Market ekes out small gains

Key benchmark indices eked out small gains as index heavyweights ITC and Reliance Industries (RIL) edged higher. The barometer index, BSE Sensex, advanced 21.07 points or 0.11%, up about 58 points from the day's low and off close to 96 points from the day's high. Data showing that foreign funds remained net buyers of Indian stocks on Monday, 24 September 2012, underpinned sentiment. The market breadth was positive. BSE Small-Cap and Mid-Cap indices both outperformed the Sensex. The Sensex has gained 1,264.85 points or 7.26% in this month so far (till 25 September 2012). The Sensex has jumped 3,239.49 points or 20.96% in calendar 2012 so far (till 25 September 2012). From a 52-week high of 18,866.87 on 21 September 2012, the Sensex has fallen 172.46 points or 0.91%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 3,558.55 points or 23.51%. Shares of power generation, transmission and distribution companies and power equipment makers rose after the Cabinet Committee on Economic Affairs on Monday evening announced a scheme for financial restructuring of ailing state distribution companies (Discoms). Realty stocks extended recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country, with the government allowing up to 51% foreign direct investment in multi-brand retail trade. FMCG stocks rose on renewed buying. In banking pack, HDFC Bank hit record high. United Spirits surged to hit a 52-week high after the company and Diageo plc issued a joint statement today, 25 September 2012, confirming that Diageo is in discussion with United Spirits and United Breweries (Holdings) for a possible transaction for Diageo plc to acquire an interest in United Spirits. In cement pack, UltraTech Cement hit record high. The market edged higher in early trade after provisional data showed that foreign institutional investors (FIIs) remained net buyers of Indian stocks on Monday 24 September 2012. The market reversed initial gains and slipped into the red in morning trade. The Sensex alternately swung between gains and losses in mid-morning trade. Key benchmark indices regained positive terrain after hitting fresh intraday low in early afternoon trade. It hovered in positive terrain in afternoon trade. The Sensex retained positive zone in mid-afternoon trade. The market regained positive zone after slipping into the red for a brief period in late trade. The market may remain volatile in the immediate future as traders roll over positions in the futures & options (F&O) segment from the near month September 2012 series to October 2012 series. The September 2012 F&O contracts expire on Thursday, 27 September 2012. The BSE Sensex rose 21.07 points or 0.11% to settle at 18,694.41, its highest closing level since 21 September 2012. The index jumped 116.67 points at the day's high of 18,790.01 at the onset of the trading session. The index fell 37.18 points at the day's low of 18,636.16 in early afternoon trade, its lowest level since 21 September 2012. The S&P CNX Nifty rose 4.30 points or 0.08% to settle at 5,673.90, its highest closing level since 21 September 2012. The index hit a high of 5,702.70 in intraday trade. The index hit a low of 5,652.45 in intraday trade, its lowest level since 21 September 2012. The BSE Mid-Cap index rose 0.46% and the BSE Small-Cap index rose 0.53%. Both these indices outperformed the Sensex. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,552 shares rose and 1,325 shares fell. A total of 133 shares were unchanged. BSE clocked turnover of Rs 3434 crore, higher than Rs 2868.46 crore on Monday, 24 September 2012. From the 30-share Sensex pack, 18 stocks fell and rest of them rose. Index heavyweight Reliance Industries (RIL) rose 0.43% to Rs 839.85. The stock hit a high of Rs 844.70 and a low of Rs 830.50. RIL has purchased 3.9 crore shares and spent Rs 2794.73 crore (excluding brokerage, service tax, Securities Transaction Tax, Stamp Duty, Exchange Transaction Charges and Sebi fees) till 18 September 2012 under the company's 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. Shares of power generation, transmission and distribution companies and power equipment makers rose after the Cabinet Committee on Economic Affairs on Monday evening approved the scheme for financial restructuring of state distribution companies (Discoms). JSW Energy (up 6.48%), Crompton Greaves (up 5.34%), NHPC (up 3.44%), Bhel (up 2.67%), Lanco Infratech (up 2.59%), Torrent Power (up 1.78%), Adani Power (up 1.09%), Reliance Power (up 0.94%), Suzlon Energy (up 0.38%) and GMR Infrastructure (up 0.2%), edged higher. However, Siemens (down 1.55%), ABB (down 1.45%), NTPC (down 0.9%), Power Grid Corporation of India (down 0.89%), Thermax (down 0.35%), Reliance Infrastructure (down 0.28%) and Tata Power (down 0.24%), edged lower. In an attempt to restore power purchasing capacity of the debt ridden state Discoms and also to enable commercial banks to recover their loans to Discoms, the Cabinet Committee on Economic Affairs on Monday, 24 September 2012, approved the scheme for financial restructuring of state distribution companies (Discoms). The scheme contains various measures required to be taken by state Discoms and state governments for achieving the financial turnaround of the state Discoms by restructuring their debt with support through a transitional finance mechanism by the Central Government. The scheme is effective as soon as notified and will remain open up to 31 December 2012 unless extended by the Government of India (GOI), the government said in a statement issued after trading hours on Monday, 24 September 2012. Support under the scheme will be available for all participating state owned Discoms on fulfilling certain mandatory conditions as outlined in the scheme, it said. The accumulated losses of the state power distribution companies (Discoms) are estimated at a staggering Rs 1.9 lakh crore. Under the scheme, initially 50% of the outstanding short term liabilities as on 31 March 2012 of a state owned Discom will be taken over by the concerned state government. This shall be first converted into bonds to be issued by the Discom to participating lenders, duly backed by state governments guarantee. The scheme involves takeover of the liability by the state governments from the Discom in the next 2-5 years by way of special securities and repayment. Interest payment on the loan will be done by the state governments till the date of takeover. Restructuring the balance 50% of short term loan of the state discom will be done by rescheduling loans and providing moratorium on principal and under the best possible terms for this restructuring to ensure viability of this effort, the government statement said. The restructuring/reschedulement of loan is to be accompanied by concrete and measurable action by the discoms/state government to improve the operational performance of the distribution utilities, the government said in a statement. Under the scheme, the Central Government will provide incentive by way of grant equal to the value of the additional energy saved by way of accelerated AT&C loss reduction beyond the loss trajectory specified under RAPDRP and capital reimbursement support of 25% of principal repayment by the state government on the liability taken over by the state governments from the discom under the scheme. Distribution companies have been under severe financial stress due to electricity thefts and their failure to increase power tariffs over the years due to fears of a political and consumer backlash. This has forced the companies to borrow heavily from state-run financial institutions to pay-off their suppliers. They have also been buying less power, forcing power producers to scale back production. As the restructuring/reschedulement by lenders is subject to certain prior steps to be taken by the state government/discoms and their commitment to fulfil mandatory conditions which are aimed at bridging the gap between the average cost of supply and the average revenue realized, this would help in restoring the viability of the distribution sector, the Ministry of Power said in a statement issued after trading hours today, 25 September 2012. By restructuring and rescheduling the outstanding short term debt and securing the commitment of the state government in the discharge of debt service obligation, the Discoms would be nursed back to health, the Ministry of Power said. Tyres stocks declined on reports the Competition Commission of India (CCI) will impose stringent punishment on tyre manufacturers in a cartelisation case. Apollo Tyres (down 0.75%), CEAT (down 1.32%), Dunlop India (down 1.36%), Falcon Tyres (down 0.42%) and JK Tyre & Industries (down 1.6%), edged lower. But, MRF rose 1.31%. The CCI has completed the hearing on tyre companies and order to this effect will be issued shortly, reports suggest. The Director-General of the Commission, which acts as its investigating arm, has already submitted the report on the issue. The penalty on tyre companies could be approximately three times the profits earned, report added. FMCG stocks rose on renewed buying. Hindustan Unilever (up 1.75%) and Dabur India (up 0.12%), edged higher. Godrej Consumer Products rose 2.31% to Rs 675.90. The company on Monday, 24 September 24, 2012, entered into an agreement for exclusive rights to include the hair extensions business