Aviation stocks, retailers advance on reform hopes

Key benchmark indices edged higher on expectations that the government will kick-start economic reforms after the upcoming presidential election. The barometer index, BSE Sensex, jumped 79.71 points or 0.47%, up 146.42 points from the day's low and off 20.25 points from the day's high. The market breadth turned positive from negative in late trade. Data showing sustained buying of Indian stocks by foreign funds this month and gains in European shares underpinned sentiment. Auto stocks reversed intraday losses as data released early this week showed the rate of growth in inflation based on the wholesale price index slowed in June 2012. India's second largest motorcycle maker by sales Bajaj Auto surged over 5% after the company said at the time of announcement of Q1 June 2012 results it has undertaken proactive measures like rationalizing the end-user cost of vehicles in Sri Lanka and with these measures the company expects normalcy in exports to resume by end of Q2 September 2012. Interest rate sensitive realty shares rose on renewed buying as data released early this week showed the rate of growth in inflation based on the wholesale price index slowed in June 2012. Index heavyweights Reliance Industries (RIL) and ITC declined. Metal stocks recovered on bargain hunting after recent slide triggered by weak Chinese economic data. Shares of VKS Projects settled with marginal premium over initial public offer price on its debut. Shares of organised retailers surged after Union Minister for Commerce, Industry and Textiles Mr. Anand Sharma said in an interview to a news agency on Tuesday that that the government is planning to persuade the chief ministers of individual states to back the entry of foreign supermarket chains. Aviation stocks also rose after Mr. Sharma said the government plans to soon allow foreign carriers to invest up to 49% in Indian airlines. A bout of initial volatility was witnessed as key benchmark indices pared gains after a positive start triggered by data showing that foreign funds remained buyers of Indian stocks on Tuesday, 17 July 2012. Volatility continued as key benchmark indices hit their lowest level in almost 3 weeks, with investor sentiment hurt by mostly lower Asian stocks and due to hawkish comments from Reserve Bank of India governor D Subbarao on inflation early this week. The Sensex and the 50-unit S&P CNX Nifty hit their lowest level in almost three weeks. The market extended losses in mid-morning trade. The market moved into positive zone from negative zone in early afternoon trade. A bout of volatility was witnessed as key benchmark indices bounced back and scaled fresh intraday high after sliding into the negative zone from positive zone in mid-afternoon afternoon trade. The market retained positive zone in late trade. Data showing sustained buying of Indian stocks by foreign funds this month underpinned sentiment on the domestic bourses. Foreign institutional investors (FIIs) bought shares worth a net Rs 4644.50 crore from the secondary equity markets during 11 trading sessions from 3 July 2012 to 17 July 2012, as per data from Securities & Exchange Board of India (Sebi). The BSE Sensex jumped 79.71 points or 0.47% to settle at 17,185.01, its highest closing level since 13 July 2012. The index jumped 99.96 points at the day's high of 17,205.26 in late trade. The index fell 66.71 points at the day's low of 17,038.59 in mid-morning trade, its lowest level since 28 June 2012. The S&P CNX Nifty advanced 23.45 points or 0.45% to settle at 5,216.30, its highest closing level since 13 July 2012. The Nifty hit an intraday high of 5,222.85. The index hit a low of 5,169.05 in intraday trade, its lowest level since 28 June 2012. The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,459 shares advanced and 1,391 shares declined. A total of 154 shares were unchanged. The BSE Mid-Cap index rose 0.53% and outperformed the Sensex. The BSE Small-Cap index rose 0.29%, underperforming the Sensex. The total turnover on BSE amounted to Rs 2279 crore, lower than Rs 3948.92 crore on Tuesday, 17 July 2012. From the 30-share Sensex pack, 20 stocks gained and rest of them declined. Tata Power Company (up 2.82%), Bhel (up 2.21%) and L&T (up 1.82%) edged higher from the Sensex pack. NTPC (down 0.7%), Cipla (down 0.48%) and Sun Pharmaceutical Industries (down 0.44%) edged lower from the Sensex pack. Index heavyweight and cigarette maker ITC shed 0.41% to Rs 254.30. India's largest FMCG firm by sales Hindustan Unilever rose 0.12% to Rs 445.85 on high volume of 92.75 lakh shares. A bulk deal of 90.71 lakh shares was executed on the counter at Rs 445 per share at 09:35 IST on the BSE. Index heavyweight Reliance