Market seen opening slightly higher; June inflation data eyed

Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 8 points at the opening bell. The Central Statistical Organization (CSO) will announce data on wholesale price index inflation for June 2012 at 11:30 IST today, 16 July 2012. Asian markets were trading mixed as China's premier on Sunday said weakness in the world's second-biggest economy is not yet over. Tata Steel turns ex-dividend today, 16 July 2012, for dividend of Rs 12 per share for the year ended 31 March 2012 (FY 2012). Tata Motors is developing a new range of fuel-efficient trucks and buses to keep its leadership of the commercial vehicle market in India where it expects the entry of several auto makers to challenge its domination in the coming years, Tata Motors chairman Ratan Tata said in the company's annual report for the year ended 31 March 2012 (FY 2012), which was released on Friday, 13 July 2012. In the coming years, Tata Motors' predominance in commercial vehicles will be challenged by the entry of international brands like Mercedes-Benz, Volvo and Navistar which have all entered, or are in the process of entering India, Mr. Tata said. In passenger cars, Tata Motors will face even greater competition from the many automotive brands that are in the country, Mr. Tata said. The company will need to address the marketplace more effectively with its existing and future products in order to regain the level of market share that it earlier enjoyed, he added. Mr. Tata also said that Tata Motors' UK-based unit Jaguar Land Rover Plc. will introduce several new sport sedans and sports cars in the next two years and a new line of competitively priced range of SUVs. Jaguar Land Rover has undertaken its most ambitious product development program in its history, Mr. Tata said. Tata Motors bought Jaguar Land Rover from Ford for $2.3 billion in 2008, just before the global downturn hit global auto makers hard, forcing Tata Motors to cut production, shut down plants and reel under losses. Fortunes gradually turned for the luxury brands, which eventually became Tata Motors' highest revenue generator globally. Key benchmark indices dropped for the third day in a row on Friday, 13 July 2012 and reached their lowest closing level in more than two weeks as index heavyweight Reliance Industries (RIL) edged lower in volatile trade. The BSE Sensex shed 18.85 points or 0.11% to settle at 17,213.70, its lowest closing level since 28 June 2012. Foreign institutional investors (FIIs) are buying Indian stocks this month. FIIs bought shares worth a net Rs 281.13 crore on Friday, 13 July 2012, as per provisional data released by the stock exchanges. Earlier, FIIs bought shares worth a net Rs 3363.10 crore in eight trading sessions from 3 July 2012 to 12 July 2012. According to latest data released by the Ministry of Agriculture, rice sowing has picked up in the country. Though sowing of other major crops is behind last year, sowing has picked up fast as compared to the last week, the ministry said in a statement on Friday, 13 July 2012. Rice was sown in 96.79 lakh hectare (ha) till 13 July 2012, compared with 55.4 lakh ha a week back, but it still remains lower than 111.63 lakh ha during the corresponding period last year. Sugarcane and cotton have been sown in more area than the area covered by these crops this time last year. During the week ended 11 July, 2011, rainfall for the country as a whole was 1% above the long period average (LPA), with above normal rainfall over northwest and central India. Out of 36 meteorological sub-divisions, rainfall was excess in 8, normal in 13, deficient in 13 and scanty in 2 sub-divisions during the week. In area-wise distribution, 59% area of the country received excess/normal rainfall. Remaining 41% area received deficient/scanty rainfall. For the country as a whole, seasonal rainfall during this year's monsoon up to 11 July was 22% below the LPA. Out of 36 meteorological subdivisions, the rainfall was excess/normal over 15, deficient in 17 and scanty in 4 sub-divisions. In area-wise distribution, 40% area of the country received excess/normal rainfall. Remaining 60% area received deficient/scanty 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. Prime Minister Dr. Manmohan Singh on Friday, 13 July 2012, approved the constitution of an expert committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) to undertake stakeholder consultations and finalise the guidelines for GAAR. The committee would manage the consultation process and finalise the draft GAAR guidelines, the prime minister's office (PMO) said in a release. While postponing GAAR by one year to 2013 was a very welcome move, a widespread consultative process is necessary to generate a discussion on GAAR provisions so that there is an informed debate on how GAAR is going to operate, the release said. Department of Revenue undertook some consultations with stakeholders before finalising a first draft set of guidelines. This consultation was done by invitation. Subsequently, at PM's behest, Department of Revenue put the draft guidelines on the internet. This was widely welcomed as it