Nifty hits 5-1/2-week high

Key benchmark indices continued uptrend to hit fresh intraday highs in late trade on expectations the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial production grew just 0.1% in April 2012. The 50-unit S&P CNX Nifty hit 5-1/2-week high. The barometer index, BSE Sensex, hit five-week high. The Sensex was provisionally up 182.97 points or 1.1%, up about 295 points from the day's low and off close to 45 points from the day's high. The market breadth turned positive from negative in late trade. Interest rate sensitive banking, realty and auto stocks extended recent gains on expectations the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial output grew just 0.1% in April 2012. Index heavyweight Reliance Industries (RIL) edged higher in volatile trade. Shares of power generation firms rose for the fourth straight day as Prime Minister Manmohan Singh on Wednesday, 6 June 2012, laid out ambitious infrastructure development plans for the current fiscal year which includes plans to add a record 18,000 megawatts (MW) of power capacity this year. The market trimmed losses after a weak opening triggered by lower Asian shares. A bout of volatility was witnessed as key benchmark indices weakened once again after paring almost entire intraday losses in morning trade. The market moved into the positive terrain to hit fresh intraday high in mid-morning trade on hopes the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial production grew just 0.1% in April 2012. The market trimmed gains after hitting fresh intraday high in early afternoon trade. Volatility ruled the roost as key benchmark indices surged to hit fresh intraday highs in mid-afternoon. The market trimmed gains after hitting fresh intraday high in late trade. Industrial production in April rose a dismal 0.1% from a year earlier as manufacturing output remained weak and mining output shrank, deepening worries of a slowdown in the economy. Manufacturing output, which has a 75.5% weight in the index of industrial production, grew a mere 0.1% from a year earlier in April, government data showed Tuesday. Capital goods production in April shrank 16.3% while mining output contracted 3.1%. The government slightly revised upwards March industrial output data to a contraction of 3.2% from a contraction of 3.5% reported earlier. As per provisional figures, the BSE Sensex was up 182.97 points or 1.1% to 16,850.98. The index jumped 229.41 points at the day's high of 16,897.42 in late trade, its highest level since 8 May 2012. The index fell 114.54 points at the day's low of 16,553.47 at the onset of the trading session, its lowest level since 8 June 2012. The S&P CNX Nifty jumped 57.65 points or 1.14% to 5,111.75, as per provisional figures. The index hit a high of 5,128.90 in intraday trade, its highest level since 4 May 2012. The index hit a low of 5,015.15 in intraday trade, its lowest level since 8 June 2012. BSE clocked turnover of Rs 1956 crore, higher than Rs 1947.16 crore on Monday, 11 June 2012. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,337 shares rose and 1,324 shares fell. A total of 149 shares were unchanged. From 30-share Sensex pack, 23 stocks rose and rest of them fell. Index heavyweight Reliance Industries (RIL) rose 0.07% to Rs 722, off the day's low of Rs 714. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai last week 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. The world's largest coal company by output Coal India rose 1.46%, with the stock extending Monday's 1.44%. Coal India Chairman S. Narsing Rao said in a media interview on Monday, 11 June 2012, that the company plans to import up to 30 million metric tons of coal this fiscal year as part of efforts to meet rising domestic demand and mitigate power shortages. The imports are dependent on firm orders from customers, mostly in the power and cement sectors, Mr. Rao said. Mr. Rao said the company plans to lower its coal sales through electronic auctions by 3.9% on year to about 50 million tons in the year that began April 1, to comply with government directives to trim such lucrative sales over the next five years and make more coal available to the power sector. Bank stocks rose on hopes the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial output grew just 0.1% in April 2012. India's largest commercial bank in terms of branch network State Bank of India gained 2.12%. The state-run bank has cut its retail term deposit interest rates by 0.25% in tenors up to 240 days with effect from 8 June 2012. Among other PSU bank stocks, Bank of India, Bank of Baroda and Punjab National Bank rose by between 2.17% to 3.98%. India's largest private sector bank by net profit ICICI Bank gained 1.45%. India's second largest private sector bank by net profit HDFC Bank rose 1.89%, with the stock extending gains for the seventh straight day. Shares of many power generation firms rose for the fourth straight day as Prime Minister Manmohan Singh on Wednesday, 6 June 2012, laid out ambitious infrastructure development plans for the current fiscal year which includes plans to add a record 18,000 megawatts (MW) of power capacity this year. NTPC, GVK Power & Infrastructure, Lanco Infratech, and JSW Energy rose by between 0.85% to 3.37%. Tata Power Company fell 0.1%. As per media reports, power projects using imported coal would soon be allowed to raise tariffs by up to Re 1 per unit to offset the effect of increase in fuel price due to additional taxes or changes in law by the governments of source countries. Bharti Airtel rose 1.15% on recent media reports that the company aims to raise the share of sales from the division that targets large companies and other telecommunication operators at a time when stiff competition is forcing it to offer discounted call rates to shore up the user base for its mobile-phone services business. Auto stocks rose on hopes the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial output grew just 0.1% in April 2012. Lower interest rates may help revive demand for properties. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's largest commercial vehicle maker by sales Tata Motors rose 3.08%. Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles rose 4% to 64,347 vehicles in May 2012 over May 2011. The company's domestic sales of Tata commercial and passenger vehicles for May 2012 rose 6% to 60,128 units in May 2012 over May 2011. The company announced the monthly sales data early this month. India's largest utility vehicles maker Mahindra & Mahindra (M&M) gained 1.87%. The company on Monday announced that 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 8th June 2012. The XUV500 is now available at more than 100 dealerships across India, including those cities where it had been launched earlier. Small-car major Maruti Suzuki India rose 3.44% after the company said during market hours today 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. Maruti early this month said total sales declined 5% to 98,884 units in May 2012 over May 2011. Shares of two-wheeler makers also edged higher. India's second largest motorcycle maker by sales Bajaj Auto rose 0.51%. 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) gained 0.6%. 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). PSU OMCs may reportedly reduce petrol prices by around Rs 2 a litre later this week. This will be the second price cut in the month after the Rs 7.54 increase last month triggered strong political opposition. On 2 June 2012, petrol was brought down by Rs 2.02 to Rs 71.16 a litre in the capital. Oil Minister S. Jaipal Reddy on Friday, 8 June 2012, said his ministry has recommended that the tax on diesel vehicles should be raised. Realty stocks reversed initial losses on hopes the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial output grew just 0.1% in April 2012. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. Godrej Properties, HDIL, and Unitech rose by between 3.31% to 4.48%. Real estate major DLF rose 2.56% after the company 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. India's second-largest software exporter by revenue Infosys gained 1.08%. The company announced after market hours on Monday another successful partnership sparked by its recently unveiled Finacle digital commerce solution. Finacle will power agency banking for Standard Bank and help the bank extend service channels across its markets in Africa, Infosys said in a statement. This new alternate channel for the bank will offer value-added financial services to consumers in Africa, while also reducing cost of operations for the bank, Infosys said. Foreign institutional investors (FIIs) bought shares worth a net Rs 130.39 crore on Monday, 11 June 2012, as per provisional figures from the stock exchange. Data on first installment of the advance tax payment due on Friday, 15 June 2012 could provide cues on Q1 June 2012 corporate earnings. Housing finance major HDFC announces Q1 June 2012 results on 11 July 2012. Finance Minister Pranab Mukherjee today, 12 June 2012, said that the government is taking several measures to kick-start the economy. The government is committed to ensure faster project clearances, attracting new investments, both domestic and foreign, fixing regulatory issues, etc to boost investors' confidence, he said. Mukherjee on Monday, 11 June 2012, said the government hopes to introduce a bill for a direct tax code (DTC) during the monsoon session of parliament. The monsoon session usually runs from July to August. The code, which will replace the existing Indian Income Tax Act 1961, intends to cut tax rates to bring more people and companies under the tax net, phase out profit-linked exemptions for companies and replace them with investment-linked incentives. Data on inflation for May 2012 due at 11:30 IST on Thursday, 14 June 2012 could provide cues on the central bank's likely policy stance at mid-quarter monetary policy review on 18 June 2012. The annual rate of inflation, based on monthly wholesale price index (WPI), is projected at 7.4% for May 2012, as per the median estimate of a poll of economists carried out by Capital Market. The annual rate of inflation, based on monthly wholesale price index (WPI), stood at 7.23% (provisional) for the month of April 2012. Global rating agency Standard & Poor's on Monday 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. The United States extended exemptions from its tough, new sanctions on Iran's oil trade to seven more economies on Monday, leaving China the last remaining major importer exposed to possible penalties at the end of the month. In the latest sign Washington is working with other countries to pressure Iran's nuclear program, India, South Korea, Turkey and four more economies will receive waivers from financial sanctions in return for significantly cutting purchases of Iranian oil, Secretary of State Hillary Clinton said on Monday. 