Market hits 4-week low; breadth weak

Key benchmark indices fell for the second straight trading session to hit their lowest level in four weeks as stocks fell across the globe on renewed concerns over debt problems in Spain and Greece. The market breadth was weak. All the 13 sectoral indices on BSE were in the red. The barometer index, BSE Sensex, shed 281.09 points or 1.64%, off close to 170 points from the day's high and up about 30 points from the day's low. From a recent high of 17,278.85 on 19 July 2012, the Sensex has declined 401.50 points or 2.32% in two trading sessions. The Sensex has lost 552.63 points or 3.17% in this month so far (till 23 July 2012). The Sensex has jumped 1,422.43 points or 9.2% in calendar 2012 so far (till 23 July 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,741.49 points or 11.5%. From a 52-week high of 18,944.60 on 26 July 2011, the Sensex has lost 2,067.25 points or 10.91%. Coming back to today's trade, index heavyweight Reliance Industries (RIL) edged lower in volatile trade after weak Q1 results. Another index heavyweight and cigarette maker ITC also dropped. L&T declined on profit booking after reporting strong Q1 results. Colgate-Palmolive (India) trimmed intraday losses after good Q1 results. Dabur India dropped on profit taking after strong Q1 results. Auto stocks declined across the board on speculation the government will raise fuel prices shortly to lighten its subsidy burden and improve fiscal position. Maruti Suzuki India tumbled after the company declared lockout at its Manesar, Haryana plant after last week's labour unrest. Metal stocks declined across the board after a Chinese central bank adviser predicted the nation's expansion may cool to 7.4% this quarter, adding to concern that the world's second-biggest economy has yet to bottom out. The market opened on a weak note on lower Asian stocks. Weakness continued on the bourses in morning trade. The barometer index, BSE Sensex, fell below the psychological 17,000 mark. The market extended losses in mid-morning trade. The downtrend continued as the market hit fresh intraday low in early afternoon trade. Key benchmark indices hit fresh intraday lows in afternoon trade, tracking a weak opening in European market. The market extended losses in mid-afternoon trade. Weakness continued in late trade. The market may remain volatile this week as traders roll over positions from the near-month July 2012 series to August 2012 series. The July 2012 derivatives contracts expire on Thursday, 26 July 2012. The BSE Sensex was down 281.09 points or 1.64% to 16,877.35, its lowest level since 25 June 2012. The index declined 309.16 points at the day's low of 16,849.28 in late trade. The index fell 110.71 points at the day's high of 17,047.73 at the onset of the trading session. The S&P CNX Nifty was down 87.15 points or 1.67% to 5,117.95, its lowest level since 25 June 2012. The Nifty hit low of 5,108.10 and a high of 5,164.20 in intraday trade. The BSE Mid-Cap index declined 1.31% and the BSE Small-Cap index fell 1.14%. Both these indices outperformed the Sensex. The total turnover on BSE amounted to Rs 1631 crore, lower than Rs 1691 crore on Friday, 20 July 2012. The market breadth, indicating the overall health of the market, was weak. On BSE, 1,794 shares fell and 989 shares rose. A total of 109 shares were unchanged. From the 30-share Sensex pack, 26 stocks declined and only four of them gained. L&T fell 1.12% to Rs 1374.50, with the stock sliding on profit booking after the company reported good Q1 results during trading hours. The company's recurring profit after tax rose 19% to Rs 890 crore on 26% growth in gross revenue to Rs 12078 crore in Q1 June 2012 over Q1 June 2011. The L&T had stock had witnessed pre-result rally. The scrip had jumped 22.52% to settle at Rs 1,390.05 on Friday, 20 July 2012, from a recent low of Rs 1,134.50 on 1 June 2012. L&T said the healthy revenue growth in Q1 June 2012 was on the back of a strong order book and good progress in execution of various jobs. International sales constituted 17% of the total revenue in Q1 June 2012, L&T said in a statement. L&T's order inflow jumped 21% to Rs 19594 crore in Q1 June 2012 over Q1 June 2011 despite weak investment sentiment and prevailing global uncertainties, the company said. The major orders came from infrastructure, buildings & factories and power transmission & distribution sectors, L&T said in a statement. L&T's order book stood at Rs 153095 crore as on 30 June 2012. With