Market seen opening slightly lower; RIL result eyed

Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 8.50 points at the opening bell. Reliance Industries and Asian Paints unveil Q1 results today, 20 July 2012. The Central Statistics Office (CSO) will announce data on consumer price index (agricultural labourers/rural labourers) for June 2012 tomorrow, 20 July 2012. Asian stocks were mostly lower on Friday as weaker employment data in the US spoiled sentiment. In corporate news, Reliance Exploration and Production DMCC, a wholly owned subsidiary of Reliance Industries (RIL) has completed the transaction for divestment of its 80% working interest and operatorship in the production sharing contracts (PSCs) for the Rovi and Sarta Blocks in the Kurdistan Region to subsidiaries of Chevron Corporation. OMV will continue to maintain its 20% interest in each of the two blocks, a press release from RIL issued after market hours on Thursday said. "RIL's exit from the blocks is in line with its portfolio rationalization strategy of international assets and to create value for the E&P segment. RIL will continue to look for opportunities to invest globally," the release added. Maruti Suzuki India in a statement issued after market hours on Thursday stated that the company was deeply disturbed by the mob violence and arson at the Manesar plant on Wednesday evening. Several executives, managers and supervisors were brutally attacked and injured, and nearly 100 of them had to be hospitalised. The company said General Manager (HR) at Manesar plant Mr. Awanish Kumar Dev was burnt to death by the mob. Maruti said the company is still assessing the total damage to property and facilities from the acts of arson. The company added that the office facilities have been burnt beyond repair, as have the main gate, security office and the fire safety section. Maruti said its Manesar plant remained shut on Thursday. The company said it will shortly announce a decision on the next steps with regard to resuming operations at the unit. After being terrorized, abused and attacked in a brutal manner by the mob, recovery for the injured employees will not be easy, Maruti said adding that the management will ensure the injured employees continue to receive quality medical attention and that the company is extending all possible to the families of the injured employees. Israel based Taro Pharmaceutical Industries on Thursday reportedly said a special committee of its board has rejected an offer from Sun Pharmaceutical Industries to purchase its issued and outstanding shares not held by the Indian pharma firm due to inadequate price. Sun Pharmaceutical Industries, which holds 66.5% stake in Taro, had said it was proposing to acquire 15 million outstanding shares at a price of $24.50 per share. Sun Pharmaceutical Industries had acquired a controlling stake in Taro in September, 2010. Tata Power has reportedly completed construction of the second 800 megawatt (mw) unit of its flagship Mundra ultra mega project in Gujarat, taking the company's overall capacity to over 6,000 MW. With synchronisation of unit 2, the thermal power generation capacity of Tata Power stands at 5,247 MW and the generation through clean sources such as hydro, wind and solar stands at 852 MW, reports added. Tata Power's total generation capacity now stands at 6,099 MW, it added. The government on Thursday reportedly approved the sale of 10.82% of its stake in Steel Authority of India (Sail). The cabinet committee on economic affairs (CCEA), headed by Prime Minister Manmohan Singh, has cleared Sail public offer. The share sale process, proposed to be conducted through auction route or offer for sale, is expected to fetch over Rs 4000 crore to the government. Oil & gas and infrastructure stocks may be in focus after the government has decided to set up a Project Clearance Board along the lines of Foreign Investment Promotion Board (FIPB) under the chairmanship of the Cabinet Secretary for review and issue of one-time clearances, including security clearance for energy and infrastructure projects in a time-bound manner. The proposed Project Clearance Board will include representatives from the Ministries of Home, Defence, Environment & Forests, Commerce, Coal, D/o Space and other infrastructure and energy related Ministries/Departments, the government said in a statement on Thursday, 19 July 2012. Power equipment makers may advance after the Cabinet yesterday slapped a 21% import duty on power equipments mainly to protect Indian companies from cheap Chinese imports. Telecom stocks will be watched as the Empowered Group of Ministers on telecom will meet today to take on the contentious issue of a reserve price for the re-auction of 2G spectrum. Sugar stocks may be in action on reports the cabinet committee on economic (CCEA) has approved a 17% hike in sugarcane price that mills pay to farmers to Rs 170 per quintal for 2012-13. Key benchmark indices moved higher on Wednesday, 19 July 2012 and attained their highest level in more than one week, with