Market may edge higher in early trade on firm Asian stocks

The market may edge higher in early trade on firm Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 31 points at the opening bell. Asian stocks rose for a third day on Monday, 30 July 2012 led by financial firms, on optimism European policy makers will support the euro. Investors will scrutinize the macro economic report to be released by the central bank at 17:00 IST today, 30 July 2012, on the eve of Tuesdays' (31 July 2012) monetary policy review. Among corporate news, Bank of Baroda and GAIL (India) unveil Q1 results today, 30 July 2012. Grasim Industries' consolidated net profit declined 4.52% to Rs 718 crore on 16% growth in revenue to Rs 5907 crore in Q1 June 2012 over Q1 June 2011. Grasim said the profit before interest, depreciation and taxation (PBIDT) rose 1% to Rs 1767 crore in Q1 June 2012 over Q1 June 2011 on the back of enhanced performance of the cement business. The net profit declined due to higher taxes and increase in minority interest on higher cement profits, Grasim said. Grasim said expansion in capacity of viscose staple fibre (VSF) and chemicals businesses is on track. As regards the cement business, Grasim's Chhattisgarh and Karnataka brownfield expansions are on track and are expected to be operational by Q1 June 2013, Grasim said. Consequently, UltraTech Cements' cement capacity will be enhanced by 10.2 million tonnes per annum (mtpa) to 62 million mtpa, Grasim said. With regard to future business outlook, Grasim said stability in euro zone and macro-economic policies will influence demand for VSF. The cotton crop in the ensuing season will influence VSF realisations in the short term, it said. In cement, despite the 8% projected growth in demand, the surplus scenario is likely to continue for three years, Grasim said. Capacity expansions under implementation in both VSF and cement will provide additional volumes, driving growth and will further consolidate the company's leadership, Grasim said. Maruti Suzuki India on Saturday, 28 July 2012, said its net profit declined 22.8% to Rs 423.80 crore on 27.5% growth in net sales to Rs 10529.20 crore in Q1 June 2012 over Q1 June 2011. The car major said adverse yen-rupee exchange rate movement impacted profits adversely in Q1 June 2012. The company attributed strong sales growth to higher volumes, favourable product mix and higher export realization. Maruti said demand continued to be skewed in favour of diesel cars while petrol cars suffered a sharp de-growth in Q1 June 2012. Nestle India's net profit rose 15.03% to Rs 245.97 crore on 12.8% growth in total income to Rs 1997.87 crore in Q2 June 2012 over Q2 June 2011. The result was announced after trading hours on Friday, 27 July 2012. The company's board declared interim dividend of Rs 18 per share for the year ending 31 December 2012. Housing finance major HDFC's consolidated net profit jumped 25.07% to Rs 1275.86 crore on 21.61% growth in total income to Rs 7268.79 crore in Q1 June 2012 over Q1 June 2011. The result was announced on Saturday, 28 July 2012. Due to surveillance concerns, BSE and NSE in consultation with stock market regulator Securities & Exchange Board of India (Sebi) have decided to reduce the price band on 6 stocks viz. Glodyne Technoserve, Radico Khaitan, Pipavav Defence and Offshore Engineering Company, Parsvnath Developers, Tulip Telecom and Era Infra Engineering to 5% with effect from Monday, 30 July 2012. Net profit of state-run Neyveli Lignite Corporation (NLC) declined 15.9% to Rs 288.47 crore on 9.9% growth in net sales to Rs 1331.81 crore in Q1 June 2012 over Q1 June 2011. The result hit the market after trading hours on Friday, 27 July 2012. Crude oil refiner Mangalore Refinery and Petrochemicals (MRPL) reported a massive net loss of Rs 1520.55 crore in Q1 June 2012, compared with net profit of Rs 172.71 crore in Q1 June 2011. The company said the net loss in Q1 June 2012 was mainly due to sharp reduction in crude and product prices in April and May 2012, a steep rupee deprecation and lower throughput due to force majeure arising out of stoppage of water supply for about 10 days by the distraction administration. MRPL's net sales declined 4.1% to Rs 12809.86 crore in Q1 June 2012 over Q1 June 2011. Infrastucture stocks will be in focus after the Prime Minster's Office (PMO) on Friday, 27 July 2012, said the flagship infrastructure projects in key sectors viz. ports, airports and railways are moving ahead smoothly and detailed timelines have been drawn up for intermediate stages. Mechanisms have also been put in place for regular monitoring and problem solving, the PMO said in a statement. Prime Minister Dr. Manmohan Singh has identified boosting infrastructure as one of his focus areas in the short term. Dr. Reddy's Laboratories (DRL) on Friday, 27 July 2012, said the United States Food and Drug Administration (USFDA) has lifted the import alert at the company's chemical manufacturing facility at Cuernavaca, Mexico. DRL's Mexico