Market loses ground as RBI keeps repo rate unchanged

Key benchmark indices tumbled on the first trading session of the week as the market sentiment was hit adversely after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged at 8% after a mid-quarter monetary policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction. The barometer index, BSE Sensex, fell below the psychological 17,000 mark, having regained that level earlier in the day. The Sensex lost 244 points or 1.44%, up about 70 points from the day's low and off close to 405 points from the day's high. The market breadth was weak. The Sensex has risen 487.30 points or 3% so far in this month (till 18 June 2012). The barometer index has gained 1,250.91 points or 8.09% in calendar 2012 so far (till 18 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,569.97 points or 10.37%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 2,425.87 points or 12.67%. Coming back to today's trade, index heavyweight Reliance Industries (RIL) dropped on reports of lower advance tax payment in Q1 June 2012. Interest rate sensitive auto, realty and banking stocks reversed initial gains after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged after a mid-quarter policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction. Metal stocks declined on profit booking after recent gains. But, shares of steel major Tata Steel rose after the company made a voluntary open offer for raising its stake in The Tinplate Company of India and Tata Sponge Iron. FMCG giant Hindustan Unilever reversed direction after scaling a record high. Key benchmark indices surged in early trade as Asian stocks jumped after Greek voters on Sunday, 17 June 2012, gave the victory to the conservative New Democracy party, which has already begun talks with the third-place socialist Pasok party toward forming a coalition government. The BSE Sensex moved past the psychological 17,000 level. The 50-unit S&P CNX Nifty hit 6-1/2-week high. Firmness continued in morning trade. The market reversed intraday gains to slide to fresh intraday low in mid-morning trade after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged after a mid-quarter monetary policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction. The Sensex fell below the psychological 17,000 level. Weakness continued on the bourses in early afternoon trade. The market remained weak in afternoon trade. Volatility ruled the roost as the key benchmark indices cut losses in late trade after sliding to their lowest level in almost one week in mid-afternoon trade. The BSE Sensex lost 244 points or 1.44% to settle at 16,705.83, its lowest closing level since 14 June 2012. The index lost 313.74 points at the day's low of 16,636.09 in mid-afternoon trade, its lowest level since 12 June 2012. The index jumped 160.12 points at the day's high of 17,109.95 in early trade, its highest level since 4 May 2012. The S&P CNX Nifty shed 74.80 points or 1.46% to 5,064.25, its lowest closing level since 14 June 2012. The index hit a low of 5,041.70 in intraday trade, its lowest level since 12 June 2012. The index hit a high of 5,190.20 in intraday trade, its highest level since 3 May 2012. The BSE Mid-Cap index fell 1.06% and the BSE Small-Cap index declined 0.7%. Both these indices outperformed the Sensex. The total turnover on BSE amounted to Rs 1920 crore, higher than Rs 1722.99 crore clocked on Friday, 15 June 2012. The market breadth, indicating the overall health of the market, was weak. On BSE, 1,694 shares declined and 997 shares gained. A total of 120 shares were unchanged. Among the 30-share Sensex pack, 28 declined while only two of them gained. Index heavyweight Reliance Industries (RIL) fell 1.09% to Rs 718.70. The stock hit a high of Rs 734.55 and a low of Rs 712.95. Advance tax payment of Reliance Industries (RIL) reportedly declined to Rs 770 crore in Q1 June 2012 from Rs 900 crore in Q1 June 2011. This is the first time in the past five years tax outgo of RIL has dipped below the previous year's figure. Lower advance tax payment could mean weak Q1 June 2012 results from the firm. