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Thursday, August 22, 2013

Fed up of weakness! Same story again

Occasions do not make a person either strong or weak but shows what the person is.- Thomas a Kempis

You have to probably be out of this world to be strong in a market like this. Asset classes are being butchered in rotation but equity appears the favourite for getting crushed day in and day out. Today is no different and the trigger, just in case anyone wanted one, is the minutes of the Fed meeting.

The outlook is a weak start as markets world over are weak as Fed minutes point towards near-term tapering of its US$85 billion bond purchase program. Parliament is back probably to adjournments. The Reserve Bank of India is to release its Annual Report this evening. That aside, the Indian currency will remain in focus. Oil companies dollar demands are also setting in which could add pressure on the Indian currency.

The Union Cabinet, a report states, might pave the way for imposition of a higher tax rate of 35 per cent on the ‘super rich’ — those with income of more than Rs 10 crore a year — as it takes up the amendments to the Direct Taxes Code (DTC) Bill, 2010, today. If the Cabinet gives its go-ahead, the much-awaited amendments could be tabled in the ongoing session of Parliament, reports added.

The minutes of the Fed's July 30-31 meeting, released on Wednesday, showed that almost all of the 12 members of the policy- agreed that changing the stimulus was not yet appropriate.

Open to interpretation, the Fed made no formal policy change after its July meeting when it stated that the US economy continues to need support. The economy is not growing as fast as some board members had hoped. The data received since the forecast was prepared for the previous meeting suggested that real GDP growth was weaker, on net, in the first half of the year than had been anticipated, the minutes stated.

Meanwhile, the central bank heads of the US, the UK and the EU are all set to miss the annual Jackson Hole Symposium. But guess what? Ben Bernanke or rather his successor may be the hot topic of discussion.

A Chinese manufacturing index rose in August from an 11-month low.The preliminary reading of 50.1 for a Purchasing Managers’ Index (EC11FLAS) released by HSBC Holdings Plc and Markit Economics compares with a final figure of 47.7 in July.

What is in store today is the Union Cabinet meeting followed by a meeting of the Cabinet Committee on Economic Affairs. The Cabinet may take up amendments to Direct Taxes Code bill and the Cabinet panel may discuss additional allocation of 5 mln tonnes food grain for those below poverty line.

Results watch: Bombay Rayon, Eastern Sugar, Eastern Sugar

Trends in FII flows: The FIIs were net sellers of Rs7.92bn in the cash segment on Wednesday, while the domestic institutional investors (DIIs) were net buyers of Rs7.75bn, as per the provisional figures released by the NSE.

The foreign funds were net sellers of Rs18.50bn in the cash segment on Tuesday, according to the SEBI figures.

Global Data Watch: CB Leading Indicator (Jun) AUD, Jackson Hole Symposium USD, HSBC Manufacturing PMI (Aug)Preliminar CNY, Trade Balance (Jul) CHF, Exports (MoM) (Jul) CHF, Imports (MoM) (Jul) CHF, Markit Manufacturing PMI (Aug)Preliminar EUR, Markit Services PMI (Aug)Preliminar EUR, Markit Manufacturing PMI (Aug)Preliminar EUR, Markit Services PMI (Aug)Preliminar EUR, Markit Manufacturing PMI (Aug)Preliminar EUR, Markit PMI Composite (Aug)Preliminar EUR, Markit Services PMI (Aug)Preliminar EUR, Retail Sales s.a. (MoM) (Jun) EUR, Retail Sales (MoM) (Jun) CAD, Retail Sales ex Autos (MoM) (Jun) CAD, Initial Jobless Claims USD, Continuing Jobless Claims USD, Markit Manufacturing PMI (Aug)Preliminar USD, Housing Price Index (MoM) (Jul) USD, American Petroleum Institute Monthly Report (Jul) USD, CB Leading Indicator (MoM) (Jul) USD, EIA Natural Gas Storage change (Aug 16) USD, Current Account Balance (Jun) EUR, Kansas Fed manufacturing activity (Aug) USD, Treasury Sec Lew Speech USD.

Corporate snippets

NALCO plans to raise its alumina exports by 40% to 1.4mn tons this financial year. (BS)

Tech Mahindra, which merged Mahindra Satyam with itself a few months ago, is in the process of transferring three special economic zones that were allotted to the latter before merger. (BS)

ICICI Bank has raised fixed deposit rates by up to 0.75% across select maturities. The bank has raised interest rate on term deposits with 46- 60 day maturity by 0.75% to 7%. (BS)

Indian Oil Corp will invest about Rs80bn to expand capacity at its Koyali oil refinery in Gujarat to 18mtpa by 2016-17. (ET)

ONGC’s decision to use the surplus infrastructure of Reliance Industries’ KG-D6 block will help the state firm cut costs by 40% and significantly speed up development of gas fields to produce up to 9 mmscmd. (ET)

Tata Steel Thailand said it foresaw a high demand for its products due to the country’s planned US$70bn investment in infrastructure projects. (BS)

Reliance Industries finalised terms with a consortium of leading banks to raise US$1.75bn by way of overseas borrowings. While US$1.2bn will be used to refinance a five-year, multi-currency facility, US$550mn of new money will be repayable after seven years. (ET)

Forward Markets Commission has sent a strongly-worded letter to the NSEL board asking it to take action against the defaulters. The FMC wants all the commodities that were offered as collateral by the defaulters to be auctioned. (BL)

Welspun Energy Ltd unveiled a 55-MW solar plant in Rajasthan. (BL)

Shareholding in GMR Holdings, the apex decision-making body for the GMR group, including GMR Infra, has been divided equally among four key trusts — one each owned by Group Chairman GM Rao, his two sons and son-in-law. (BS)

Federal Bank has increased interest rates on domestic and non-resident deposits. The bank has raised domestic term deposit rate by 150 basis points and will now pay 8.50% on these deposits maturing in 60 days to 119 days. (BS)

HDFC Bank Ltd announced the launch of 11 mini branches in rural locations across Andhra Pradesh. Each mini branch, comprising two persons, will complement the banks existing traditional branch set up in the state, allowing it to reach out to more people in rural geographies. (BS)

The members of the RBI’ s technical advisory committee on monetary policy has raised concerns on the government’s ambitious Food Security Bill, on the ground that it would exert pressure on food inflation. (BS)

A panel comprising representatives of department of space, defence ministry, telecom department and telecom sector regulator is considering a proposal to free up 80 MHz or "units" of airwaves in the S-band for fourth generation wireless broadband services. (ET)

Foreign direct investment flows into the country increased by about 16% to US$1.4bn in June. In June 2012, the country had received FDI worth US$1.24bn. (ET)