investor sentiment boosted by data showing sustained buying of Indian stocks by foreign funds this month and higher world equities. The BSE Sensex jumped 93.84 points or 0.55% to settle at 17,278.85, its highest closing level since 11 July 2012. Foreign institutional investors (FIIs) are buying Indian stocks this month. FIIs bought shares worth a net Rs 125.78 crore on Thursday, 19 July 2012, as per provisional data released by the stock exchanges. Earlier, FIIs bought shares worth a net Rs 5011 crore from the secondary equity markets during 12 trading sessions from 3 July 2012 to 18 July 2012, as per data from Securities & Exchange Board of India (Sebi). On the macro front, provisional annual inflation rate based on all India general consumer price index (CPI) (Combined) for June 2012 on point to point basis (June 2012 over June 2011) stood at 10.02%, lower than 10.36% (final) for May 2012, data released on Wednesday, 18 July 2012, by the Ministry of Statistics and Programme Implementation showed. The corresponding provisional inflation rates for rural and urban areas for June 2012 stood at 9.74% and 10.44%, respectively. Inflation rates (final) for rural and urban areas for May 2012 stood at 9.57% and 11.52%, respectively. Decline in the inflation rate for the urban areas in June 2012 as compared to May 2012 is attributed to the higher base of the housing group index for June 2011 as compared to May 2011, the Ministry of Statistics and Programme Implementation said in a statement. Housing group includes items such as house rent, water charges and repair charges. Housing group index for June 2011 included the rent index compiled using the rent data for the period January 2011 to June 2011, which was the first six months period after the base year of January 2010 to December 2010, it said. The annual rate of inflation based on monthly wholesale price index (WPI) eased to 7.25% (provisional) for the month of June 2012 (over June, 2011) from 7.55% (provisional) for the previous month and 9.51% during the corresponding month of the previous year. Build up inflation in the financial year so far (April-June 2012) was 1.99% compared to a build up of 2.41% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in a statement. The official WPI for All Commodities for the month June 2012 rose 0.2% to 164.2 (provisional) from 163.9 (provisional) for the previous month, it said. Inflation is way above the desired threshold level of Reserve Bank of India, central bank governor D Subbarao said early this 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 on Tuesday. 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. Rainfall in the country till July 15 was 22% short of the long-term average, raising concerns that farm output may be hurt and could lead to a rise in food prices. It is a challenge for farmers to maintain the same performance compared with the last two years, Farm Minister Sharad Pawar said on Monday, 16 July 2012. The key agricultural states of Karnataka, Maharashtra and Andhra Pradesh have experienced the worst shortage of rain, Mr. Pawar said. Maharashtra is the country's largest producer of sugar and second-biggest producer of soybeans, while Karnataka is the largest coffee producer and Andhra Pradesh one of the biggest rice producers. The government has prepared contingency plans to help farmers increase output, Mr. Pawar said. The agriculture ministry has sent seeds for late sowing to areas that have received insufficient rain, he said. Steps have also been taken to provide sufficient quantities of seeds of rabi pulses to compensate for any loss in pulses production in the kharif season, he said. According to data released by the Ministry of Agriculture, 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. Cumulative sowing of coarse cereals totaled 39.76 lakh ha as on 13 July 2012, sharply lower than 79.82 lakh ha during the corresponding period last year. Sowing of pulses totaled 20.54 lakh ha as on 13 July 2012, much lower than 32.88 lakh ha during the corresponding period last year. Sowing of oilseeds totaled 67.7 lakh ha, lower than 78.33 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. If the rains fail to pick up soon, it could have a lasting impact beyond the summer season and affect even the winter season crop. 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 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 last week 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 by 30 September 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. 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. 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 conducted on Thursday, 19 July 2012. Mr. Mukherjee was 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 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. 