regard to future business outlook, L&T said that with its enhanced capacities and presence in the diverse sectors, the company is in a good position to harness the opportunities as they emerge. The superior execution capabilities and growing order book provide visibility to sustained revenue growth in the medium term, L&T said in a statement. On the international front, select markets in the Middle East, South East Asia and CIS countries hold promising prospects where the company is strengthening its presence, L&T said in a statement. Among other capital goods stocks, Thermax, BEML, Bhel, Siemens and Punj Lloyd dropped by between 1.15% to 4.5%. Index heavyweight and cigarette maker ITC shed 1.34%. FMCG major, Hindustan Unilever shed 0.67% ahead of its Q1 results today, 23 July 2012. Colgate-Palmolive (India) fell 0.05% to Rs 1167.85, off the day's low of Rs 1145.50. The company's net profit rose 17% to Rs 117.40 crore on 20% growth in net sales to Rs 736.10 crore in Q1 June 2012 over Q1 June 2011. The result hit the market during trading hours today, 23 July 2012. During the quarter, the company achieved a volume growth of 11%. The company enhanced its leadership position in the toothpaste category to 54.5% volume market share in January-June 2012 from 52.4% during the period January-June 2011. The flagship brands -- Colgate Dental Cream, Active Salt, MaxFresh, Colgate Sensitive and Colgate Total -- contributed to this consistent growth, Colgate-Palmolive (India) said in a statement. The toothbrush category has strengthened its market leadership position at a market share of 38.2% during the period January-June 2012 as against 36.3% during the period January-June 2011. The mouthwash category continues its growth momentum which has been enhanced by the recent launch of Colgate Plax Fresh Tea in Q4 March 2012, Colgate-Palmolive (India) said. In an inflationary environment, the company's continuing efforts and focussed programs to enhance efficiencies and reduce costs continue to yield strong, positive results helping to maintain margin and fund investments in building and strengthening brand equity and the business, Colgate-Palmolive (India) said. Prudent price increases and cost management has enabled the company to maintain its strong gross margin for this quarter. The company has recently acquired a plot of land in Andhra Pradesh on a long term lease for setting up a toothbrush manufacturing facility. Dabur India rose 0.1% after strong Q1 results. The stock rose 0.1% in volatile trade. The company announced during market hours today that consolidated net profit rose 16.95% to Rs 149.40 crore on 22.01% growth in total income to Rs 1496.16 crore in Q1 June 2012 over Q1 June 2011. Dabur India's Chief Executive Officer Mr. Sunil Duggal said, "Despite signs of an economic downturn and increased competitive intensity in the market, Dabur India has accelerated volume growth ahead of the market in its key categories. Dabur has laid the foundation for strong and profitable growth in the future with an array of initiatives that includes doubling our distribution footprint in rural India. These initiatives have already started to yield positive results". Index heavyweight Reliance Industries (RIL) fell 0.54% to Rs 718.75. The stock was volatile. The scrip hit a high of Rs 725 and a low of Rs 713.15. The company announced after market hours on Friday, 20 July 2012, its net profit fell 21% to Rs 4473 crore on 13.4% growth in turnover to Rs 94926 crore in Q1 June 2012 over Q1 June 2011. The gross refining margin (GRM) stood at $7.6 per barrel in Q1 June 2012, matching the GRM of Q4 March 2012, but sharply lower than GRM of $10.3 a barrel in Q1 June 2011. Commenting on the results, Mukesh D. Ambani, Chairman and Managing Director, RIL said: "RIL has improved its earnings profile as profits from operations were higher on a sequential basis on the back of volume growth in the refining business. We have commenced our next phase of capital investments in refining and petrochemical segments to enhance earnings and value of our core energy businesses". With regard to oil and gas exploration and production operations, RIL said it has made significant efforts towards augmenting production from KG D6. The company said it is planning to submit a Revised Field Development Plan (RFDP) for D1-D3 which is aimed at maximizing gas recovery from the existing fields. It also plans to further pursue approval of RFDP of D 26 (MA) submitted in the earlier quarter. To expedite