Market may open slightly lower

Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 11 points at the opening bell. Most Asian stocks declined on Tuesday after Chinese trade data pointed to more signs of stress in the global economy. In corporate news, global rating agency Standard & Poor's Ratings Services (S&P) has revised its outlook on Tata Power to negative from stable while affirming its 'BB-' long term corporate credit rating on the power generation major and its 'BB-' issue rating on the company's senior unsecured notes. S&P said it may lower the rating on Tata Power if the company is unable to secure waiver from its lenders on the breach of covenant. Another trigger for the rating downgrade could be increase in expenditure due to the Mundra ultra mega power (UMPP) project or otherwise resulting into substantial weakness in Tata Power's financial risk profile. S&P said it could upgrade the outlook on Tata Power to stable if Tata Power secures the necessary waiver and if the construction at the Mundra UMPP continues as planned and is within budget. S&P may also consider an upward revision in outlook in case if Tata Power faces no material deterioration in its business and sustainably maintains its financials risk profile such that its ratio of funds from operations to adjusted debt is 10% to 12%. Key benchmark indices fell for the second straight day on Monday, 9 July 2012, to hit their lowest closing level in 1-1/2 weeks, with sentiment hit adversely by global growth worries and euro-zone debt woes. The BSE Sensex lost 129.14 points or 0.74% to settle at 17,391.98, its lowest closing level since 28 June 2012. Foreign institutional investors are buying Indian stocks. Foreign institutional investors (FIIs) bought shares worth a net Rs 252.99 crore on Monday, 9 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. The Centre's gross direct tax collections rose 6.77% to Rs 111182 crore in Q1 June 2012 over Q1 June 2011. Gross collection of corporate taxes rose 3.48% to Rs 70594 crore. Gross collection of personal income tax rose 13% to Rs 40520 crore. The Centre's net direct tax collections jumped 47.16% to Rs 84273 crore. Collection from the Securities Transaction Tax (STT) declined 0.52% to Rs 952 crore. Prime Minister Dr Manmohan Singh said in a newspaper interview last week 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. The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from this week. 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. Ambuja Cements announces Q2 June 2012 results on 26 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. On macro front, the government will announce data on industrial production (IIP) for May 2012 on Thursday, 12 July 2012. Industrial production growth slowed sharply to 0.1% in April due to contraction in capital goods and dip in manufacturing output. Concerns on the monsoon front remain. For the country as a whole, seasonal rainfall during this year's monsoon was 30% below the long period average (LPA) till 4 July 2012. Out of 36 meteorological subdivisions, the rainfall was excess/normal over 10, deficient in 17 and scanty in 9 sub-divisions. In area-wise distribution, 18% area of the country received excess/normal rainfall. Remaining 72% area received deficient/scanty rainfall. According to the latest information received from the Department of Agriculture and Cooperation, rice has been sown in 55.40 lakh hectare, coarse cereals in 21.95 lakh hectare and oilseeds in 26.55 lakh hectare so far. Though sowing of rice, coarse cereals and oilseeds is lagging behind, sowing of pulses has picked up and is now sown in 66 thousand hectares more than this time last year, the Ministry of Agriculture said in a statement on Friday, 6 July 2012. Sugarcane has been sown in 2.52 lakh ha and cotton in 3.78 lakh ha more than last year, it said. 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 India Meteorological Department (IMD) has said that rainfall would occur at many places along the west coast, central & east India and northeastern states throughout this week. Rainfall would also occur at many places over Uttar Pradesh, Himachal Pradesh and Uttarakhand on many days of the week, IMD said in its weekly updated on Friday, 6 July 2012. Rain/thundershowers would occur at a few places over Jammu & Kashmir, Punjab, Haryana, Delhi and east Rajasthan Gujarat region, Madhya Maharashtra, Marathawada, Telangana and north coastal Andhra Pradesh on many days of the week, the IMD has said. Most Asian stocks declined on Tuesday, 10 July 2012, after Chinese trade data pointed to more signs of stress in the global economy. Key benchmark indices in China, Hong Kong, South Korea and Taiwan fell by between 0.12% to 0.35%. Key benchmark indices in Indonesia, Japan, and Singapore rose by between 0.27% to 0.57%. China's imports rose 6.3% in June 2012 from a year earlier, the customs administration said on Tuesday. Exports grew 11.3% in June from a year earlier, faster than market expectations though easing from May's surprisingly strong rise of 15.3 percent. That left the country with a trade surplus of $31.7 billion in June. The fundamental conditions necessary for a rebound in China's trade data aren't solid, the country's customs said on Tuesday after the release of trade data for June 2012. Global uncertainty stemming from factors such as the euro zone sovereign debt crisis will continue to adversely affect Chinese trade, the customs office said in a statement. Nevertheless, China could achieve its goal of 10% trade growth if the debt crisis doesn't deteriorate, it said. China is due to release Q2 June 2012 GDP growth data, along with industrial output and other June metrics, on Friday, 13 July 2012. Euro zone ministers agreed early on Tuesday to grant Spain an extra year until 2014 to reach its deficit reduction targets in exchange for further budget savings and set the parameters of an aid package for Madrid's ailing banks. The decisions were aimed at preventing the currency area's fourth largest economy, mired in a worsening recession, from needing a full state bailout which would stretch the limits of Europe's rescue fund and plunge it deeper into a debt crisis. "The Eurogroup supports the recently adopted Commission recommendation to extend the deadline for the correction of the excessive deficit in Spain by one year to 2014," ministers said in a statement. Eurogroup chief Jean-Claude Juncker said early Tuesday at a televised news conference that 30 billion euros ($36.9 billion) would be available to assist Spain's banks by the end of the month. Spain announced in early June that it would seek assistance from the European Union of up to euro 100 billion to shore up its banking sector, hit hard by bad loans that resulted from the collapse of the Spanish housing market. European Union (EU) leaders agreed in June 2012 that the European Stability Mechanism (ESM), a bailout program, should be allowed to inject capital directly into ailing Spanish banks, once the euro zone created a banking regulator. On Tuesday, 10 July 2011, Germany's Constitutional Court convenes to issue a decision on the viability of the bailout fund after it was cleared by Germany's parliament. The decision is crucial because it will pave the way for implementation of ESM. Italian government tests sentiment in debt markets with a bond sale scheduled on Friday, 13 July 2012. US Stocks slipped on Monday as weak economic data in Asia raised concerns about a slowdown in global growth and as investors were hesitant to make big bets ahead of the upcoming earnings season in the United States. Minutes of the US Federal Open Market Committee's mid-June policy meeting on US interest rates will be released on Wednesday, 11 July 2012. This could provide clues on how policy makers view the economy and how seriously they are considering new stimulus measures.