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. Hindustan Unilever, L&T and Cairn India unveil Q1 results on 23 July 2012. Wipro, Sesa Goa and Jindal Steel & Power unveil Q1 results on 24 July 2012. Power Grid Corporation of India unveils Q1 results on 25 July 2012. HCL Technologies announces Q4 June 2012 results on the same day. ITC, Bhel and Sterlite Industries (India) unveil Q1 results on 26 July 2012. Cement majors ACC and Ambuja Cements unveil Q2 June 2012 results on the same day. ICICI Bank, Grasim Industries, NTPC and Punjab National Bank unveil Q1 results on 27 July 2012. Maruti Suzuki India announces Q1 results on 28 July 2012. GAIL (India) unveils Q1 results on 30 July 2012. Steel Authority of India announces Q1 results on 6 August 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. Asian stocks were mostly lower on Friday as weaker employment data in the US spoiled sentiment. Key benchmark indices in Indonesia, Japan, China and Singapore were down by 0.11% to 0.29%. Key benchmark indices in South Korea, Taiwan and Hong Kong rose by 0.02% to 0.35%. Chinese Premier Wen Jiabao on Tuesday said that expanding employment is a top priority for the government as the country's employment situation is set to grow more challenging. Jiabao had said recently said that China's economic rebound isn't yet stable and hardship may continue for a period of time, according to a state-media report. Wen also pointed to China's actions to address the economic deceleration. The economic growth rate is still within the government target range set early this year, and stabilization policies are working, Wen was quoted as saying in a Xinhua news agency report. China's second-quarter economic growth slowed to 7.6% from a year earlier, compared to 8.1% in the first quarter,. It was the weakest rate of growth in more than three years. The Bank of Japan released the minutes of its latest interest rate meeting on Wednesday which showed that the bank remains focused on providing stability to the financial system and that it continues to conduct monetary policy in an appropriate manner. The Bank of Japan (BoJ), last week, left ultra-low interest rates unchanged at its policy meeting. 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 Asian Development Bank said in a report released on 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 last week 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%. US stocks advanced on Thursday as earnings from technology companies dispelled fears of a slowdown in world's largest economy. However, weak economic data capped further gains. The Dow Jones Industrial Average gained 34.66 points, or 0.27%, to 12,943.36. The Standard & Poor's 500 index rose 3.73 points, or 0.27%, to 1,376.51 and the Nasdaq Composite index added 23.30 points, or 0.79%, to 2,965.90. In economic data, despite continued job gains, New York unemployment rate jumped to 10% in June, from 9.7% in May, matching its recession peak, the state Department of Labor reported Thursday. The jobless rate was more than a full percentage point above last June's figure. The Philadelphia Federal Reserve Bank said its business activity index for the mid-Atlantic region came in at a reading of minus 12.9 in July compared with minus 16.6 last month. A reading below zero indicates contraction in output in factories in eastern Pennsylvania, southern New Jersey and Delaware. The Labor Department said initial claims for state unemployment benefits rebounded by 34,000 to a seasonally adjusted 386,000 last week. A seasonal quirk caused claims to drop by 24,000 in the prior week. Federal Reserve Chairman Ben Bernanke told lawmakers this week that the U.S. central bank was watching the labor market closely and would take additional action to spur the recovery if needed. General Electric Co. reports Q2 results on Friday, 20 July 2012. The US Fed chairman Ben Bernanke reiterated the central bank's resolve to breathe more life into the US economy if things get worse. Bernanke doesn't expect a double-dip recession in the US. However, the Fed Beige Book survey says the US economy slowed in June and early July. The International Monetary Fund early this week reduced its outlook for 2013 global growth to 3.9% from an April forecast of 4.1% Spain saw demand weaken as it auctioned debt Thursday. The yield on Spain's 10-year government bond rose in the secondary market on Thursday, 19 July 2012, after the government sold euro 2.98 billion ($3.67 billion) in a series of auctions. The government had aimed to raise between 2 billion to 3 billion euros. In an auction of debt maturing in 2014, the yield rose to 5.204% versus 4.335% in a previous sale. The yield at an auction of five-year debt rose to 6.459% versus 6.072% in a previous sale. The yield at an auction of seven-year debt was 6.701%. The bid-to-cover ratio for the two-year paper was 1.9, down from a reported 4.26 a month ago, while the ratio for the five-year paper was 2.06 versus 3.44 in June. The auction comes as major unions in Spain called for nationwide protests against the government's vast austerity program. A meeting of European officials is scheduled on Friday, 20 July 2012, to hammer out the final details of the Spanish bank 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.