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 on Monday. European shares rose in choppy trade on Tuesday, 12 June 2012. Key benchmark indices in UK, France and Germany were up by 0.39% to 0.61%. Data on industrial production in the UK showed a decline for a 14th consecutive month in April on an annual basis, down 1%. However, compared with March 2012 industrial production was unchanged, beating analysts' expectations of a slight decline. Fitch Ratings on Monday, 11 June 2012, cut the rating of two Spanish financial institutions -- Spain's Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA -- by two notches, saying the rating actions reflected last week's downgrade of Spain and the expectation that the country will remain in recession through 2013. Spain on Saturday, 9 June 2012, agreed to receive euro 100 billion ($125 billion) in financial aid for its struggling banking sector from the European Union. The request made Spain the fourth euro-zone country to require international assistance. Spain's Treasury said Monday that the government's plan to shore up the banks with a loan of up to euro 100 billion ($125 billion) will reinforce the overall solvency of the debt markets in the country. In a statement released via the Economics Ministry, the Treasury said it will continue to execute its funding program via its regular auction calendar. The Treasury said a "sound and duly capitalized banking system will reduce future contingent liabilities of the state and will therefore reinforce the sustainability of Spanish debt." Greek voters return to the polls on 17 June 2012 after the splintered results of a May 6 parliamentary election left no party able to put together a government. The poll could potentially decide whether the nation will remain in the euro zone. Asian stocks fell on Tuesday, 12 June 2012, giving back much of the steep gains made in the previous session, as initial euphoria over Spain's bank bailout gave way to uncertainty over the details. Key benchmark indices in China, Hong Kong, Japan, South Korea, Taiwan and Indonesia fell by between 0.35% to 1.02%. Singapore's Straits Times rose 0.33%. China's bank lending and the money supply expanded more than expected in May, with households and corporations showing a strong appetite for loans of medium and longer-term duration, indicating that Beijing's policy easing was beginning to find traction. Chinese financial institutions issued 793.2 billion yuan ($125.6 billion) in May, compared with 682 billion yuan in April, according to data released by the People's Bank of China on Monday. The possibility of a Greek exit from the euro zone is relatively high, and China should prepare for its potential impact, which would include capital outflows and weaker exports, the Financial News on Tuesday reported a Chinese government researcher as saying. According to internal research by the Chinese Academy of Social Sciences, a top state think tank, Greece is very likely to exit the euro zone, which would lead to the euro's depreciation and gains in the US dollar, gold and the Japanese yen, Yin Jianfeng, a deputy director with the Institute of Finance and Banking under the think tank, said in the report. The declining euro and a fall in demand in Europe over the medium term would hit China's export sector and increase unemployment, the newspaper reported Mr. Yin as saying. China is starting to liberalize its interest rate and financial systems, but Fitch Ratings Tuesday said it is concerned about the pace and magnitude of such reform which could be "quite destabilizing" to the financial market and economy as a whole. "Financial liberalization is best pursued from a position of strength, and China's financial system is not in a position of strength at the moment," Fitch's Senior Director of Financial Institutions Charlene Chu said at a conference. The International Monetary Fund said Tuesday the Bank of Japan should pursue "powerful monetary easing" to increase the chance of meeting its 1% inflation goal by 2014, according to a statement published on the website of the Washington-based agency. Japan could substantially expand its asset purchase program in an effort to drive down lending rates to help achieve the inflation goal, the IMF said in the concluding statement, following its annual consultation mission. Trading in US index futures indicated that the Dow could gain 72 points at the opening bell on Tuesday, 12 June 2012. US stocks edged lower on Monday as investors fretted about the finer points of the proposed aid package to Spain. The Federal Open Market Committee holds its next policy meeting on June 19-20. The Organization of Petroleum Exporting Countries (OPEC), which supplies about 40% of the world's crude, may maintain its official daily production ceiling at 30 million barrels a day when the group meets in Vienna on Thursday, 14 June 2012. The 7th Group of 20 industrial and developi