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Thursday, July 18, 2013

Fed speaks; no disappointment really!

I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant – Alan Greenspan

Choosing not to spook markets, the US Federal Reserve's chairman, Ben S Bernanke, reiterated his stance that the Fed remains committed to its easy money policy and there were no plans to taper its $85bn per month bond buying program anytime soon. Asset purchases depend on economic and financial developments, but they are by no means on a preset course, he affirmed.

Given that global markets are mostly higher, we have a positive opening in store. The indices may remain in a narrow range with action continuing on corporate announcing their numbers. TCS will be in focus but the numbers are expected after market hours.

Mutual funds faced Rs500bn redemption orders from banks and companies on Tuesday, prompting the Reserve Bank of India (RBI) to provide them a three-day repo borrowing window at a 10.25 % interest rate .(BS)

The International Monetary Fund said risks are increasing that China’s economic growth this year will fall short of IMF’s forecast. Downside risks to the IMF’s 7.75% growth estimate have risen after a gauge of manufacturing weakened in June, it said.

The Dow, S&P 500 and Nasdaq gained marginally. Asian markets are also mostly higher. Japan's Nikkei is up over half a percent while Hong Kong's Hang Seng index has gained a quarter of a percent. South Korea's Kospi is down 0.7% while China's Shanghai index is almost down a percent.

Technology companies in the United States such as IBM, Yahoo and Intel’s results announced their June quarter results. IBM’s net income fell 17% in the second quarter while net income rose 3% to $4.3 billion. Intel’s results were in-line with expectations; the company said it expects revenues to be flat this year, after previously forecasting a modest increase. Financial space players American Express and Bank of America posted better than expected results.

On the home front, the government cleared an ordinance to add sting to the bite as it empowered the market regulator Sebi to directly go for search and seizure powers on errant listed companies.

Blackstone India has announced taking over Chennai-based auto ancillary firm Agile Electric along with its listed subsidiary Igarashi Motors in an Rs 660 deal.

A $12bn foreign direct investment lined up for India got scrapped when world's largest steel maker ArcelorMittal, on Wednesday announced scrapping its proposed steel plant in Odisha over delays, problems in acquiring land and securing iron ore linkages.

iGate, the software services company after posting a better than expected Q1 numbers expects to have a new chief executive in place in about six to eight weeks, the company's interim CEO said while announcing earnings for the April-June quarter

Bharti Retail has returned 17 properties, which it had leased across the country to open Easyday stores, back to landlords, says a report.

IBM raised its full-year outlook based on strong software pipeline.

Brent crude prices was down 0.1% to around $108.50 a barrel.

Gold fell more than 1% on Wednesday. Spot gold fell 1.3 per cent to $1,275.84 an ounce

Nearly half (46.4 %) of the country’s gross domestic savings in 2011-12 were in physical assets — a nine-year high, according to Central Statistics Office (CSO) data.

Onion prices in India hit a two-and-a-half-year high on Wednesday riding a supply squeeze due to last year's drought in key growing areas, and traders expect prices to spiral up further in a month as demand remains strong due to Ramadan, says a report.

Undue volatility in the rupee is not desirable, chief economic adviser Raghuram Rajan said. The rupee ended at 59.36/37 on Wednesday.

RBI will sell four gilts worth up to Rs 120 bln via open market operations today. Gilts up for sale include 8.07%, Jul 2017 bond, 8.15%, 2022 bond, 8.33%, 2026 bond and 8.97%, 2030 bond.

Results watch: TCS, Mindtree, IDBI Bank, Axis Bank, Infotech Enter, Kotak Mah Bank, Bajaj Finserv, Blue Star Info, D B CORP, Essar Ports, GCCL Infra, Austin Engr, GLOBUS CON, Supreme Inds, Sasken Comm, S Kumars, Rallis India, Magma Fin, Honeywell Auto

Trends in FII flows: The FIIs were net sellers of Rs260.9mn in the cash segment on Wednesday, while the domestic institutional investors (DIIs) were net sellers of Rs738.6mn, as per the provisional figures released by the NSE.

The foreign funds were net sellers of Rs5.72bn in the cash segment on Tuesday, according to the SEBI figures.

Global Data Watch: CB Leading Indicator (May) AUD, National Australia Bank's Business Confidence (QoQ) (Q2) AUD, RBA Foreign Exchange Transaction (Jun) AUD, House Price Index (Jun) CNY, Exports (MoM) (Jun) CHF, Imports (MoM) (Jun) CHF, Trade Balance CHF, Current Account n.s.a (May) EUR, Current Account s.a (May) EUR, Retail Sales (MoM) (Jun) GBP, Retail Sales (YoY) (Jun) GBP, Retail Sales ex-Fuel (MoM) (Jun) GBP, Retail Sales ex-Fuel (YoY) (Jun) GBP, 10-y Obligaciones Auction EUR, Current Account Balance (May) EUR, Wholesale Sales (MoM) (May) CAD, Continuing Jobless Claims (Jul 6) USD, Initial Jobless Claims (Jul 12) USD, American Petroleum Institute Monthly Report (Jun) USD, CB Leading Indicator (MoM) (Jun) USD, Fed's Bernanke Speech USD, Philadelphia Fed Manufacturing Survey (Jul) USD, EIA Natural Gas Storage change (Jul 12) USD, Visitor Arrivals (YoY) (Jun) NZD, Foreign bond investment (Jul 12) JPY, Foreign investment in Japan stocks (Jul 12) JPY

In other news in the media:

ArcelorMittal has decided to scrap the 12-million-tonne-a-year plant in Odisha following delays in getting land and securing captive iron ore resources. (BL)

At a time when the Prime Minister’s Office is busy paving the way for fuel linkage to new power projects, India’s largest electricity generation company, NTPC Ltd, is claiming that capacities worth nearly 5000 MW are lying idle due to lack of demand.(BL)

The transportation infrastructure business segment of L&T has bagged an order worth Rs20.85bn from the Transport Ministry of Oman for the construction of Al Batinah Expressway Package 4. (BL)

Lanco Resources Australia has secured conditional approval from the Environmental Protection Authority of Western Australia to develop a coal-handling berth at Bunbury port. (BL)

The Government has decided to revise the natural gas prices in India by April 1, 2014. This is likely to increase oil subsidy. And there are reports saying OIL and ONGC may have to shell out more funds to meet the higher subsidy. (BL)

Agrotech Foods will enter the olive oil category with a new brand — Olivea.(BL)

Blackstone Capital Partners, is acquiring a majority stake in Chennai-based auto part maker Agile Electric Works, and its listed arm, Igarashi Motors India Ltd (IMIL). (BS)

Following the new domestic gas pricing formula announced by the Centre last month, GSPC’s ambition to charge KG gas in parity with the imported liquefied natural gas (LNG) at US$14.2 a million British thermal unit (mBtu) has fallen flat. (BS)

Ashok Leyland unveiled its Stile, a multi-purpose vehicle in the light commercial vehicle segment (LCV).

Sesa Goa has sought Finance Minister P Chidambaram's intervention and requested him to anchor the coordination between various government departments, so that the mining ban issue can get resolved in the Supreme Court. (ET)

Under pressure from international retailers, the government might soon amend the foreign direct investment (FDI) policy on multi-brand retail trading (MBRT) by easing some conditions which had drawn sharp criticism from global investors.(BS)

The government is working on a modality to facilitate creation of more work spaces in sub-urban areas to increase manufacturing in garment sector, besides a score of other measures to boost textiles industry.(ET)