Industries (RIL) fell 0.44% to Rs 716. Minister of Petroleum & Natural Gas Mr. S. Jaipal Reddy has promised expeditious clearance of four investment proposals of RIL. The representatives of the RIL and BP Shri PMS Prasad and Shri Sashi Mukundan met the Mr. Reddy on 13 July 2012 and represented for speedy clearances in four of the Blocks (NEC 25, KGD6, two in Cauvery basin) being operated by RIL-BP joint venture. It was agreed at the meeting to recommend to the competent authority on two issues viz. the Declaration of Commerciality of certain wells in the NEC 25 and KG D6. The Ministry of Petroleum & Natural Gas will consider extension of appraisal period to facilitate the declaration of commerciality at an early date. It was also agreed that quicker approvals for two blocks in the Cauvery Basin as per the extant Government Policy would be given, the Ministry of Petroleum & Natural Gas said in a statement issued on Tuesday, 17 July 2012. The Ministry of Petroleum & Natural Gas also told RIL that denial of access to its records by RIL to the Comptroller and Auditor General (CAG) was adversely commented upon in previous audit by the CAG. It was also brought to their notice that CAG recommended withholding of sanction to work plans and budgets if access to records is denied to CAG. Essar Oil rose 1.1%. After market hours on Tuesday, the company said that in response to its petition in the Supreme Court on principal repayment schedule and waiver/remission of interest in the Sales Tax issue, the court has directed the company to pay Rs 1000 crore to the Gujarat state government towards sales tax/VAT dues by July 30th. Essar Oil had offered to pay this amount in its submission to the court. On payment of this amount of Rs 1000 crore, coercive steps already taken by state would be stayed, Essar Oil said in a statement. As previously announced, Essar Oil is also in advanced discussions with Indian lenders with regard to putting in place a $1 billion (Rs 5000 crore) loan facility as a contingency measure for use in the event that the sales tax liability becomes payable immediately or that Essar Oil is not able to negotiate a satisfactory repayment schedule. Essar Oil said it expect this facility to be finalised shortly. Auto stocks reversed intraday fall as data released early this week showed the rate of growth in inflation based on the wholesale price index slowed in June 2012. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's second largest motorcycle maker by sales Bajaj Auto surged 5.04% to Rs 1520.05. During market hours today, the company said its profit after tax rose 1% to Rs 718 crore on 4% growth in turnover to Rs 5048 crore in Q1 June 2012 over Q1 June 2011. The company said its strategy of managing growth with profitability and building a sustainable growth momentum has resulted in the company maintaining its industry leading EBITDA (earnings before interest, taxation, depreciation and amortization) margin of 19.4% in Q1 June 2012. The EBITDA of 19.4% in Q1 June 2012 was higher than 19.1% in Q1 June 2011. The company said domestic demand for motorcycles remains subdued. On the export front, Bajaj Auto lost exports of about 20,000 units in Sri Lanka in Q1 June 2012 due to introduction of import barriers by that country. The company also lost export of about 25,000 commercial vehicles in Q1 June 2012 due to restrictions by importing countries and due to political unrest in Egypt, Bajaj Auto said in a statement. Bajaj Auto said that the company along with its distributor has undertaken proactive measures like rationalizing the end-user cost of vehicles in Sri Lanka and with these measures the company expects normalcy in exports to return by end of Q2 September 2012. Hero MotoCorp (HMCL) rose 0.72%. The company recently launched a 125 cubic-centimeter motorcycle Ignitor. The Ignitor motorcycle will be available in two versions, costing Rs 55,900 and Rs 57,900 at dealerships in New Delhi, the company said. The latest model follows the 110cc Maestro scooter, which was launched in March, and the 150cc Impulse motorcycle, introduced last October. The Ignitor will add to the Glamour and the Super Splendor -- the two 125cc motorcycle models sold currently by Hero MotoCorp. Hero MotoCorp sells motorcycles with 100cc to 225cc engines. It also sells two scooter models, including the Maestro. Hero MotoCorp's total sales rose 4.26% to 5,34,091 units in June 2012 over June 2011. With sales of 5,34,091 units in the month of June, HMCL's cumulative sales for the first quarter (April-June) of this financial year (2012-13) has touched 16,42,292 units -- its highest-ever sales in any single quarter. India's largest commercial vehicle maker by sales Tata Motors fell 1.84% as the stock turned