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai early this month that the company has cumulatively bought back a total of 2.7 crore shares under the share buyback programme, which is 22.5% of share buyback target. Ambani said the company's buyback programme represents 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. Ambani said RIL will invest about Rs 1 lakh crore over the five years in expanding its business in India. Ambani said RIL is targeting to double its operating profit in about five years. Interest rate sensitive bank stocks reversed initial gains after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged after a mid-quarter policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction. India's largest private sector bank by net profit ICICI Bank fell 3.34% to Rs 816.70 after hitting an intraday high of Rs 864.90. India's second largest private sector bank by net profit HDFC Bank slipped 2.71% to Rs 533 after advancing to an intraday high of Rs 550.55. India's largest commercial bank in terms of branch network State Bank of India (SBI) lost 4.36% to Rs 2087.65 after scaling an intraday high of Rs 2231.80. The bank has reportedly slashed interest rates on term loans, agriculture loans and loans to small and medium enterprises (SMEs) by 50-350 basis points (bps), or 0.5%-3.5% with effect from 1 June 2012. SBI has kept the base rate unchanged at 10%. Among other banking stocks, IDBI Bank, Bank of India, Bank of Baroda and Punjab National Bank shed by between 2.42% to 4.68%. Interest rate sensitive auto stocks reversed initial gains after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged after a mid-quarter policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's largest utility vehicles maker Mahindra & Mahindra (M&M) fell 0.91%. The company early this month said it has received an overwhelming 7,200 plus bookings for its cheetah-inspired XUV500 from customers within just 2 days of opening all India bookings for the vehicle. All India bookings for the XUV500 were opened from 8 June 2012. Small-car major Maruti Suzuki India declined 1.49%. The company early this month said that the board of directors of the company has approved a proposal to merge Suzuki Powertrain India (SPIL) with the company. SPIL, which supplies diesel engines as well as transmissions for vehicles to Maruti Suzuki, is a subsidiary of Suzuki Motor Corporation (SMC), Japan. SMC holds 70% share in SPIL and remaining 30% is held by Maruti Suzuki. As per the terms of the proposed merger, SMC will receive one share of MSIL of Rs 5 each for every 70 shares of Rs 10 each it holds in SPIL. There will be no cash outflow from MSIL due to the merger. MSIL proposes to make a fresh issue of about 1.31 crore equity shares to SMC in lieu of SMC's 70% holding in SPIL. Consequent to the merger, SMC's holding in MSIL will go up from 54.2% to 56.2%. With the merger, MSIL will be able to bring its entire diesel engine capacity under a single management control. All key initiatives to strengthen the business, including sourcing, localization, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSIL management, MSIL said in a statement. The proposed merger also promises benefits for the combined entity through synergies in areas like finance, capital structuring, and administration and consequent reduction of transaction costs, MSIL said. India's largest truck maker by sales Tata Motors shed 0.85%. The stock had jumped on Friday after Chairman Ratan Tata announced the acquisition of additional shares of the firm from the open market. Tata Motors on Friday, 15 June 2012, intimated to the Bombay Stock Exchange (BSE) that Chairman Ratan N Tata purchased additional 4.25 lakh equity shares of Tata Motors from open market purchases on Thursday, 14 June 2012, for about Rs 9.94 crore. After the latest acquisition, Ratan N Tata now holds a total of 13.61 lakh ordinary equity shares of Tata Motors and 1.09 lakh 'A' Ordinary shares of Tata Motors, aggregating to 0.05% of voting rights of Tata Motors. Tata Motors on Friday, 15 June 2012, said sales of its luxury vehicles -- Jaguar Land Rover -- jumped 35% to 30,094 in May 2012 over May 2011. Tata Motors derives almost two-third of its revenue from its British unit Jaguar Land Rover. Tata Motors' global vehicle sales rose 12% to 96,089 units in May 2012 over May 2011. The company's overall global passenger vehicles sales rose 21% to 51,064 units in May 2012 over May 2011. Commercial vehicle sales rose 3% to 45,025 in May 2012 over May 2011. Shares of two-wheeler makers were mixed. India's second largest motorcycle maker by sales Bajaj Auto rose 0.94%. The company early this month said its total sales fell 2% to 3,52,219 units in May 2012 over May 2011, as exports to Sri Lanka were nil in May 2012 against a typical monthly average of 10,000 motorcycles and 3-wheelers each per month. The company expects recovery in Sri Lankan exports from July 2012 onwards. The company's exports rose 3% to 1,30,573 units in May 2012 over May 2011. Hero MotoCorp (HMCL) fell 0.41%. The board of directors of the company recently approved a proposal to merge Hero Investments (HIPL), the investment arm of the Hero Group, into HMCL. The shareholders of HIPL include the partnership firm Brijmohan Lall Om Prakash (BMOP) which holds 71.63%, and private equity (PE) investors BC India Private