the development projects of other discoveries, RIL is preparing development plans based on an integrated concept which is planned for submission in Q3 December 2012, RIL said in a statement. RIL has also commenced pre-development activities in the D6 block which includes Engineering Surveys i.e. Geophysical Surveys & Geotechnical Investigations and Conceptual Engineering and FEED With regard to telecom business, RIL said its subsidiary, Infotel Broadband Services (Infotel), which has emerged as a successful bidder in all the 22 circles of the auction for Broadband Wireless Access (BWA) spectrum, is in the process of setting up a world class Broadband network using state-of-the-art technologies and finalizing the arrangement with leading global technology players, service providers, infrastructure providers, application developers, device manufacturers and others to help usher the 4G revolution into India. Infotel plans to provide end-to-end solutions that address the complete digital value chain across various digital services in key domains of national interest such as education, healthcare, security, financial services, government-citizen interfaces, entertainment and working on building the requisite parts of this customers' experience which fundamentally change the lives of hundreds of millions of Indians, RIL said. Metal stocks declined across the board after a Chinese central bank adviser predicted the nation's expansion may cool to 7.4% this quarter, adding to concern that the world's second-biggest economy has yet to bottom out. China is the World's largest consumer of copper and aluminum. Sterlite Industries, Bhushan Steel, JSW Steel, Tata Steel, Hindalco Industries and Hindustan Zinc shed by between 0.88% to 5.19%. Jindal Steel & Power fell 2.9% ahead of its Q1 results tomorrow, 24 July 2012. Steel Authority of India (Sail) slipped 2.46%. The cabinet committee on economic affairs on Thursday, 19 July 2012, approved disinvestment 10.82% government stake in the state-run steel firm. The cabinet committee on economic affairs (CCEA) on Thursday, 19 July 2012, approved the disinvestment of 10.82% equity of Sail out of Government of India's shareholding of 85.82% through an offer of sale of shares through stock exchanges. After this disinvestment Government of India's shareholding in the company would come down to 75%. Shares of iron ore miners fell on weakness in global iron ore prices. Sesa Goa (down 4.53%) and NMDC (down 1.26%) edged lower. Auto stocks declined across the board on speculation the government will raise fuel prices shortly to lighten its subsidy burden and improve fiscal position. India's largest car maker by sales Maruti Suzuki India tumbled 5.65% to Rs 1079.90. The company said on Saturday, 21 July 2012, it has issued a notice declaring a lock-out at the company's Manesar, Haryana plant. The company's other facilities, including the operations in Gurgaon, will continue to function normally, Maruti said in a statement. Maruti's Manesar facility was rocked by labour violence on July 18, 2012. A General Manager, Awanish Kumar Dev, was burnt to death by the mob of workers inside the plant facilities. Nearly a hundred managers and supervisors sustained serious and critical injuries and had to be hospitalised. The mobs also set fire to the office wing and the main gate. The management's most important concern at this time is the safety and security of its supervisory and management personnel, Maruti said. The management firmly believes that unless the causes are identified and appropriate corrective action is in place it would be unsafe for supervisors and managers to resume work, Maruti said. Following the incidents of violence and arson at the Manesar facility, the management believes that if employees are asked to report for work at the facility, their lives will be endangered, Maruti said. Maruti said that the company wants to ensure that the injured continue to receive quality medical care and recover from the mental trauma caused by the violence. About 30 managers and executives are currently admitted in hospitals in Gurgaon. Even among those discharged from hospital, many are going through trauma owing to the terror and abuse accompanying the attacks. The families of these victims remain disturbed, Maruti said. India's largest commercial vehicle maker by sales Tata Motors declined 3.29%. M&M dropped 1.55%. M&M has suspended its plans to develop a vehicle for the US market due to changes in the US regulatory and market situation. M&M has said that it will continue to monitor the US situation and remain flexible with its approach to this market. Two wheeler makers declined. Bajaj Auto fell 2.22% on profit booking after recent strong gains triggered by the company's announcement at the time of Q1 June 2012 results last week that 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. 