facility was inspected by USFDA in November 2010. Based on observations by the USFDA, a warning letter was issued on 14 June 2011 to the company. DRL later worked with USFDA to resolve the observations in the warning letter. An inspection report after the last inspection in March 2012 indicated that USFDA was satisfied with all the outstanding action points that DRL had submitted. With the satisfactory closure of observations in the warning letter and the lifting of the import alert, DRL can now start importing products to the US from this facility, DRL said in a statement. DRL's Mexico facility produces intermediates and active pharmaceutical ingredients. Rural Electrification Corporation (REC) announced after market hours on Friday, 27 July 2012, its net profit jumped 32.44% to Rs 876.73 crore on 30.33% growth in total income to Rs 3092.68 crore in Q1 June 2012 over Q1 June 2011 Key benchmark indices snapped two-day losing streak on Friday, 27 July 2012 as euro zone debt worries eased after European Central Bank (ECB) President Mario Draghi on Thursday, 26 July 2012, said the ECB will do whatever is necessary to protect the euro zone from collapse, raising hopes for action to ease strains for highly indebted euro zone member states facing pressures to seek a bailout. The BSE Sensex jumped 199.37 points or 1.2% to settle at 16,839.19 on that day, its highest closing level since 25 July 2012. Foreign institutional investors (FIIs) have resumed buying of Indian stocks. FIIs bought shares worth a net Rs 563.72 crore on Friday, 27 July 2012, as per provisional data released by the stock exchanges. FIIs had pressed sales recently after making sustained buying of Indian stocks. The Reserve Bank of India (RBI) is unlikely to cut its key policy rate viz. the repo rate at first quarter review of the Monetary Policy 2012-13 tomorrow, 31 July 2012, to guard against higher inflation as the country faces the possibility of a drought. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns. RBI has said that fiscal consolidation by the government is critical for interest rates to ease. The volume of monsoon rain in India in the week ended July 25 was 20% below the long-term average, as rainfall remained deficient in northern and western parts of the country, the India Meteorological Department said on Thursday, 26 July 2012. Total rainfall so far this season is 22% below the long-period average. The monsoon's slow progress across the country has heightened concerns that output of summer-sown crops such as oilseeds, sugar and pulses may fall. A ministerial panel may soon review the drought-like situation in the country, Farm Minister Sharad Pawar said on Thursday, 26 July 2012, after a meeting with the country's food minister. 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. Sowing of summer crops has picked up pace during the past few days. According to data released by the Ministry of Agriculture, rice was sown in 191.06 lakh hectares (lh) till Friday, 27 July 2012, sharply higher than 144.59 lh a week back. It, however, remains lower than 199.77 lh of normal area for this time of the year. Cumulative sowing of coarse cereals totaled 117.48 lh as on 27 July 2012, compared with 95.43 lh a week back. It, however, remains much lower than 160.86 lh of normal area for this time of the year. Sowing of pulses totaled 62.99 lh as on 27 July 2012, sharply higher than 40.19 lh a week back. It, however, remains lower than 79.82 lh of normal area for this time of the year. Sowing of oilseeds totaled 138.33 lh as on 27 July 2012, compared with 108.84 lh a week back. The normal oilseeds sowing area of 134.45 lh by this time of the year has already been surpassed. Sowing of cotton totaled 97.24 lh as on 27 July 2012, compared with 83.74 lh as on 20 July 2012. The normal cotton sowing area of 94.02 lh by this time of the year has already been surpassed. Sowing of jute and mesta totaled 8.29 lh as on 27 July 2012, exceeding the normal area of 8.22 lk for the crop by this time of the year. The central government has prepared extensive plans to deal with the deficiency in the monsoon/rainfall in some parts of the country, the Prime Minister's Office (PMO) said early last week. 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. The government will increase the availability of electricity and diesel to the grain-bowl northern region to help farmers draw ground water so that the yield of rice isn't affected, it added. It also said there is a proposal to increase the subsidy for the supply of pulses through the government's welfare program to poor families. The IMD last month predicted that rainfall this monsoon would likely be 96% of the 50-year average, with an error margin of 4%. The Prime Minister's Office said actual rainfall could be at the lower end of that range, which means around 92% of the 50-year average. Slowing growth in investment remains a cause for concern for India. Investment makes up 35% of India's economic activity. Principal adviser to the Planning