in Kenya and exports to other East Africa geographies in its partnership with the Darling Group. The transaction is expected to close after obtaining necessary regulatory approvals, Godrej Consumer Products said before trading hours today, 25 September 2012. The Godrej Darling business will include about 65% of the overall Darling Group business, the company said. Index heavyweight and cigarette maker ITC rose 1.86% to Rs 260.50, off the day's low of Rs 255. The stock had scaled a record high of Rs 272.50 in intraday trade on 14 September 2012. United Spirits jumped 8.89% to Rs 1147.70 after the company and Diageo plc issued a joint statement today, 25 September 2012, confirming that Diageo is in discussion with United Spirits and United Breweries (Holdings) for a possible transaction for Diageo plc to acquire an interest in United Spirits. The stock hit a 52-week high of Rs 1174 in intraday trade today. There is no certainty that these discussions will lead to a transaction, the joint statement from United Spirits and Diageo said. UltraTech Cement rose 0.43% to Rs 1,835.35. The stock hit a record high of Rs 1,848 in intraday trade today. Axis Bank fell 2.66% to Rs 1102.65 on concerns over credit provided to Indonesia's PT Bumi Resources, whose parent firm, Bumi Plc, launched an investigation into alleged financial irregularities at its Indonesian operations. On 4 August 2011, Bumi entered into a credit agreement with Axis Bank to provide the company a credit facility of $200 million for capital expenditure and to repay an older more expensive facility, PT Bumi Resources TBK had said in its 2011 annual report. India's second largest private sector bank by net profit HDFC Bank rose 0.48% to Rs 637.50. The stock hit a record high of Rs 638.45 in intraday trade today, 25 September 2012. Realty stocks extended recent gains as investors bet that retail real estate will get a boost from the entry of foreign supermarket chains in the country, with the government allowing up to 51% foreign direct investment in multi-brand retail trade. Anant Raj Industries (up 19.48%), Peninsula Land (up 4.28%), HDIL (up 4.07%), Godrej Properties (up 3.85%), Unitech (up 3.1%), Phoenix Mills (up 1.97%), Sobha Developers (up 1.83%), Oberoi Realty (up 1.49%), Prestige Estates (up 1.35%), Indiabulls Real Estate (up 1.12%), D B Realty (up 0.62%) and DLF (up 0.51%), edged higher. Bayer CropScience clocked a highest turnover of Rs 602.14 crore on BSE. Cairn India (Rs 93.73 crore), SKS Microfinance (Rs 58.74 crore), State Bank of India (Rs 36.27 crore) and United Spirits (Rs 25.22 crore), were the other turnover toppers on BSE in that order. Bayer CropScience reported highest volumes of 60.03 lakh shares on BSE. SKS Microfinance (50.14 lakh shares), Lanco Infratech (28.90 lakh shares), Cairn India (28.15 lakh shares) and Indiabulls Infrastructure and Power (25.13 lakh shares), were the other volume toppers on BSE in that order. Foreign institutional investors (FIIs) bought shares worth a net Rs 1652.70 crore from the secondary equity market on Monday, 24 September 2012, as per data from Securities & Exchange Board of India (Sebi). FIIs had bought shares worth a net Rs 2466.70 crore from the secondary equity market on Friday, 21 September 2012. The National Stock Exchange (NSE) on Monday, 24 September 2012, said it has decided to launch a special class of membership called 'Alpha', designed to provide quick, easy and cost efficient access to the exchange's trading platform to small firms. The Q2 September 2012 earnings season will begin around mid-October 2012. Investors and analysts will closely watch the management commentary that would accompany the results which could cause revision in their future earnings forecast of the company for the current year or the next year. Software major Infosys and private sector bank HDFC Bank unveil Q2 September 2012 results on 12 October 2012. HDFC announces Q2 resutls on 22 October 2012. On 1 October 2012, Markit Economics will release the HSBC India Manufacturing PMI for September 2012. Grid failures in the beginning of August and shrinking export orders saw manufacturing HSBC India Manufacturing falling to a nine-month low 52.8 points in August 2012 from 52.9 in July 2012. On 4 October 2012, Markit Economics will release HSBC India Services PMI and HSBC India Composite PMI for September 2012. The HSBC India Services PMI had risen to a six-month high of 55 in August 2012 from 54.2 in July 2012. Services, including government services like railway transport, make up nearly 60% of India's economic output. The Cabinet Committee on Economic Affairs on Monday, 24 September 2012, approved the strengthening and restructuring