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 on Wednesday. Bajaj Auto has said that domestic demand for motorcycles remains subdued. Hero MotoCorp extended recent losses after the company said at the time of announcement of Q1 June 2012 results last week that consumers in rural and upcountry markets could postpone buying of motorcycles if the monsoon remains weak. The stock shed 1.49%. Hero MotoCorp's net profit rose 10.31% to Rs 615.46 crore on 9.95% growth in turnover to a record Rs 6247.28 crore in Q1 June 2012 over Q1 June 2011. Hero MotoCorp also said last week that currency volatility is a point of concern and the rupee depreciation is likely to impact the company's margins. Exide Industries declined 2%. The company announced during market hours today that at the Annual General Meeting of the company held on July 17, 2012, Mr T V Ramanathan has been reappointed as the Managing Director and Chief Executive Officer of the company for a period of one year with the effect from May 1, 2012 up to April 30, 2013. Dr. Reddy's Laboratories rose 1.1% after the company's management at a conference call held on 19 July 2012 to discuss Q1 June 2012 results reiterated its target of achieving revenue of $2.7 billion for the company for the year ending March 2013 (FY 2013) on the back of new product launches and growth from the limited competition product portfolio in the US market Shares of organised retailers fell across the board on reports leaders from Samajwadi Party and leftist parties have opposed foreign direct investment (FDI) in multi-brand retail. Pantaloon Retail India (down 7.89%), Shoppers Stop (down 4.4%) and Trent (down 2.03%), edged lower. According to report, the UPA government's efforts to open up the multi-brand retail sector to foreign companies such as Wal-Mart faced a fresh roadblock on Sunday, 22 July 2012, as Samajwadi Party chief Mulayam Singh Yadav and top Left leaders shot off a letter to Prime Minister Manmohan Singh, urging him not to proceed with opening up of the sector as there was no wide-ranging consensus on the issue. On 24 November 2011, 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. UltraTech Cement rose 1.49% to Rs 1,590.35 as the company's first quarter result beat market expectations. The stock hit a record high of Rs 1,606.50 in intraday trade today. The company announced after market hours on Friday its net profit rose 13.9% to Rs 778.39 crore on 16.6% growth in net sales to Rs 5074.76 crore in Q1 June 2012 over Q1 June 2011. The combined domestic cement and clinker sales rose 4.85% to 9.94 million tonnes (MnT), while that for white cement and wall care putty rose 16.58% to 2.25 lakh metric tonnes (LmT). The variable cost rose by 10% as compared to Q1 June 2011. This was mainly on account of higher energy and raw material prices which are linked to the last increase in railway freight and increase in diesel prices. Although imported coal prices softened by around 19%, the depreciation in rupee by 21% offset the benefit. UltraTech Cement said the board has further sanctioned capital expenditure (capex) of Rs 1000 crore towards modernization and setting up of ready mix concrete plants across the country. This brings the total capex under implementation to around Rs 12000 crore. With regard to future business outlook, the company said the cement demand is likely to grow over 8% on the back of government's focus on infrastructure development. The surplus cement scenario is expected to continue over the next three years. Any rise in input costs will impact margins, it added. Other cement stocks declined after UltraTech Cement said cement glut will continued over the next three years . India Cements, ACC, Jaiprakash Associates and Ambuja Cements declined by between 0.49% to 4.82%. IT stocks fell across the board on euro zone debt worries. Europe is the second largest outsourcing market for Indian IT firms after the US. India's largest software services exporter by revenue, TCS declined 0.76% as the stock turned ex-dividend today, 23 July 2012, for interim dividend of Rs 3 per share for the year ending 31 March 2013 (FY 2013). The company on 