ex-dividend today, 18 July 2012, for dividend of Rs 4 per share for the year ended 31 March 2012 (FY 2012). The Tata Motors stocks has witnessed a consistent slide over the past few days on speculation the government will raise fuel prices after presidential election on July 19 or after the appointment of new vice president on August 7. The stock fell 8.31% in five trading sessions to settle at Rs 225.90 on Tuesday, 17 July 2012, from a recent high of Rs 246.40 on 10 July 2012. M&M rose 0.61%, with the stock recovering from recent slide triggered by concerns lower rains this year may hit demand for tractors adversely. M&M last week said it has suspended its plans to develop a vehicle for the US market due to changes in the US regulatory and market situation. M&M said it will continue to monitor the US situation and remain flexible with its approach to this market. India's largest car maker by sales Maruti Suzuki India gained 2.37%. The company early this month said its total sales jumped 20.3% to 96,597 units in June 2012 over June 2011. Automobile industry body -- the Society of Indian Automobile Manufacturers (SIAM) – on 10 July 2012, cut its forecast of domestic car sales for the year through March 2013 to 9%-11% from 10%-12% earlier. But it raised the guidance for total domestic car and sport-utility vehicle (SUV) sales to 11%-13% from 10%-12% due to expectations of higher SUV sales, most of which run on diesel. Sales of diesel cars and SUVs are surging as the price of diesel in India remains cheaper than petrol. In New Delhi diesel is 39% cheaper than petrol. Commercial vehicles maker Ashok Leyland rose 0.42% Dr Reddy's Laboratories fell 2.15%. The company today, 18 July 2012, said it has launched Atorvastatin Calcium Tablets 10 mg, 20 mg, 40 mg and 80 mg, a bioequivalent generic version of Lipitor (atorvastatin calcium) tablets in the US market on 17 July 2012 following the approval by the United States Food & Drug Administration (USFDA) of its ANDA for atorvastatin calcium tablets. The Lipitor brand had US sales of approximately $8.07 billion for twelve months ended March 2012 according to IMS Health data. Cadila Healthcare rose 4.91%, with the stock extending Tuesday's 4.74% surge. The company on Tuesday, 17 July 2012, said the US Food and Drug Administration has found the company's facilities at Moraiya acceptable. The US FDA had in June 2011 issued a warning letter to Cadila, citing non-conformity of the facilities with the US FDA norms. Bank stocks were mixed. India's second biggest private sector bank in terms of branch network HDFC Bank rose 0.69%. The private sector bank last week said its net profit jumped 30.6% to Rs 1417.40 crore on 34.3% growth in total income to Rs 9536.90 crore in Q1 June 2012 over Q1 June 2011. HDFC Bank's operating expenses jumped 25.7% to Rs 1934.60 crore in Q1 June 2012 over Q1 June 2011. The core cost-to-income ratio rose to 49.2% in Q1 June 2012 from 48.3% in Q1 June 2011, the bank said in a statement. India's largest private sector bank by net profit ICICI Bank gained 1.52%. The country's biggest commercial bank in terms of branch network State Bank of India shed 0.54%. The bank has raised the rate of interest on NRE Rupee Term Deposits for tenor of 3 years to less than 5 years from 8.75% to 9% on deposits of less than Rs 15 lakhs with effect from 17 July 2012. Axis Bank rose 1.32%. The stock had dropped 2.1% on Tuesday. During market hours on Tuesday, the private sector bank said its net profit rose 22.4% to Rs 1153.52 crore on 29.24% increase in total income to Rs 7,818.37 crore in Q1 June 2012 over Q1 June 2011. The surge in net profit was despite a 47.2% jump in provisions and contingencies to Rs 258.84 crore in Q1 June 2012 over Q1 June 2012. The bank's gross non-performing assets (NPA) stood at 1.06% of gross advances as on 30 June 2012, higher than 0.94% as on 31 March 2012. The net NPA ratio remained low. The NPA ratio was at 0.31% of net advances as on 30 June 2012, higher than 0.25% as on 31 March 2012. Axis Bank's capital adequacy ratio (CAR) stood at 13.03% as on 30 June 2012, lower than 13.66% as on 31 March 2012 and higher than 12.53% as on 30 June 2011. Metal stocks recovered on bargain hunting after recent slide triggered by weak Chinese economic data. China is the world's largest consumer of copper and aluminum. Tata Steel (up 1.29%), JSW Steel (up 0.37%), Sterlite Industries (up 2.53%), Sesa Goa (up 2.8%), Sail (up 1.69%), edged higher. Jindal Steel & Power (JSPL) rose 2.54%. The company's subsidiary Jindal Steel Bolivia (JSB) has terminated the contract signed with the Bolivian government for investment of $2.1 billion for the El Mutun mines in Bolivia. The termination comes in the wake of the issuance by JSPL