of Integrated Child Development Services (ICDS) scheme with an estimated outlay of Rs 123580 crore during the 12th Five Year Plan period from FY 2013 to FY 2017. Trade ministers of India and South Africa expect bilateral trade between India and South Africa to reach about $15 billion this year, well ahead of the 2014 timeline for the target, with bilateral trade between the two countries having crossed $14 billion last year. India's Commerce, Industry and Textiles Minister Anand Sharma visited South Africa on 21-22 September 2012 for bilateral meetings with South African Trade Minister Rob Davies. Trade ministers of the two countries also took stock of the ongoing India-SACU negotiations on Preferential Trade Agreement, India's Ministry of Commerce & Industry said in a statement on Sunday, 23 September 2012. Trade ministers of the two countries also noted the growing private investments on both sides. Indian companies had already invested over $8 billion in South Africa. On the political front, at the Congress Working Committee (CWC) meeting held today, 25 September 2012, party president Sonia Gandhi sent a strong message by backing Prime Minister Manmohan Singh's recent economic policy decisions that allowed 51 per cent foreign direct investment in multi-brand retail, apart from putting a cap on subsidised LPG cylinders and hiking diesel price to narrow down India's gaping fiscal deficit. A combative Sonia said that there was no threat to the United Progressive Alliance (UPA) government while blaming the Bharatiya Janata Party (BJP) for playing "negative politics" over the reforms. She added that the need of the hour was to improve the economy. The Congress President without taking names pointed out that even though the Trinamool Congress had withdrawn its support from UPA, two Uttar Pradesh-based parties - Samajwadi Party and Bahujan Samaj Party - have reiterated their outside support to the Manmohan Singh government. Trinamool Congress (TMC) chief Mamata Banerjee has announced a strike on October 1 at Jantar Mantar against the recent government policy decisions hiking diesel prices and allowing 51 per cent foreign direct investment in retail. With the TMC's 19 MPs withdrawing support to UPA last week, the UPA has been reduced to a minority in the Lok Sabha. The TMC withdrew support from the UPA to register its protest against the reformist decisions like allowing 51% FDI in multi-brand retail, increasing the diesel price by Rs 5 per litre, and imposing a cap on the number of subsidized LPG cylinders per family at six. Prime Minister Dr. Manmohan Singh last week said that the time has come for hard decisions. Explaining the rationale for the government's recent measures viz. hike in diesel price, capping of subsidised LPG cylinders per household per year and allowing foreign direct investment in multi-brand retail trade, Dr. Singh said that rapid growth in the economy is necessary to raise the government's revenue for financing its programmes in education, health care, housing and rural employment. Dr. Singh said that India must avoid high fiscal deficit which could cause a loss of confidence in the economy. The government last week braved intense political opposition to notify the rules for allowing 51% foreign direct investment (FDI) in multi-brand retail. The government also notified the relaxed conditions for single brand retail as well as the norms for allowing 49% investment by foreign airlines in Indian carries and permitted greater foreign investment in some sections of the broadcasting sector. The finance ministry last week announced reduction in the tax rate on the interest paid to overseas lenders by local companies to 5% from 20%. The rate is applicable from July 2012 until June 2015. The tax reduction will encourage corporates to borrow more for funding expansion projects. Over the past few weeks, the Reserve Bank of India has eased curbs on overseas borrowing for companies in the manufacturing and infrastructure sectors to boost growth. The outlook for Rabi or winter crops has improved due to the annual monsoon rains' delayed withdrawal, which has provided crops with badly needed moisture after months of insufficient rainfall. The monsoon rains usually leave India by 1 September, but this year rainfall began to pick up in late August, after insufficient rain in preceding months forced four major agricultural states to declare a drought. 