12 July 2012 said its consolidated net profit as per Indian GAAP jumped 14.6% to Rs 3318 crore on 12.1% growth in revenue to Rs 14869 crore in Q1 June 2012 over Q4 March 2012. Operating profit rose 10.8% to Rs 4077 crore in Q1 June 2012 over Q4 March 2012. Consolidated net profit as per International Financial Reporting Standards (IFRS) rose 2.89% to $604 million on 3.02% growth in revenue to $2.728 billion in Q1 June 2012 over Q4 March 2012 India's second largest software services exporter by revenues, Infosys fell 1.42% to Rs 2,186.15. The stock had hit 52-week low of Rs 2,163 in intraday trade on 17 July 2012. Infosys revised downwards both earnings and revenue growth guidance for the year ending March 2013 (FY 2013) in dollar terms after reporting disappointing Q1 June 2012 results on 12 July 2012. The company has cut the guidance citing slower IT spends by large corporations due to challenging global economic situation. India's third largest software services exporter by revenue, Wipro, declined 1.86%. The company announces Q1 results tomorrow, 24 July 2012. The rupee fell to an over one-week low on Monday, tracking weaker regional currencies and stocks, as the euro slumped to lows against major currencies undermined by worries that Spain may need a full-fledged bailout. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. Essar Oil (EOL) declined 2.19% after company announced during market hours today that it has tied up a new credit facility from domestic banks to provide a credit line of up to Rs 5000 crore to meet its Sales Tax liability of Rs 6169 crore. The company continues to pursue the matter of repayment schedule of its sales tax liability both legally and with the Gujarat State Government. Essar Oil is confident that with this facility tied up it will be in a position to meet its entire payment obligations. Lalit Gupta, MD & CEO, Essar Oil, said: "The new loan facility will enable the company to meet its sales tax liability. Our lenders have continued to be very supportive of the business, which remains well placed given the demand for high value fuels both in India and internationally". As previously announced, the completion of the Vadinar refinery phase 1 expansion and the early completion of the additional optimisation project at Vadinar complete the scheduled capex programme for the refinery. With its benchmark low operating costs and enhanced scale and complexity, Vadinar is expected to deliver significantly enhanced margins and cash flow generation in future, the company added. The state government of Gujarat had initially allowed Essar Oil to take the benefit of a program that allowed it to defer paying sales taxes until 2021. The benefit, given after the company decided to build a giant refinery in the state's Vadinar area, was withdrawn later, citing a delay in setting up the project. The Mumbai-based company, a unit of London-listed Essar Energy PLC, filed a lawsuit against the state's move. But, the Supreme Court of India in January ruled that the refiner would no longer be eligible for the benefit. Banking stocks declined across the board. The country's biggest commercial bank in terms of branch network State Bank of India dropped 1.97%. 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. Among other PSU bank stocks, Bank of India, Bank of Baroda and Punjab National Bank shed by between 1.65% to 2.14%. India's second biggest private sector bank in terms of branch network HDFC Bank shed 1.57%. India's largest private sector bank by net profit ICICI Bank slipped 2.41%. Cairn India fell 1.99% as US crude oil futures dropped for second day in a row amid speculation fuel demand will falter as China's economy slows and Europe struggles to control its debt crisis. Cairn India announced after market hours today its consolidated net profit rose 40.31% to Rs 3825.74 crore on 43.36% growth in total income to Rs 5402.75 crore in Q1 June 2012 over Q1 June 2011. Telecom stocks were mostly lower after the Empowered Group of Ministers (EGoM) on telecom headed by Home Minister P Chidambaram on Friday, 20 July 2012, decided to recommend a reduction in the reserve price for the 2G spectrum auction suggested by sector regulator Trai. Tata Teleservices (Maharashtra) and Bharti Airtel dropped by between 2.45% to 3.31%. Media reports suggest that the ministerial pan has recommended a price of Rs 14000-16000 crore for five MHz of pan-India spectrum. That amounts to a reduction of more than 20 per cent from the base price of Rs 18110 crore