lifted the veil on the GAAR guidelines, the release said. While these steps are good in themselves, a need was felt for far more widespread consultations, it said. There is a need to have greater clarity on many other fronts, the release said. The committee will invite comments from stakeholders and the general public on the draft GAAR guidelines which have been published by the government on its website. After receiving feedback, the committee will vet and rework the guidelines based on the feedback and publish the second draft of the GAAR guidelines for comments and consultations. This will be followed by the committee undertaking widespread consultations on the second draft GAAR guidelines. Once the consultation process is completed, the committee will finalise the GAAR guidelines and a roadmap for implementation and submit these to the government by 30 September 2012. 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 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 earlier 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 scheduled on Thursday, 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. Corporate affairs minister Veerappa Moily said in a newspaper interview published on Wednesday, 11 July 2012, that the government is hopeful of the passage of the pension bill in the monsoon session of parliament. The monsoon session of parliament begins on 7 August 2012. Foreign direct investments in India fell 38% in the April-May period, according to central bank data which reflect the battering the country's appeal has taken in the past few months. FDI flows into India in the first two months of the fiscal year which began April 1 dropped to $3.2 billion from $5.15 billion a year earlier. In May alone, net foreign direct investment more than halved from a year earlier to $1.38 billion, adding to worries about India's current account deficit. India depends on capital inflows to finance its current account deficit, which widened to a record 4.5% of gross domestic product in the January-March period. India's trade deficit narrowed in June, helped by a sharp fall in imports, director-general of foreign trade Anup Pujari said on Friday, 13 July 2012. The trade deficit was $10.3 billion during the month, down from $14.4 billion a year earlier. Exports in June fell 5.45% from a year earlier to $25.1 billion while imports declined 13.46% to $35.3 billion due slide in crude oil prices. The first quarter June 2012 earnings season has just begun. In the next one month, investors and analysts will closely watch the management commentary that would accompany the result to see if there is any 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. Axis Bank announces Q1 results tomorrow, 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. Reliance Industries and Asian Paints unveil Q1 results on 20 July 2012. Hindustan Unilever, L&T and Cairn India unveil Q1 results on 23 July 2012. Wipro and Jindal Steel & Power unveil Q1 results on 24 July 2012. GAIL (India) and Power Grid Corporation of India unveil Q1 results on 25 July 2012. Cement majors ACC and Ambuja Cements unveil Q2 June 2012 results on 26 July 2012. Bhel announces Q1 results on the same day. ICICI Bank and Grasim Industries unveil 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. BPCL announces Q1 results on 10 August 2012. Hindalco Industries announces Q1 results on 14 August 2012. Inflation based on the wholesale price index (WPI) is seen rising further to 7.62% in June 2012 from 7.55% in May 2012, as per the median estimate of a poll of economists carried out by Capital Market. The CSO will announce data on WPI inflation for June 2012 at 11:30 IST today, 16 July 2012. The CSO will also announce data on consumer price index (rural)/consumer price index (urban)/consumer price index (combined) for June 2012 on Wednesday, 18 July 2012. On Friday, 20 July 2012, CSO will announce data on consumer price index (agricultural labourers/rural labourers) for June 2012. 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. Asian markets were trading mixed on Monday as China's premier on Sunday said weakness in the world's second-biggest economy is not yet over. The weekend comments from Wen Jiabao came after China on Friday reported that quarterly economic growth slipped to a three year low. Wen said China's economy has not yet entered a recovery and “economic difficulties may continue for some time.” Key benchmark indices in Hong Kong, Indonesia and Singapore rose by between 0.01% to 0.66%. Key benchmark indices in China, South Korea and Taiwan were down by 0.18% to 0.85%. Japanese markets are closed today for a public holiday. China's economy cooled to its weakest rate of growth in more than three years in Q2 June 2012, expanding 7.6% from a year earlier, in a result that matched expectations but underscored problems faced by its export-dependent growth model. The growth rate was the weakest since the first quarter of 2009. For the January-to-June period, the economy grew 7.8%, compared to 9.6% in the same period a year earlier. The GDP had risen 8.1% in Q1 March 2012. In other data released simultaneously on Friday by China's