of a letter to the Govt. of Bolivia on June 8, 2012 conveying its intention to terminate the contract due to the non-fulfillment of contract conditions on the part of the Bolivian government. As per terms of the Joint Venture Contract, the Govt. of Bolivia had 30 days time to resolve the issues failing which JSPL could terminate the contract within 7 working days thereafter. JSPL said it took the decision to terminate the contract after all its efforts to resolve the issues and take the project forward did not meet with success. Due to the non-fulfillment of the contractual obligations and unwillingness to fulfill the contract on the part of the Govt. of Bolivia, JSPL has been forced to terminate the contract, JSPL said in a statement. JSPL had signed a contract with the Government of Bolivia in the year 2007 for investing $2.1 billion in iron ore mining, pelletization (10 million ton per annum), DRI (6 million ton per annum) and steel making (1.7 million ton per annum). This was supposed to be the single largest foreign investment in Bolivia. As per the contract, Govt. of Bolivia was to sign an agreement for supply of natural gas required for the project -- 10 million cubic metre per day (MCD) within 180 days of signing of the contract, which has not been signed till date, JSPL said. The Govt. of Bolivia was willing to commit only 2.5 MCD of gas (as against a total requirement of 10 MCD) from 2014 onwards due to non availability of gas in the country whereas the company was being asked to make investment as per capacities originally envisaged under the Joint Venture Contract. Also, the Govt. of Bolivia did not provide the agreed contract area for setting up the steel project till date, JSPL said. In view of the aforesaid breaches of the Bolivian Government and its entities, the company intends to pursue international arbitration relating to the contract, JSPL said in a statement. Hindalco Industries fell 0.42%. The company's US unit -- Novelis -- early this week said it will establish a new organization for the procurement of used beverage cans (UBCs) in North America that will make the company the largest UBC buyer in the region. The announcement follows the company's decision to withdraw from its Evermore joint venture with Alcoa effective August 31, 2012. Novelis will procure all UBCs for its recycling plants in Greensboro, GA, Berea, KY, and Oswego, NY, directly through the new organization. Interest rate sensitive realty shares rose on renewed buying as data released early this week showed the rate of growth in inflation based on the wholesale price index slowed in June 2012. Purchases of both residential and commercial property are largely driven by finance. DLF (up 1.75%), Unitech (up 0.87%), Indiabulls Real Estate (up 3.12%), and Orbit Corporation (up 0.96%), gained. The Competition Commission of India directed cement firms last month to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Cement is a key raw material in housing construction. Shares of organised retailers jumped. Pantaloon Retail India (up 7.03%), Shoppers Stop (up 5.17%), and Trent (up 3.87%) surged. The government is planning to persuade the chief ministers of individual states to back the entry of foreign supermarket chains, Commerce and Industry minister Anand Sharma said in an interview to a news agency on Tuesday, 17 July 2012. Mr. Sharma has written to the chief ministers of several states that aren't allied with the Congress party in an effort to persuade them that backing the introduction of foreign supermarket chains, known as multi-brand retailers, in India would rapidly improve the nation's supply-chain infrastructure, increase pay for farmers by cutting out market middlemen, and reduce costs for consumers. Late last year, the government approved a rule that would allow retailers such as Wal-Mart Stores Inc. to own 51% of an Indian joint venture; they are currently prohibited. But, in the face of a firestorm of protest, including from coalition allies within the Congress party-led government, implementation was put on hold. Mr. Sharma said chief ministers of at least eight out of 28 states had publicly declared their support for the policy. The main opposition Bharatiya Janata Party is staunchly opposed. Aviation stocks rose after Mr. Sharma said the government plans to soon allow foreign carriers to invest up to 49% in Indian airlines. SpiceJet (up 3.86%) and Jet Airways India (up 1.41%) edged higher. But, Kingfisher Airlines lost 2.17% to Rs 9.45, with the stock hitting a record low of Rs 9.36. A decision will be taken soon to allow greater investment in the airline industry, Mr. Sharma said. Foreign financial investors are currently allowed to own up to 49% of an Indian carrier, but the