars, and expanding state-funded social welfare programs. The new plan follows a stimulus package of 8.5 trillion won announced in June to boost the economy for the second half of 2012. The combined stimulus of 13.1 trillion won for this year equates to 1% of the country's gross domestic product. South Korea's export-led economy has been severely hit by shrinking overseas demand amid the prolonged euro-zone sovereign-debt crisis and weakened global economy. Trading in US index futures indicated that the Dow could gain 62 points at the opening bell on Friday, 14 September 2012. US markets surged on Thursday after the US Federal Reserve announced to buy $40 billion worth of mortgage back securities per month to keep borrowing rates low and would keep its benchmark interest rates "exceptionally low" until the middle of 2015. The Dow Jones Industrial Average ended up 206.51 points, or 1.55%, at 13,539.86. The Standard & Poor's 500 index was up 23.43 points, or 1.63%, at 1,459.99. The Nasdaq Composite index gained 41.51 points, or 1.33%, to 3,155.83. Concluding its two-day meeting on Thursday, the Federal Open Market Committee (FOMC) said that it will closely monitor incoming information on economic and financial developments in coming months. In particular, the FOMC also decided to keep the target range for the federal funds rate at 0 to 0.25% and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. The US government's debt rating could be heading for the "fiscal cliff" along with the federal budget. Moody's Investors Service on Tuesday said it would likely cut its "Aaa" rating on US government debt, probably by one notch, if budget negotiations fail. If Congress and the White House don't reach a budget deal, about $1.2 trillion in spending cuts and tax increases will automatically kick in starting January 2, a scenario that's been dubbed the "fiscal cliff," because it is likely to send the economy back into recession and drive up unemployment. A year ago, Moody's cut its outlook on US debt to "negative," which acts as a warning that it might downgrade the rating, after partisan wrangling over raising the US debt limit led the nation to the brink of default. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012.