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. The Centre has advised state government to go for early sowing of Rabi crops, especially in rainfed areas to make use of the moisture available in the soil due to wide-spread rains in August and September. State-run India Meteorological Department (IMD) Monday, 24 September 2012, said that the southwest monsoon has started withdrawing. The Ministry of Agriculture on Monday, 24 September 2012, said as per the first advance estimates of production of Kharif crops, 117.18 million tonnes (MT) foodgrains is likely to be produced in the current season. These production estimates are higher than the average of the first advance estimates of the last five years (133 MT). Final estimates are generally 5 to 10% higher than the first estimates, the Ministry of Agriculture said in a statement. Even as compared to the average of final estimates (118.86 MT), the current estimates are lower by 1.68 million tonnes or about 1.4% despite deficient and late rains this year, it said. As per the first advance estimates, production of rice estimated at 85.59 million tones for the current season, though lower as compared to last year's record Kharif production, is higher than the average production of 83.17 million tonnes. The estimated production of Coarse Cereals, is however, lower than average production by 3.65 million tonnes mainly on account of loss in area coverage under Bajra and Maize in Gujarat, Haryana, Maharashtra, Karnataka and Rajasthan. The estimated production of Kharif Pulses is also lower than the average production by 0.45 million tonnes mainly due to shortfall in Moong and other Kharif Pulses. Though there is a significant increase in estimated production of soyabean, yet due to decline in the production of Groundnut, total production of Kharif Oilseeds estimated at 18.78 million tonnes for the current season, is lower than the average production by 0.61 million tonnes. The current year's production of sugarcane estimated at 335.33 million tonnes is higher by 10.22 million tonnes as compared to average production. The estimated production of Cotton at 33.40 million bales (of 170 kg each) has registered an increase of 5.32 million bales as compared to average cotton production of 28.08 million bales. Production of Jute is also estimated to be marginally higher than the average production, the Ministry of Agriculture said. The government has set food grain target for 2012-13 at 249.52 million tonnes. The Reserve Bank of India last week announced a reduction of 25 basis points in the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand and time liabilities (NDTL) effective the fortnight beginning 22 September 2012 from current 4.75% after mid-quarter review of monetary policy. The reduction in CRR will inject around Rs 17000 crore of primary liquidity into the banking system, RBI said in a statement. The RBI kept its policy rate viz. the repo rate unchanged at 8%, stating that inflationary pressures, both at wholesale and retail levels, remain strong. As inflationary tendencies have persisted, the primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations, RBI said. Finance Minister P. Chidambaram on 17 September 2012 said the government will unveil more measures to narrow fiscal deficit and to boost economic growth, which may encourage the central bank to cut interest rates at its next monetary policy review on 30 October 2012. He didn't elaborate on what the measures could be. RBI is scheduled to undertake Second Quarter Review of Monetary Policy - 2012-13 on 30 October 2012. The Cabinet Committee on Political Affairs (CCPA) raised price of heavily subsidised diesel by Rs 5 per liter on 13 September 2012 to balance government's fiscal deficit situation. The CCPA also restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum. European stocks fell on Tuesday, 25 September 2012, as investors awaited news on a potential bailout from Spain, the expected release of Spain's budget plan and the results of detailed stress tests for Spanish banks. Key benchmark indices in UK, France and Germany declined by 0.09% to 0.37%. Investors are also keeping a close watch on news from Spain as speculation grows over whether the country may be setting the stage for a bailout request. The Spanish government is expected to announce on Friday, 28 September 2012, the results of a review of its banking system, which will also include how much the European Stability Mechanism needs to recapitalize those banks. The Spanish government is also expected to unveil the 2013 budget and a package of economic reforms this week. German Chancellor Angela Merkel and French President François Hollande have reportedly failed to agree on a time frame for beginning joint oversight of Europe's banking system. Greek officials on Monday, 24 September 2012, reportedly rebutted reports that the country would not qualify for further help until it closes a budget shortfall of 20 