Investors (19.81%) and Lathe Investment (8.56%). BC India Private Investors is an affiliate of Bain Capital LLC, while Lathe Investment is a wholly-owned subsidiary of Government of Singapore Investment Corporation (GIC). Hero MotoCorp reported its best-ever monthly sales in May 2012, thus underlining the robust momentum the company has sustained since embarking on its solo journey. Marking its 10th consecutive month of over five lakh sales, Hero MotoCorp total sales rose 11.3% to 5,56,644 two-wheelers in May 2012 over May 2011. The company's sales in May this year surpassed its previous highest of 5,51,557, recorded only last month (April 2012). FMCG stocks edged lower on profit booking after recent gains. Nestle India, ITC, Dabur India and United Spirits dropped by between 0.02% to 4.151%. India's largest FMCG firm by sales Hindustan Unilever fell 0.94% to Rs 445.85. The stock reversed direction after hitting a record high of Rs 453.30 in intraday trade today. Cairn India rose 1.06% as crude futures rose to the highest level in a week as gains by pro-bailout parties in Greek elections eased speculation Europe's debt crisis will escalate and threaten global economic growth. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms such as Cairn India. Shares of public sector oil marketing companies were mostly higher on report the government will soon consider increasing prices of diesel and cooking gas. Indian Oil Corporation (up 0.63%) and HPCL (up 0.75%) edged higher. BPCL fell 0.41%. According to the reports, the government's plan to consider hiking prices of diesel and cooking gas is part of broader policy measures that the government is planning to unveil to attract capital inflows and boost investor confidence. These measures are reportedly aimed at averting a possible sovereign downgrade to junk status and reviving faltering growth. The three public sector oil marketing companies (PSU OMCs) -- BPCL, HPCL and IOC -- suffer revenue loss on domestic sale of diesel, LPG (cooking gas) and kerosene at a controlled price. The government decontrolled pricing of petrol in 2010. Metal stocks declined on profit booking after recent gains. Jindal Steel & Power, Sterlite Industries, JSW Steel, Sail, Bhushan Steel and Sesa Goa declined by between 0.28% to 4.34%. National Aluminium Company rose 3.36% on report the government has initiated the process of 10% stake sale in the company, which may fetch the exchequer an estimated Rs 12000 crore. The government currently holds 87.15% stake in Nalco (as on 31 March 2012). Private sector steel major Tata Steel rose 1.29%. After market hours on Friday, 15 June 2012, the company made a voluntary open offer for raising its stake in The Tinplate Company of India and Tata Sponge Iron. Tata Steel has made an open offer to shareholders of Tata Sponge Iron for acquiring up to 17.34 lakh shares constituting 11.26% equity of Tata Sponge Iron at Rs 375 per share. The total consideration for the offer is Rs 65.02 crore, which is payable in cash. Tata Steel currently holds 39.74% stake in Tata Sponge Iron. Tata Steel has also made an open offer to shareholders of The Tinplate Company of India for acquisition of up to 1.46 crore shares constituting 14% of the equity capital of The Tinplate Company of India at Rs 60 per share. The total consideration for the offer is Rs 87.92 crore, which is payable in cash. Tata Steel currently holds 59.44% stake in The Tinplate Company of India. Shares of Tinplate Company of India jumped 18.91% and Tata Sponge Iron rose 12.74%. Capital goods stocks edged lower on profit booking after recent gains. ABB, L&T, BEML, Thermax, Siemens, Bhel and Punj Lloyd shed by between 0.35% to 2.85%. IT stocks declined on profit booking after recent gains triggered by speculation that the US Federal Reserve will take more steps to stimulate US economy. US is the biggest outsourcing market for the Indian IT firms. India's second-largest software exporter by revenue Infosys shed 0.36%. Infosys on Thursday, 14 June 2012, said it has signed an initial agreement with the Israeli government to work on industrial research and development. The pact will create a framework for industrial cooperation between Infosys and Israeli companies in the technology areas of cloud, information security, sensors, analytics and sustainability, Infosys said. Dansk Supermarked A/S, a leading retailer in the Nordics, has engaged Infosys as its strategic partner to transform its cross-channel commerce program, Infosys said in a release early last week. Through this engagement, Dansk Supermarked A/S which has over 1,300 stores across Denmark, Sweden, Germany and Poland will provide its consumers a seamless and convenient cross-channel shopping experience, Infosys