change would allow other carriers to take stakes up to 49%, too. Future Ventures India fell 4.02% to Rs 8.84 on massive volume of 7.06 crore shares. A bulk deal of 6.7 crore shares was executed on the counter at Rs 9.5 per share in opening trade on the BSE. Tata Communications rose 5.56%. The company will announce Q1 results on 26 July 2012. Century Textiles & Industries rose 5.30%. The company will announce Q1 results on 1 August 2012. GTL Infrastructure jumped 7.03% after the company said its board has issued compulsorily convertible debentures to lenders and the promoter group as part of its corporate debt restructuring. The announcement was made after market hours on Tuesday, 17 July 2012. Shares of VKS Projects settled at Rs 55.60 on BSE, a 1.09% premium over initial public offer price of Rs 55 per share. On BSE, 11.53 lakh shares were traded on the counter. The stock hit a high of Rs 56 and a low of Rs 53.05. VKS Projects is engaged in the business of undertaking EPC/turnkey item-rate contract for mechanical, piping and heavy equipment erections for various industrial and infrastructure projects. Of late the company is also forayed into land development for industrial/infra projects. Hindustan Unilever was the top traded counter on the BSE with turnover of Rs 412.78 crore followed by SBI (Rs 95.19 crore), Adani Enterprises (Rs 68.68 crore), Future Ventures (Rs 67.09 crore) and Bajaj Auto (Rs 55.78 crore). Future Ventures was the turnover topper on the BSE with volume of 7.06 crore shares followed by Cals Refineries (1.59 crore shares), Hindustan Unilever (92.75 lakh shares), Lanco Infratech (52.71 lakh shares) and Kingfisher Airlines (38.96 lakh shares). On the macro front, provisional annual inflation rate based on all India general consumer price index (CPI) (Combined) for June 2012 on point to point basis (June 2012 over June 2011) stood at 10.02%, lower than 10.36% (final) for May 2012, data released today, 18 July 2012, by the Ministry of Statistics and Programme Implementation showed. The corresponding provisional inflation rates for rural and urban areas for June 2012 stood at 9.74% and 10.44%, respectively. Inflation rates (final) for rural and urban areas for May 2012 stood at 9.57% and 11.52%, respectively. Decline in the inflation rate for the urban areas in June 2012 as compared to May 2012 is attributed to the higher base of the housing group index for June 2011 as compared to May 2011, the Ministry of Statistics and Programme Implementation said in a statement. Housing group includes items such as house rent, water charges and repair charges. Housing group index for June 2011 included the rent index compiled using the rent data for the period January 2011 to June 2011, which was the first six months period after the base year of January 2010 to December 2010, it said. On Friday, 20 July 2012, CSO will announce data on consumer price index (agricultural labourers/rural labourers) for June 2012. The annual rate of inflation based on monthly wholesale price index (WPI) eased to 7.25% (provisional) for the month of June 2012 (over June, 2011) from 7.55% (provisional) for the previous month and 9.51% during the corresponding month of the previous year. Build up inflation in the financial year so far (April-June 2012) was 1.99% compared to a build up of 2.41% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in a statement. The official WPI for All Commodities for the month June 2012 rose 0.2% to 164.2 (provisional) from 163.9 (provisional) for the previous month, it said. Inflation is way above the desired threshold level of Reserve Bank of India, central bank governor D Subbarao said early this week. He added that the RBI stance of monetary policy is aimed at restraining demand and managing inflation expectations. "There is a threshold level of inflation. Below the threshold, may be, there is a trade-off between growth and inflation. But above the threshold, there is definitely no trade-off between growth and inflation," he said. "The Reserve Bank of India is sacrificing growth only in the short-term and there is no growth-inflation trade off in the medium term," he said. The RBI's threshold level for inflation is around 5%, he said. However , the governor did issue a disclaimer that his statements did not imply RBI's decision in its July 31 policy. India's potential growth rate may have fallen to around 7.5% as the uncertainty surrounding economic activity has increased after the financial crisis of 2008-09, Subbarao said in a speech on Tuesday. The Reserve Bank of India (RBI) announces first quarter review of the Monetary Policy 2012-13 on 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns. Rainfall in the country till July 15 was 22% short of the