suggested by the Trai. It means the base price for one MHz will be Rs 2800-3200 crore, instead of the Trai recommended Rs 3622 crore. A final decision on the price will be taken by the Union Cabinet. The EGoM has also favoured the Trai recommendation of permitting deferred payment by operators for the spectrum. However, no decision was taken on the one-time fee that DoT had proposed to levy on existing telecom operators by making changes in their licence conditions. Idea Celluar declined 1.65%. The company announced after market hours today that consolidated net profit rose 32.08% to Rs 234.14 crore on 21.74% growth in total income to Rs 5503.69 crore in Q1 June 2012 over Q1 June 2011. Reliance Communications (RCom) lost 2.98% as company has deferred the initial public offering of a unit that holds its undersea-cable assets. The company said it would list the unit at a later date when there were more "supportive market conditions and easing of prevailing global uncertainties." The company didn't elaborate on a time frame for a subsequent IPO. Realty stocks edge lower on profit booking after recent strong gains. HDIL, DLF, Unitech and Godrej Properties shed by between 3.03% to 6.9%. 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. Zee Entertainment Enterprises rose 1.8% to Rs 152.55. The stock hit a 52-week high of Rs 155 in intraday trade today. Zee Entertainment Enterprises during trading hours on Friday, 20 July 2012, said its consolidated profit after tax rose 21% to Rs 157 crore on 21% growth in operating revenue to Rs 843 crore in Q1 June 2012 over Q1 June 2011. Tata Power Company declined 2.16%. The company after market hours on Friday, 20 July 2012, announced that it has signed a long term coal supply agreement with PT Antang Gunung Meratus (AGM), a 100% subsidiary of the Indonesian company PT Baramulti Sukses Sarana (BSSR). Further, in order to secure the coal supplies, the company, through its 100% subsidiary Khopoli Investments (Khopoli), has also entered into an agreement which gives Khopoli an option, subject to necessary approvals, to take up to a 26% stake in BSSR. AGM and BSSR own approximately 1 billion tonnes of coal resources in South and East Kalimantan in Indonesia. Speaking on the development, Anil Sardana, Managing Director, Tata Power said, "As a strategy to support our growth agenda, we are happy to have signed this coal supply agreement. It would support our upcoming power projects based on imported coal to be developed over the next 5 years." Tata Power's existing Indonesia presence includes 30% equity stakes (the Purchase) in two major Indonesian thermal coal producers, PT Kaltim Prima Coal and PT Arutmin Indonesia, and a related trading company owned by PT Bumi Resources Tbk (Bumi). As part of the purchase, Tata Power has signed an Offtake Agreement which entitles it to purchase about 10 million tonnes of coal per annum. Additionally, a consortium comprising of Tata Power, Origin Energy and PT Supraco is developing a geothermal project in Indonesia with approximately 240 megawatts of generation capacity. REI Agro clocked highest volume of 4.96 crore shares on BSE. JM Financial (62.76 lakh shares), Birla Power Solutions (53.72 lakh shares), Cals Refineries (50.68 lakh shares) and BAMPSL Securities (41.20 lakh shares) were the other volume toppers in that order. L&T clocked highest turnover of Rs 117.52 crore on BSE, SBI (Rs 82.07 crore), REI Agro (Rs 53.73 crore), Maruti Suzuki India (Rs 42.53 crore) and TCS (Rs 36.98 crore) were the other turnover toppers in that order. Investors will closely watch political developments as the Nationalist Congress Party (NCP) holds a party meeting today, 23 July 2012, to decide the future course of action on continuing its alliance with the Congress-led United Progressive Alliance (UPA). NCP which has 9 MPs is currently a part of the Congress led UPA government at the centre. The NCP is upset over what it says the Congress' unilateral approach in decision making. Pranab Mukherjee, former finance minister and senior leader of the ruling Congress party, was elected as the new President of India on Sunday, 22 July 2012. On Thursday, the country's 4,896 lawmakers in state assemblies and parliament cast their votes for the president, a ceremonial post. The All-India Consumer Price Index Numbers for Agricultural Labourers (AL) and Rural Labourers (RL) for June 2012 increased by 8 points each to stand at 646 points for Agricultural Labourers and 648 points for Rural Labourers. The rise/fall in index varied from State to State, the Ministry of Labour & Employment said in a statement issued on Sunday, 22 July 2012. Point to point rate of inflation based on the CPI-AL and RL increased from 7.77% and 8.11% in May, 2012 and reached at the level of 8.03% and 8.54% in June, 2012. Inflation based on food index of CPI-AL and CPI-RL stood at 6.24% and 6.4%, Inflation is way above the desired threshold level of Reserve Bank of India, central bank governor D Subbarao said last week. 