Market may open lower on weak Asian stocks

The market may edge lower in early trade on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 17 points at the opening bell. Asian stocks fell Monday after a string of negative global developments hit sentiment, including a disappointing U.S. jobs report and weekend comments from Chinese Premier Wen Jiabao highlighting his nation's economic pressures. Asian Paints said that Mumbai high court has approved the composite scheme for merger and demerger which envisages merger of PPG Coatings India (subsidiary of PPG in India) and AP Coatings (wholly owned subsidiary of the company) with Asian PPG Industries (APPG) (existing Joint Venture between Asian Paints Group and PPG Group). The scheme then provides for the demerger of the Liquid Industrial Paints, Powder Coatings and Protective Coatings businesses from APPG into Asian Paints PPG (second Joint Venture Company). Key benchmark indices snapped three-day winning streak on Friday, 6 July 2012 as weak global stocks dampened sentiment. The BSE Sensex lost 17.55 points or 0.1% to 17,521.12, its lowest closing level since 4 July 2012. Foreign institutional investors are buying Indian stocks. Foreign institutional investors (FIIs) bought shares worth a net Rs 571.78 crore on Friday, 6 July 2012 as per provisional figures on the stock exchanges. An India-Mauritius joint panel will in August discuss a series of proposals to review the double taxation avoidance treaty between the two nations, Mauritius Foreign Minister Arvin Boolell said on Thursday, 5 July 2012. 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. India and Mauritius will discuss the renegotiation of the tax pact between 22-24 August 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 recently for implementing the controversial anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (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 has said in a newspaper interview 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 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. On macro front, the government will announce data on index of industrial production (IIP) for May 2012 on Thursday, 12 July 2012. The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. Investors and analysts will closely watch the management commentary that would accompany the result which could cause 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. HDFC announces Q1 results on 11 July 2012. IT heavyweights, Infosys and TCS unveil Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Axis Bank announces Q1 results on 17 July 2012. Bajaj Auto reports Q1 results on 18 July 2012. Kotak Mahindra Bank, Hero MotoCorp and Dr Reddy's Laboratories unveil Q1 results on 19 July 2012. Asian Paints announces Q1 results on 20 July 2012. Cairn India announces Q1 results on 23 July 2012. ICICI Bank announces 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. Asian stocks fell for a third day on Monday amid concern slower growth is damaging earnings after China's Premier Wen Jiabao said China's economy faces “relatively large” downward pressure and Japanese machinery orders fell more than expected following a disappointing U.S. jobs report. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan fell by between 0.54% to 1.12%. China's consumer-price index eased to a 29-month low in June, giving Wen Jiabao more room to relax economic policies after the second interest-rate cut in a month. The consumer price index rose 2.2% from a year earlier, the National Bureau of Statistics said today in Beijing. Japan's current-account surplus was the smallest in May since at least 1985 and machinery orders fell the most in more than five years, adding to signs a slump in demand is threatening the nation's rebound. US stocks fell on Friday as another month of tepid jobs growth underlined fears the economy was stalling. American employers hired fewer workers than forecast in June and the unemployment rate held at 8.2%. Global business confidence cooled in June as the euro zone debt crisis took its toll, though corporate sentiment in the United States held up better, a survey from financial information firm Markit showed on Sunday. The percentage of companies around the world that expected business activity to rise over the next 12 months outnumbered those anticipating a decline by a margin of 37% according to Markit's global business outlook survey.