National Bureau of Statistics, industrial production was also slightly weaker, expanding 9.5% in June, compared to May's 9.6% expansion. Fixed-asset investment growth in urban areas accelerated to 20.4% in the first half, picking up from 20.1% in the first five months of the year. Retail sales were up 13.7% in June from a year earlier, softening slightly from May's 13.8% growth. Sales of home appliances at large retailers were among bright spots, rising 9.5% on year, up from 0.5% growth in May. There is no need to worry about deflation although China's consumer inflation is likely to continue to slow, an official with the country's statistics bureau said on Friday, 13 July 2012. Despite lower inflation recorded in June, Chinese companies still face heavy cost pressures, Sheng Laiyun, the National Bureau of Statistics' spokesman, said at a press conference. Meanwhile, people should be cautious about imported inflation due to ample liquidity globally, he said. The Bank of Japan (BoJ) left ultra-low interest rates unchanged at its policy meeting on Thursday. The BoJ reaffirmed its commitment to steadily increasing the size of its asset purchase program, but didn't announce any immediate increase in the overall size of the program. The Bank of Korea on Friday scaled back its 2012 economic-growth forecast for the second time this year, a day after it unexpectedly cut interest rates and signaled that it would act pre-emptively to protect against slowing global growth. South Korea's economy will expand 3% this year, the central bank said today in a statement, an estimate lowered from a 3.5% prediction made in April and 3.7% in December. Singapore's economy unexpectedly contracted last quarter as manufacturing fell, adding to signs of a deepening slowdown in Asian expansion as Europe's debt crisis curbs demand for the region's goods. Gross domestic product fell an annualized 1.1% in the three months through June from the previous quarter, when it climbed a revised 9.4% the Trade Ministry said today. The Asian Development Bank said in a report released on Thursday, 12 July 2012, that weaker global demand is helping ease international oil and food prices in Asia, which is reducing inflationary pressures in the region. The bank trimmed its inflation forecast for developing Asia for this year to 4.4% from 4.6% previously. It cut its inflation forecast for China this year to 3.7% from 4% previously. The World Bank on Thursday revised down its 2013 Indonesia growth forecast to 6.4% from 6.5% a month ago, but said a severe global downturn could send growth tumbling even further to 4%. Spain and France are scheduled to hold bond auctions on Thursday, 19 July 2012, ahead of a meeting of European officials scheduled on Friday, 20 July 2012, to hammer out the final details of the Spanish bank bailout. Moody's Investors Service on Friday cut Italy's bond rating to Baa2 from A3, with a negative outlook. Moody's said the government in Rome is more likely to experience a sharp increase in funding costs, or the loss of market access, and that its near-term economic outlook has deteriorated. Italy on Friday sold 3.5 billion euros ($4.3 billion) of new three-year government bonds, producing a yield of 4.65%, down from 5.30% in a sale in June, news reports said. Borrowing costs were expected to decline after Italian bond yields pulled back from crisis levels following a European Union summit meeting in late June. The amount sold was at the top end of the government's range of 2.5 billion to 3.5 billion euros. Demand outstripped supply 1.73 times, reports said, up slightly from 1.59 in June. US stocks rallied on Friday, 13 July 2012 after better-than-expected quarterly results from J.P. Morgan Chase boosted enthusiasm about earnings season The Dow Jones Industrial Average gained 203.82 points, or 1.6%, to 12777.09. The Standard & Poor's 500-stock index advanced 22.02 points, or 1.6%, to 1356.78. The Nasdaq Composite Index rose on 42.28 points, or 1.5%, to 2908.47. US retail sales data for June 2012 and Federal Reserve Bank of New York's Empire Manufacturing Survey Index for July 2012 are due for release on Monday, 16 July 2012. US consumer price index for June 2012 and the July US home builders index are due for release on Tuesday, 17 July 2012. Federal Reserve Chairman Ben Bernanke testifies before the Senate banking committee on Tuesday, 17 July 2012 and the House Financial Services committee on Wednesday, 18 July 2012. The Fed's Beige Book report is slated for release on Wednesday, 18 July 2012. A report from Federal Reserve Bank of Philadelphia is due for release on Thursday, 19 July 2012. Quite a few prominent US companies report Q2 June 2012 earnings this week. Citigroup Inc. reports results on Monday, 16 July 2012. Johnson & Johnson Inc., Coca-Cola Co., Goldman Sachs Group Inc., Intel Corp., and Yahoo Inc. report Q2 results on Tuesday, 17 July 2012. Honeywell, Bank of America Corp., IBM and Qualcomm Inc. report Q2 results on Wednesday, 18 July 2012. Microsoft Corp. and Google Inc. report Q2 results on Thursday, 19 July 2012. Wrapping up the week, General Electric Co. reports Q2 results on Friday, 20 July 2012