said. Infosys was selected by Dansk Supermarked A/S for its capabilities in delivering end-to-end digital commerce programs for global retailers, Infosys said. This transformation program will start with Bilka.dk, one of Dansk Supermarked's store chains and is expected to help increase Bilka.dk's sales to 2.4 Billion Danish kroner by 2016, Infosys said. India's largest IT company by revenue Tata Consultancy Services (TCS) slipped 1.12%. India's third largest software services exporter by revenue, Wipro, fell 0.62%. The company last week said that Wipro Technologies, the global information technology, consulting and outsourcing business of Wipro, has been chosen by Australia based MMG, a mid-tier global resources company as its strategic partner to define and deliver MMG's integrated business management program over a period of three years. Interest rate sensitive realty stocks reversed initial gains after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged after a mid-quarter policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction Purchases of both residential and commercial property are largely driven by finance. D B Realty, Unitech and HDIL shed by between 0.6% to 3.5%. Real estate major DLF fell 4.57%. The company early this month said its wholly-owned subsidiary, DLF Hotel Holdings, has divested its entire shareholding in Adone Hotels and Hospitality (Adone) for Rs 567 crore. DLF said that the transaction is in line with its stated objective of divesting its non-strategic assets. Aviation stocks reversed initial gains as crude prices rose. Kingfisher Airlines (down 2.7%), Jet Airways (India) (down 3.23%) and SpiceJet (down 0.95%), edged lower. State-run oil marketing companies reduced the prices of aviation turbine fuel by 5%, effective 16 June 2012. The price of aviation turbine fuel or jet fuel, in Delhi was reduced by Rs 3,260 per kilo litre (kl), or 5%, to Rs 62,410 per kl. ATF typically makes up almost half of an airline's operating cost. State-run oil marketing companies revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight. Sybly Industries clocked highest volume of 1.1 crore shares on BSE. Cals Refineries (93.56 lakh shares), Lanco Infratech (53.52 lakh shares), HDIL (47.72 lakh shares) and Kingfisher Airlines (40.44 lakh shares) were the other volume toppers in that order. SBI clocked highest turnover of Rs 254.18 crore on BSE. MindTree (Rs 120 crore), Tata Motors (Rs 73.07 crore), L&T (Rs 69.25 crore) and ICICI Bank (Rs 55.70 crore) were the other turnover toppers in that order. The Reserve Bank of India (RBI) today, 18 June 2012, kept its policy rate viz. the repo rate unchanged at 8% after a mid-quarter monetary policy review, contrary to market expectations of a 25 basis points reduction. The RBI said the role of interest rates in the current slowdown is relatively small, and that a rate cut at this stage could exacerbate inflationary expectations. The RBI said that the evolving growth-inflation dynamic will continue to influence its stance on interest rates. Recognizing that the global situation is turbulent, the Reserve Bank of India stands ready to use all available instruments and measures to respond rapidly and appropriately to any adverse developments, the RBI said in a statement. The rate pause follows a half percentage point cut in April 2012, the first step toward unwinding the 3.75% rate increases that the RBI carried out between March 2010 and October 2011. The RBI said that the core inflation has moderated, reflecting demand conditions and lower pricing power. However, both headline and retail inflation rates are rising, which have a bearing on inflation expectations, RBI said in a statement. Future actions will depend on a continuing assessment of external and domestic developments that contribute to lowering inflation risks, RBI said. Management of liquidity remains a priority of the central bank, RBI said. Even as the liquidity situation converges to the comfort zone, the Reserve Bank of India will continue to use open market operations (OMOs) as and when warranted to contain liquidity pressures, RBI said. The RBI left the cash reserve ratio, or the percentage of deposits that banks must park with the RBI, unchanged at 4.75%. The central bank said that domestic producers have gained competitiveness over foreign producers as a result of the depreciation of rupee against the dollar over the past several months. Over time, this should result in expanding exports and contracting imports, thus acting as a demand stimulus, RBI said in a statement. The annual consumer price inflation remained unchanged in May 2012 at 10.36%, government said in a statement on Monday, 18 June 2012. In April 2012, consumer prices provisionally rose 