long-term average, raising concerns that farm output may be hurt and could lead to a rise in food prices. It is a challenge for farmers to maintain the same performance compared with the last two years, Farm Minister Sharad Pawar said on Monday, 16 July 2012. The key agricultural states of Karnataka, Maharashtra and Andhra Pradesh have experienced the worst shortage of rain, Mr. Pawar said. Maharashtra is the country's largest producer of sugar and second-biggest producer of soybeans, while Karnataka is the largest coffee producer and Andhra Pradesh one of the biggest rice producers. The government has prepared contingency plans to help farmers increase output, Mr. Pawar said. The agriculture ministry has sent seeds for late sowing to areas that have received insufficient rain, he said. Steps have also been taken to provide sufficient quantities of seeds of rabi pulses to compensate for any loss in pulses production in the kharif season, he said. According to data released by the Ministry of Agriculture, rice was sown in 96.79 lakh hectare (ha) till 13 July 2012, compared with 55.4 lakh ha a week back, but it still remains lower than 111.63 lakh ha during the corresponding period last year. Cumulative sowing of coarse cereals totaled 39.76 lakh ha as on 13 July 2012, sharply lower than 79.82 lakh ha during the corresponding period last year. Sowing of pulses totaled 20.54 lakh ha as on 13 July 2012, much lower than 32.88 lakh ha during the corresponding period last year. Sowing of oilseeds totaled 67.7 lakh ha, lower than 78.33 lakh ha during the corresponding period last year. Sugarcane and cotton have been sown in more area than the area covered by these crops this time last year. The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. More than 60% of the country's farmland is rain-fed. The timing, distribution and quantity of rainfall are all important for crops. Prime Minister Dr. Manmohan Singh last week approved the constitution of an expert committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) to undertake stakeholder consultations and finalise the guidelines for GAAR by 30 September 2012. Foreign direct investments in India fell 38% in the April-May period, according to central bank data which reflect the battering the country's appeal has taken in the past few months. FDI flows into India in the first two months of the fiscal year which began April 1 dropped to $3.2 billion from $5.15 billion a year earlier. In May alone, net foreign direct investment more than halved from a year earlier to $1.38 billion, adding to worries about India's current account deficit. India depends on capital inflows to finance its current account deficit, which widened to a record 4.5% of gross domestic product in the January-March period. India's trade deficit narrowed in June, helped by a sharp fall in imports, director-general of foreign trade Anup Pujari said on Friday, 13 July 2012. The trade deficit was $10.3 billion during the month, down from $14.4 billion a year earlier. Exports in June fell 5.45% from a year earlier to $25.1 billion while imports declined 13.46% to $35.3 billion due slide in crude oil prices. An India-Mauritius joint panel will discuss a series of proposals to review the double taxation avoidance treaty between the two nations on 22-24 August in Mauritius. India has been looking to negotiate the double taxation avoidance agreement with Mauritius for the past few years to check so-called round tripping and other potential abuses. Round tripping entails moving money out of one country to another, and getting it back under the garb of foreign capital. Capital gains tax is close to zero in Mauritius and almost 40% of investments into India come through the island nation. Under the bilateral agreement, capital gains from sale of securities can be taxed only in Mauritius. The India-Mauritius joint working group will also discuss the inclusion of a so-called limitation of benefit clause, similar to the Singapore tax treaty with India, to ensure only genuine Mauritius-based companies are benefited. India's tax agreement with Singapore says that only those companies that spend a minimum of $200,000 (about Rs 1 crore) in Singapore can avail the benefits of the treaty. Sanctity of tax residency certificates issued by a country to companies operating in its jurisdiction to enable the firms to claim tax benefits under various treaties is another issue between India and Mauritius. While India in this year's national budget said the certificates are a necessary but not sufficient condition, Mauritius wants those issued by it honoured. Draft guidelines issued by Indian government for implementing the controversial anti-avoidance tax proposal viz. the GAAR state that