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 last week 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. Sowing of major kharif crops has picked in the last few days. According to data released by the Ministry of Agriculture, rice was sown in 144.59 lakh hectares (lh) till Friday, 20 July 2012, sharply higher than 96.79 lh a week back. It, however, remains lower than 153.37 lh of normal area for this time of the year and 161.27 lh during the corresponding period last year. Cumulative sowing of coarse cereals totaled 95.43 lh as on 20 July 2012, sharply higher than 39.76 lh a week back. It, however, remains lower than 126.20 lh of normal area for this time of the year Sowing of pulses totaled 40.19 lh as on 20 July 2012, sharply higher than 20.54 lh a week back. It, however, remains lower than 51.77 lh of normal area for this time of the year. Sowing of oilseeds totaled 108.84 lh as on 20 July 2012, sharply higher than 67.7 lh a week back. It, however, remains lower than 109.59 lh of normal area for this time of the year. Sowing of cotton totaled 83.74 lh as on 20 July 2012, compared with 65.22 lh as on 13 July 2012. It, however, remains lower than 90.03 lh of normal area for this time of the year. Sowing of jute and mesta totaled 8.27 lh as on 20 July 2012, exceeding 8.57 lh during the corresponding period last year. India Meteorological Department (IMD) on Friday, 20 July 2012, said rainfall scenario improved significantly over east and northeast India and also over south Peninsula during the week ended 18 July 2012. Out of 36 meteorological sub-divisions, rainfall was excess/normal in 14 (mainly over north eastern states & adjoining east India and south Peninsula) deficient in 16 and scanty in 6 sub-divisions (mainly in northwest and central India) during the week ended 18 July 2012. In area-wise distribution, 32% area of the country received excess/normal rainfall. Remaining 68% area received deficient/scanty rainfall. For the country as a whole, seasonal rainfall during this year's monsoon was 22% below the long period average (LPA) till 18 July 2012. Out of 36 meteorological subdivisions, the rainfall was excess/normal over 11, deficient in 22 and scanty in 3 sub-divisions (Punjab, Haryana, Chandigarh & Delhi and Saurashtra & Kutch). In area-wise distribution, 24% area of the country received excess/normal rainfall. 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. The four-month southwest monsoon season that starts from June accounts for almost 70% of total annual moisture that Indian soil receives in a year. The central government has prepared extensive plans to deal with the deficiency in the monsoon/rainfall in some parts of the country, it said in a statement today, 23 July 2012. There has been reduction of around eight million hectares in the crop area sown compared to last year. While the reduction in area sown in case of rice could be covered over time, area reduction in coarse cereals is likely to persist, the statement added. While the prices of wheat and rice are stable, the prices of sugar, pulses and vegetable are showing an upward trend, the government said. A proposal for increase in subsidy for supply of pulses through Public Distribution System to BPL families is being brought before Cabinet Committee on Economic Affairs by the Ministry of Consumer Affairs, Food and Public Distribution, it said. 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. 