10.36%. Consumer price-based food inflation, however, accelerated to 10.66% in May 2012 from 10.18% in April 2012. The RBI today, 18 June 2012, said that with a view to enhancing the credit flow to the export sector, it has been decided to enhance the eligible limit of the Export Credit Refinance (ECR) facility for scheduled banks (excluding RRBs) from 15% of the outstanding export credit eligible for refinance to 50%, effective fortnight beginning 30 June 2012. This will provide additional liquidity support to banks of over Rs 30000 crore, RBI said. The rate of interest charged on the ECR facility will continue to be the prevailing repo rate under the Liquidity Adjustment Facility (LAF), which is currently 8%. Fitch Ratings today, 18 June 2012, cut its ratings outlook on India's sovereign debt rating to negative from stable, saying the country's growth potential gradually will deteriorate if efforts to create a more positive operational environment for business and private investments aren't hastened. The announcement was made after trading hours today, 18 June 2012. The ratings company said the revision also reflects India's slow progress on its fiscal consolidation, specifically in the reduction of its central government's debt despite overall financial improvement in the state governments. The ratings company pointed to inflation pressures and weak public finances, underscoring the need for government reforms and policies that can assist long-term growth of the economy. Fitch said India faces an awkward combination of slowing growth and still-elevated inflation. Fitch said India's general elections, which are due in 2014, could result in pressure to further loosen fiscal policy and could weaken its public finances even more. Fitch said such a loosening of fiscal policy, which leads to an increase in the government debt compared to the country's output, would result in a downgrade of India's sovereign debt ratings. An improvement in the country's investment climate as well as fiscal consolidation and budget reform would be positive for its ratings. Fitch backed its triple-B-minus rating on India, which is one notch above junk level. Meanwhile, Indian companies have reported an average increase of about 10% in advance tax outgo in the April-June quarter. The increase in advance tax mop-up, which is a measure of companies' performance, comes at a time the economy is faced with sluggish growth and currency depreciation. Corporate entities pay 15% of their annual estimated tax liability in April-June, 30% in July-September and October-December each, and the rest by March 15. Foreign institutional investors (FIIs) bought shares worth a net Rs 339 crore on Friday, 15 June 2012, as per provisional figures from the stock exchange. The Congress-led United Progressive Alliance (UPA) coalition on Friday, 15 June 2012, named Finance Minister Pranab Mukherjee as its nominee for the post of president in the upcoming presidential poll. Mukherjee is expected to step down as the country's finance minister later this month. Prime Minister Manmohan Singh is widely expected to handle the finance portfolio himself. Singh early this month laid out ambitious infrastructure development plans for the current fiscal year, in an effort to counter criticism over a perceived policy paralysis that has led India into its worst slowdown in nearly a decade. Monsoon rains have reportedly covered half of India after having briefly stalled last week, bringing relief to farmlands and giving some reason to cheer to the country's embattled economy. The pickup in rains will erase concerns over the monsoon's impact on summer crops, as it had stalled for four to five days after reaching parts of Maharashtra. It will also bring some cheer to India's slowing economy because plentiful rains lead to better crop output, increasing farmers' income and driving up rural spending on goods. The sowing of summer crops such as rice, oilseeds, sugar cane and cotton begins with the arrival of the rains. The timing, distribution and quantity of the rains are vital to India's agricultural sector and economy, as more than 60% of the country's farmland is rain-fed. Monsoon rains in India were 36% below the 50-year average between June 1-17, according to the India Meteorological Department. About 81% of India's total area has received deficient or scant rains so far, with the remainder receiving normal or excess rain. The monsoon normally reaches the central regions by June 15 and covers the entire country by July 15. Global rating agency Standard & Poor's early last week warned that India could become the first BRIC nation to lose its investment-grade rating if the South Asian country doesn't revive its growth and push the pedal