billion euros. Asian stocks rose in choppy trade on Tuesday September 2012. Key benchmark indices in Hong Kong, Japan, Indonesia and Singapore rose by between 0.02% to 0.62%. Key benchmark indices in South Korea and Taiwan shed by between 0.44% to 0.60%. In mainland China, the Shanghai Composite Index fell 0.19%, languishing at multi-year lows. Diplomats from China and Japan are meeting today amid rising tensions over a territorial dispute between the two Asian giants, as dozens of Chinese and Taiwanese vessels approached the islands at the center of the spat. Japanese Vice Foreign Minister Chikao Kawai meets with Chinese counterpart Zhang Zhijun in Beijing in a sign the two countries are attempting to ease tensions over the islands, known as Senkaku in Japanese and Diaoyu in Chinese. Markit Economics will release the HSBC China Manufacturing PMI for September 2012 on Saturday, 29 September 2012. The HSBC Flash China manufacturing purchasing managers' index (PMI) had showed activity stabilized in September after hitting a nine-month low in August, with the headline reading ticking up to 47.8 from 47.6 last month. But, it remained below 50 -- the value that separates contraction from expansion Markit Economics will release the Markit/JMMA Japan Manufacturing purchasing managers' index (PMI) for September 2012 on Friday, 28 September 2012 Thailand's Ministry of Finance forecasts the economy to grow by 5.2% in 2013, slower than 5.5% forecast for this year due partly to a high comparison base, the head of the ministry's Fiscal Policy Office (FPO) said on Tuesday, 25 September 2012. It also forecasts export growth of 10.5% in 2013 compared with 4.5% in 2012, and inflation of 3.5% compared with 3.3%, FPO head Somchai Sujjapongse said at a press conference. Trading in US index futures indicated that the Dow may rise 9 points at opening bell on Tuesday, 25 September 2012. US stocks ended lower Monday, with Europe's troubles back in focus after the release of softer-than-expected German business confidence data and amid more concern about Greece's finances. Also dragging on sentiment, US bellwether construction-machinery major Caterpillar Inc. cut its yearly earnings forecast late Monday, saying it expects modest economic growth in the next few years. On Tuesday, 25 September 2012, the Conference Board will release US consumer confidence index for September 2012. On the same day, S&P/Case-Shiller will release Case-Shiller home-price index for July 2012 while the Federal Housing Finance Agency (FHFA) will release FHFA home-price index for July 2012. Philadelphia Fed President Charles Plosser is due to give a speech on Tuesday, 25 September 2012. The US Commerce Department will release data on new home sales for August 2012 on Wednesday, 26 September 2012. Chicago Fed President Charles Evans will offer views Wednesday, 26 September 2012, on current economic issues. The US Labor Department will release data on weekly unemployment claims on Thursday, 27 September 2012. The Commerce Department will release durable-goods orders for August 2012 and the final reading of second-quarter gross domestic product (GDP) on Thursday, 27 September 2012. On the same day, the National Association of Realtors will release the pending home-sales index for August 2012. On Friday, 28 September 2012, the Labor Department will unveil data on personal income and consumer spending for August 2012. On the same day, the Institute of Supply Management will release Chicago PMI report on business activity for September 2012. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. Investors are worried about US fiscal cliff. The "cliff" refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts. The non-partisan Congressional Budget Office has said the scenario could throw the country into recession. Congress created the hazardous deadline of 31 December 2012 in August 2O11 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling. The International Monetary Fund's Managing Director Christine Lagarde said on Monday the IMF is set to cut its forecast for global growth next month when it updates its projections for the world economy. The IMF/World Bank meetings will be held in Tokyo on October 12-14. Group of 20 officials meeting in Mexico City agreed that the latest monetary easing by developed nations will buy time for the global economic recovery and that governments must do more to boost growth, Mexican central bank Deputy Governor Manuel Ramos Francia said. Ramos Francia spoke at a news conference following the end of a two-day meeting of deputy finance ministers and central bank officials from G-20 nations in Mexico City. Mexico is presiding over the group this year.