GAAR provisions should be invoked on a foreign institutional investor (FII), if it chooses to take a treaty benefit, but would not in any case be invoked in the case of the non-resident investors of the FII. The draft guidelines suggested that the onus of proving wrongdoing should be on the authorities. Prime Minister Dr. Manmohan Singh said in a newspaper interview this month that he has identified controlling the fiscal deficit, achieving clarity on tax matters, reviving the mutual funds and insurance industries, clearing a backlog of foreign investment proposals and boosting infrastructure as his focus areas in the short term. Singh said there will be no arbitrariness in tax matters. The statement assumes significance in the context of a raging controversy over the Income Tax amendment to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad to avoid taxes. Singh last month said he is chalking out plan for the country's economic revival. Singh last month took additional charge at the finance ministry after Pranab Mukherjee resigned as finance minister on 26 June 2012 to contest the presidential polls scheduled on Thursday, 19 July 2012. Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post. The monsoon session of the parliament will begin on 8 August 2012 and the session will conclude on 7 September 2012, Parliamentary Affairs Minister Pawan Kumar Bansal said on Wednesday, 18 July 2012. The government hasn't yet finalized the agenda for the session, but the expectation is that Prime Minister Dr. Manmohan Singh -- who took charge of the finance ministry after Mr. Pranab Mukherjee resigned to contest the presidential elections -- will try and push through long-pending legislations. These could include the Direct Tax Code and the insurance, pension and banking bills. The government would also place before lawmakers the first demand for additional spending for this fiscal year which began April 1. Corporate affairs minister Veerappa Moily said in a newspaper interview published on 11 July 2012 that the government is hopeful of the passage of the pension bill in the monsoon session of parliament. The first quarter June 2012 earnings season has just begun. In the next one month, investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year or the next year. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth. Kotak Mahindra Bank, Hero MotoCorp and Dr Reddy's Laboratories unveil Q1 results tomorrow, 19 July 2012. Reliance Industries and Asian Paints unveil Q1 results on Friday, 20 July 2012. Hindustan Unilever, L&T and Cairn India unveil Q1 results on 23 July 2012. Wipro, Sesa Goa and Jindal Steel & Power unveil Q1 results on 24 July 2012. GAIL (India) and Power Grid Corporation of India unveil Q1 results on 25 July 2012. HCL Technologies announces Q4 June 2012 results on the same day. ITC, Bhel and Sterlite Industries (India) unveil Q1 results on 26 July 2012. Cement majors ACC and Ambuja Cements unveil Q2 June 2012 results on the same day. ICICI Bank, Grasim Industries, NTPC and Punjab National Bank unveil Q1 results on 27 July 2012. Maruti Suzuki India announces Q1 results on 28 July 2012. Mahindra & Mahindra announces Q1 results on 8 August 2012. Ranbaxy Laboratories announces Q2 June 2012 results on 9 August 2012. BPCL announces Q1 results on 10 August 2012. Hindalco Industries announces Q1 results on 14 August 2012. European stocks edged higher on Wednesday, 18 July 2012, helped by a well-received earnings report from heavyweight bank Credit Suisse Group AG and after US Federal Reserve Chairman Ben Bernanke on Tuesday, 17 July 2012, hinted at more easing if needed. US is the world's biggest economy. Key benchmark indices in UK, France and Germany were up by 0.07% to 0.61%. Spanish borrowing costs dropped sharply as the country's government on Tuesday sold 3.56 billion euros ($4.37 billion) of 12-month and 18-month bills at an auction, exceeding its 3.5 billion euro target, according to media reports. Yields on the 12-month bill averaged 3.918%, down from 5.074% from the previous auction in June, while the bid-to-cover ratio improved to 2.23 from 2.16. For the 18-month bill, the average yield dropped to 4.242% from 5.107% at a June auction. The bid-to-cover ratio fell to 3.66 from 4.42. The short-term debt sale comes before key auctions of up to 3 billion euros of medium- and longer-dated bonds from the Treasury on Thursday, 19 July 2012, when the Spanish government will sell bonds maturing in 2014, 2017, and 2019. The auction comes ahead of a meeting of European officials scheduled on Friday, 20 July 2012, to hammer out the final details of the Spanish bank bailout. The French government is scheduled to hold bond auction on Thursday, 19 July 2012. The European