on reforms. Setbacks or reversals in India's path toward a more liberal economy could hurt its long-term growth prospects and therefore its credit quality, Joydeep Mukherji, S&P's credit analyst, stated in a report titled 'Will India Be the first BRIC Fallen Angel. S&P currently rates India BBB-minus, just one notch above junk. The other three BRIC group of emerging nations--Brazil, Russia and China--are also rated investment-grade. S&P had in April this year cut the outlook on India's long-term credit rating to negative from stable and warned that the country could lose its investment-grade status if the government fails to bring its fiscal house in order. Data released on 31 May 2012 showed India's economic growth slowed to its weakest pace in nine years in the January-March quarter, when it expanded 5.3% from a year earlier. For the fiscal year ended March 31, the economy grew 6.5%, below the 6.9% expansion the government had projected. US Treasury Secretary Timothy Geithner will meet India's finance minister in Delhi in June to strengthen economic and financial ties between the two countries, the US Treasury Department said early last week. European stocks rose in choppy trade on Monday, 18 June 2012, after Greek voters on Sunday, 17 June 2012, gave the victory to the conservative New Democracy party, which has already begun talks with the third-place socialist Pasok party toward forming a coalition government. Key benchmark indices in Germany and UK were up by 0.3% to 0.64%. France's CAC 40 was flat. The New Democracy party favors working with euro zone partners to meet the terms of Greece's austerity and bailout deal negotiated under the previous government. The New Democracy party would now have three days to stitch together a governing coalition after gaining 129 seats out of the 151 seats it needs to lead the 300-seat government, according to the initial results. "The Greek people have spoken. We fully respect their democratic choice. We are hopeful that the election results will allow a government to be formed quickly," European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said late Sunday in a joint statement. "We will continue to stand by Greece as a member of the European Union family and of the euro area," they said. Group of Seven nations also released a statement from Los Cabos, Mexico saying they looked forward to working with Greece's new government, and urging Europe's leaders "to work in partnership with the next Greek government to ensure they remain on the path to reform and sustainability within the Euro Area." South Korean finance ministry officials, in a statement on Monday, 18 June 2012, said the Greek election result will boost markets in the short-term, but warned that Greece's prospects for meeting the terms of its aid agreement are still murky. The International Monetary Fund on Friday, 15 June 2012, warned that Spain will likely miss its 2012 deficit target of 5.3% of gross domestic product. Meanwhile, investors are awaiting the results of an independent audit of Spanish banks which is due on Thursday, 21 June 2012. The independent assessment was a key condition for the 100 billion euro financial package agreed this month to shore up the battered Spanish lenders, weighed down by soured real estate assets and a plummeting property market. A key summit of the European Union is scheduled on 28 and 29 June 2012 to discuss the ongoing European debt crisis. Tighter European banking supervision and measures to strengthen the monetary union are largely expected to be among top proposals at an EU summit. Asian markets jumped Monday after Greek voters on Sunday, 17 June 2012, gave the victory to the conservative New Democracy party, which has already begun talks with the third-place socialist Pasok party toward forming a coalition government. The New Democracy party has indicated it would stick to the outlines of a bailout agreement that Greece struck with the euro zone in February. Key benchmark indices in China, Hong Kong, Taiwan, Japan, Indonesia, Singapore and South Korea were up by 0.40% to 1.81%. Trading in US index futures indicated that the Dow could fall 38 points at opening bell on Monday, 18 June 2012. The Federal Open Market Committee holds its next policy meeting on June 19-20. It remains to be seen if the Fed extends Operation Twist -- a plan expiring this month that lengthens the average duration of bonds in the Fed's portfolio. The Fed launched Operation Twist in September 2011 to lower long-term borrowing costs. The 7th Group of 20 industrial and developing nations summit is scheduled to be held in Los Cabos, Mexico on 18 and 19 June 2012 to discuss current affairs such as poverty, youth unemployment and environmental issues.