Market opens on a firm note as euro zone debt worries recede

Key benchmark indices surged in early trade as euro zone debt worries eased after European Central Bank (ECB) President Mario Draghi on Thursday, 26 July 2012, said that the ECB will do whatever it takes to preserve the euro. The market breadth was strong. All the 13 sectoral indices on BSE were in the green. The barometer index, BSE Sensex, was up 247.49 points or 1.49%. Index heavyweight and cigarette maker ITC edged higher in early trade after the company reported strong Q1 results during trading hours on Thursday, 26 July 2012. Another index heavyweight Reliance Industries (RIL) also edged higher. Cement major ACC gained after strong Q2 results. Sterlite Industries (India) shrugged off weak Q1 results. India's largest private sector bank by net profit ICICI Bank surged ahead of its Q1 results today, 27 July 2012. At 09:35 IST, the BSE Sensex was up 247.49 points or 1.49% to 16,887.31. The index surged 275.94 points at the day's high of 16,915.76 at the onset of the trading session, its highest level since 24 July 2012. The index rose 220.34 points at the day's low of 16,860.16 in early trade. The S&P CNX Nifty was up 74.45 points or 1.48% to 5,117.45. The Nifty hit high of 5,130.70 in intraday trade, its highest level since 24 July 2012. The Nifty hit a low of 5,113.70 in intraday trade. The market breadth, indicating the overall health of the market, was strong. On BSE, 826 shares rose and 218 shares fell. A total of 43 shares were unchanged. From the 30-share Sensex pack, 29 stocks rose and only one of them fell. Tata Motors, Hindalco Industries and Tata Steel rose by between 2.55% to 3.61%. Index heavyweight and cigarette maker ITC rose 1.18%. The company on Thursday said its net profit jumped 20.21% to Rs 1602.14 crore on 15.34% growth in net sales to Rs 6652.21 crore in Q1 June 2012 over Q1 June 2011. Despite series of tax hikes, ITC's performance in cigarettes business remains robust and displays pricing power for the company. Index heavyweight Reliance Industries (RIL) gained 1.16%. RIL said at the time of announcement of Q1 results last week that 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. 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. India's largest private sector bank by net profit ICICI Bank jumped 3.21% ahead of its Q1 results today, 27 July 2012. Punjab National Bank rose 1.57% ahead of its Q1 results today, 27 July 2012. State Bank of India gained 1.37% after bank on Thursday said that it has concluded the issue of $1.25 billion Fixed Rate Senior Unsecured Notes having a maturity of 5 years at a coupon of 4.125% payable semi-annually. The bonds will be issued through the bank's London branch on 1 August 2012 and it will be listed on Singapore Stock Exchange, SBI said. Grasim Industries rose 1.51% ahead of its Q1 results today, 27 July 2012. NTPC gained 1.29% ahead of its Q1 results today, 27 July 2012. Cement major ACC rose 2.31% after company said after market hours on Thursday, 26 July 2012, its consolidated profit after tax jumped 26.33% to Rs 414.52 crore on 15% growth in turnover to Rs 2918.98 crore in Q2 June 2012 over Q2 June 2011. ACC said there was a steep escalation in major input costs, including slag, fly ash, gypsum and power in Q2 June 2012. Further, the sharp hike in railway freight rates with effect from 6 March 2012 substantially impacted both inward and outward costs, ACC said. The cement market has been growing steadily and barring seasonal fluctuations the demand for cement is expected to maintain the steady pace of growth in the near term, ACC said with regard to future business outlook. The company's board of directors declared interim dividend of Rs 11 per share for the year ending 31 December 2012. Higher metal prices on the London Metal Exchange on Thursday helped Sterlite Industries (India) shrug off weak Q1 results. The stock jumped 3.17%. The company said after trading hours on Thursday that its consolidated net profit declined 27% to Rs 1202 crore on 8% growth in net sales/income from operations to Rs 10591 crore in Q1 June 2012 over Q1 June 2011. Sterlite said its earnings before interest, taxation, deprecation and amortization (EBITDA) declined 15% to Rs 2337 crore Q1 June 2012 over Q1 June 2011. Sterlite said higher sales realization on account of steep rupee depreciation was offset by lower metal prices, lower volume of zinc, lower power sales at Balco and higher cost of production. The bottom line was additionally impacted by mark-to-market loss of Rs 217 crore on account of foreign currency loans and higher interest cost of Rs 78 crore, Sterlite said. Depreciation cost jumped 23.33% to Rs 518 crore in Q1 June 2012 over Q1 June 2011 due to the capitalization of new plants at Zinc India operations and Sterlite Energy (SEL), Sterlite said. Bosch rose 0.66%. The company has to suspend the manufacturing operations at its Bangalore plant on July 27, 2012, July 28, 2012 and July 30, 2012 and at suspend operations at the Nashik plant from July 30, 2012 to July 31, 2012 with a view to adjust production to meet the demand for products and to avoid unnecessary buildup of inventory. Wockhardt rose 2.08% after the company said it has completed divestment of its nutrition business in favour of Danone. 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 Tuesday, 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns. 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 meet early next week to review the drought-like situation in the country, Farm Minister Sharad Pawar said on Thursday 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. 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 this 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. Principal adviser to the Planning Commission Pronab Sen early this 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. 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. Maruti Suzuki India announces Q1 results tomorrow 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 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 shares rose on Friday after the European Central Bank signalled its resolve to defend the euro zone, raising expectations it will move quickly to tackle skyrocketing borrowing costs in countries like Spain. Key benchmark indices in Indonesia, South Korea, Singapore, Japan, Hong Kong, China and Taiwan rose by between 0.06% to 2.05%. Markets rallied broadly after ECB President Mario Draghi on Thursday said the bank would do whatever was necessary to protect the euro zone from collapse, raising hopes for action to ease strains for highly indebted member states facing pressures to seek a bailout. 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. Japan's consumer prices unexpectedly fell and retail sales missed analysts' forecasts, adding to evidence that the economy's expansion is faltering as gains in the yen and austerity measures in Europe hit exports. Consumer prices excluding fresh food fell 0.2% in June from a year earlier, the statistics bureau said in Tokyo today. Retail sales rose 0.2% a separate report showed, the smallest gain since November Greek Prime Minister Antonis Samaras is set to meet international creditors to try to persuade them that Athens deserves its final installment of bailout money. The EU, IMF and European Central Bank are due to examine Greece's finances before deciding whether to hand over 31.5 billion euros. Without the funds, Greece would face bankruptcy and probably leave the euro. Mr. Samaras said on Thursday that the government would do all it could to get Greece back on track. US stocks rallied on Thursday on a wave of hope inspired by comments from European Central Bank President Mario Draghi on Thursday. Thursday's data showed new US claims for jobless benefits fell last week to near a four-year low, and overall orders for long-lasting US manufactured goods rose more than expected in June. But other data has on housing and jobs markets has disappointed. 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.