Central Bank (ECB) has reportedly advocated imposing losses on holders of senior bonds issued by Spain's most troubled banks. But, European finance ministers have reportedly rejected ECB's advice on Spain out of fear financial markets would react badly. As per reports, ECB's new position was presented by ECB President Mario Draghi at a meeting of euro-zone finance ministers on July 9. The position is a turnaround from the ECB's position in 2010, when it successfully insisted that senior bondholders of Irish banks shouldn't suffer losses. Germany's Federal Constitutional Court will announce a decision on lawsuits challenging the country's participation in the permanent euro-zone rescue fund, the European Stability Mechanism, and the fiscal pact on 12 September 2012. The court held a public hearing earlier this month to examine complaints that participation in the fund and the fiscal pact violated German law by taking some authority over the national budget away from parliament. Asian stocks declined on Wednesday after Chinese Premier Wen Jiabao on Tuesday warned of a severe job outlook for the world's second biggest economy, fueling concern the economy has yet to bottom. Key benchmark indices in Taiwan, South Korea, Indonesia, Japan and Hong Kong were down by 0.32% to 1.48%. However, key benchmark indices in Singapore and China rose 0.08% and 0.37% respectively. Chinese Premier Wen Jiabao on Tuesday said that expanding employment is a top priority for the government as the country's employment situation is set to grow more challenging. Jiabao had said recently said that China's economic rebound isn't yet stable and hardship may continue for a period of time, according to a state-media report. Wen also pointed to China's actions to address the economic deceleration. The economic growth rate is still within the government target range set early this year, and stabilization policies are working, Wen was quoted as saying in a Xinhua news agency report. China's second-quarter economic growth slowed to 7.6% from a year earlier, compared to 8.1% in the first quarter,. It was the weakest rate of growth in more than three years. Meanwhile, government data released in Hong Kong today, 18 July 2012, showed lower June new-home prices in 57 of 70 cities surveyed compared to a year earlier, though average prices were unchanged in June from May. The Bank of Japan released the minutes of its latest interest rate meeting on Wednesday which showed that the bank remains focused on providing stability to the financial system and that it continues to conduct monetary policy in an appropriate manner. The Bank of Japan (BoJ), last week, left ultra-low interest rates unchanged at its policy meeting. The BoJ reaffirmed its commitment to steadily increasing the size of its asset purchase program, but didn't announce any immediate increase in the overall size of the program. The Asian Development Bank said in a report released on 12 July 2012 that weaker global demand is helping ease international oil and food prices in Asia, which is reducing inflationary pressures in the region. The bank trimmed its inflation forecast for developing Asia for this year to 4.4% from 4.6% previously. It cut its inflation forecast for China this year to 3.7% from 4% previously. The World Bank last week revised down its 2013 Indonesia growth forecast to 6.4% from 6.5% a month ago, but said a severe global downturn could send growth tumbling even further to 4%. Trading in US index futures indicated that the Dow could fall 35 points at the opening bell on Wednesday, 18 July 2012. US shares ended in positive territory on Tuesday after markets initially pulled back on the first day of Federal Reserve chairman Ben Bernanke's testimony to Congress but then recovered after he spoke about slow progress in the US economy and job market and hinted at more easing if needed. Bernanke testifies the House Financial Services committee later in the global day today, 18 July 2012. Earnings also supported the US equity market on Tuesday, with Goldman Sachs Group Inc. and Coca-Cola Co. reporting solid results. The Fed's Beige Book report is slated for release on Wednesday, 18 July 2012. A report from Federal Reserve Bank of Philadelphia is due for release on Thursday, 19 July 2012. Quite a few prominent US companies report Q2 June 2012 earnings this week. Honeywell, Bank of America Corp., IBM and Qualcomm Inc. report Q2 results on Wednesday, 18 July 2012. Microsoft Corp. and Google Inc. report Q2 results on Thursday, 19 July 2012. Wrapping up the week, General Electric Co. reports Q2 results on Friday, 20 July 2012. The International Monetary Fund early this week reduced its outlook for 2013 global growth to 3.9% from an April forecast of 4.1%