Commission Pronab Sen early last week said rate cuts weren't the remedy for India's growth slowdown. Slowing investment due to weak confidence in the economy, and not a shortage of credit, is hurting growth, he said. Mr. Sen said Indian companies aren't facing any shortage of funds. Many of them are sitting on piles of cash and aren't even repatriating overseas borrowings, he added. The government should take steps to meet the fiscal deficit target set out in the budget and that would improve sentiment and revive investments, Mr. Sen said. He said the government should scale back its spending and slash subsidies on fuels, food and fertilizers to help check its budget deficit. Mr. Sen said food prices would rise if rains don't improve in two weeks. The manufacturing Managers' Index (PMI) for July 2012 will be out 1 August 2012. The HSBC manufacturing Purchasing Managers' Index (PMI) rose to 55 in June, a four-month high, from 54.8 in May. It has kept above the 50 mark that divides growth and contraction for more than three years. The services purchasing managers' index for July 2012 is expected to be released in early August 2012. HSBC's services purchasing managers' index, which gauges the activity of around 400 firms in India, dropped to 54.3 in June from 54.7 in May. However, it has kept above the 50 mark that signifies growth since November. 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. With presidential poll over, the focus now shifts to the Vice-President's poll, which is due on August 7 -- a day before the monsoon session of parliament kicks off. 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. Jaiprakash Associates and Cipla unveil Q1 results tomorrow, 31 July 2012. Steel Authority of India announces Q1 results on 6 August 2012. Mahindra & Mahindra and Bharti Airtel unveil Q1 results on 8 August 2012. Ranbaxy Laboratories announces Q2 June 2012 results on 9 August 2012. Siemens unveils Q3 June 2012 results on 10 August 2012. BPCL announces Q1 results on the same day. ONGC announces Q1 results on 11 August 2012. Hindalco Industries and IDFC will unveil Q1 results on 14 August 2012. Asian stocks staged a broad-based advance Monday, extending gains from last week, as European leaders signaled that they are prepared to take stronger action to curb the region's debt crisis. Key benchmark indices in Singapore, Indonesia, South Korea, Japan, Hong Kong, and Taiwan rose by between 0.35% to 1.35%. China's Shanghai Composite fell 0.18%. Japan's industrial production unexpectedly declined and South Korean manufacturers' confidence dropped to a three-year low as global demand weakened. German Chancellor Angela Merkel and Italian Prime Minister Mario Monti will do everything to protect the euro zone and swiftly implement measures agreed by European leaders in June, their governments said in a statement on Sunday. The euro zone is at a decisive point and leaders will work with the European Central Bank (ECB) to demonstrate their commitment to the stability of the single currency, Eurogroup head Jean-Claude Juncker said in interviews with European media. The Governing Council of the European Central Bank (ECB) holds a monthly monetary policy review on interest rates for the euro area on Thursday, 2 August 2012. The Monetary Policy Committee of Bank of England holds a monthly policy meeting on interest rates in the United Kingdom (UK) on the same day. 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. Political leaders in Greece have reportedly agreed on most of the austerity measures demanded by its creditors and are now eyeing pension and wage cuts to find the final 1.5 billion euros of savings still needed. Key US economic data due this week include indicators on consumer spending, personal income, consumer confidence and the S&P/Case-Shiller home prices index on Tuesday, 31 July 2012. The Federal Open Market Committee (FOMC) holds a two-day policy meeting on US interest rates on 31 July and 1 August 2012. It remains to be seen if the FOMC announces or at least gives indication of another round of asset purchases, known as quantitative easing, to give the US stalling economy a jolt. US gross domestic product which is the value of all goods and services produced in the country, rose at a sluggish 1.5% clip in Q2 June 2012 as consumers pared spending and businesses invested at a slower pace, the Commerce Department reported on Friday, 27 July 2012. A report from Automatic Data Processing, Inc. (ADP) on private-sector employment in the United States in July 2012 is due on Wednesday, 1 August 2012. On the same day, a manufacturing survey for July 2012 from the Institute for Supply Management is also due for release. Data on weekly jobless claims in the US and data on factory orders are due for release on Thursday, 2 August 2012. On the same day, US retailers will unveil monthly same-store sales data. The influential US government data on non-farm payroll for July 2012 is due on Friday, 3 August 2012. In June, the United States creat