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. Investors' focus is currently on Q1 June 2012 earnings. Wipro, Sesa Goa and Jindal Steel & Power unveil Q1 results tomorrow, 24 July 2012. Power Grid Corporation of India unveils 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. HDFC announces its consolidated Q1 June 2012 results on the same day. HDFC has already announced its standalone results. Bank of Baroda and GAIL (India) unveil Q1 results on 30 July 2012. Jaiprakash Associates and Cipla unveil Q1 results on 31 July 2012. Steel Authority of India announces Q1 results on 6 August 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. ONGC announces Q1 results on 11 August 2012. Hindalco Industries and IDFC will unveil Q1 results on 14 August 2012. European shares fell on Monday on renewed concerns over debt problems in Spain and Greece. Key benchmark indices in UK, France and Germany were down by 1.57% to 1.98%. Selling pressure intensified on benchmark 10-year Spanish government bonds, with the yield surging 25 basis points to 7.46%. Many analysts believe that borrowing costs that stay above the psychological 7% are unsustainably high for governments. Greece, Ireland and Portugal were forced to seek bailouts after 10-year yields pushed above that level. There is speculation that Spain's bank-sector bailout could widen to include aid for the government as well. Recent media reports suggest that Spain's Valencia and Murcia regions may ask for Madrid's financial assistance. Spain has revised down its gross domestic product estimates from this year through 2014. Trading in major Italian banks was suspended on Monday morning after a steep slide. Yields on 10-year Italian government bonds rose 24 basis points to 6.38%. Greece moved back into the euro-zone-crisis spotlight, following a weekend report from Germany's Der Spiegel magazine that the International Monetary Fund is set to stop aid payments to the struggling country, stoking fears of a Greek default. A visit by the inspectors from the European Commission, the International Monetary Fund and the European Central Bank -- is set to start on Tuesday, 24 July 2012 -- to determine the fiscal position of Greece, which has been struggling to hold to obligations tied to 240 billion euros ($291 billion) of rescue funds over the past two years. 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 dropped for a second day on Monday after a Chinese central bank adviser forecast an economic slowdown and on renewed concern that Greece may not meet its bailout targets, damping demand for riskier assets. Key benchmark indices in Hong Kong, Taiwan, South Korea, Japan, Indonesia, China and Singapore were down by 1.1% to 2.99%. A Chinese central bank adviser has predicted that the nation's expansion may cool to 7.4% this quarter, adding to concern that the world's second-biggest economy has yet to bottom out. Song Guoqing, an academic member of the People's Bank of China monetary policy committee, also warned that a decline in producer prices in tandem with consumer inflation may hurt investment returns of industrial companies, damping their desire to expand. "The consensus is that China's economic growth rate will be close to 8 percent in coming months, but I personally am more pessimistic because there are problems on the export side," Song said at a forum in Beijing on July 21. With Europe's debt crisis still unfolding, "there is a risk of insufficient government measures if Chinese exports fall more sharply than expected in coming months," he said. Taiwan's industrial output fell in June for a fourth straight month, contracting 2.44% on year, according to Ministry of Economic Affairs data released Monday. The decline confounded expectations for an increase, and added to evidence of a broadening slump in global demand. Trading in US index futures indicated that the Dow could tumble 136 points at the opening bell on Monday, 23 July 2012. US stocks ended with losses Friday after investors retreated from stocks amid fear that Spain's bank-sector bailout could widen to include aid for the government as well. Some prominent US firms announce earnings this week. The world's largest fast-food chain, McDonald's, reports second-quarter earnings on Monday, 23 July 2012. Apple releases its much-anticipated fiscal third-quarter results after trading hours in the US on Tuesday, 24 July 2012. Boeing Co., Caterpillar Inc., Ford Motor and PepsiCo Inc. present their second-quarter results on Wednesday, 25 July 2012. Facebook Inc., which has been under scrutiny over its ability to grow its subscriber base, will report its first results as a public company on Thursday, 26 July 2012. Key US economic data due this week include new home sales on Wednesday, 25 July 2012. Data on weekly jobless claims, durable-goods orders, and pending-home sales data is due on Thursday, 26 July 2012. Data on US GDP growth figure for the second quarter is due on Friday, 27 July 2012. The Federal Open Market Committee holds a two-day policy meeting on US interest rates on 31 July and 1 August 2012.