PSU OMCs slide on fading fuel price hike hopes

Key benchmark indices edged lower to hit their lowest closing level in more than five weeks after provisional data showed that foreign funds pressed sales of Indian stocks on Tuesday, 24 July 2012. The market breadth was weak. The barometer index, BSE Sensex, was down 72.03 points or 0.43%, up about 110 points from the day's low and off close to 50 points from the day's high. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Another index heavyweight and cigarette maker ITC edged higher ahead of its Q1 results tomorrow, 26 July 2012. PSU OMCs declined on reports the government is unlikely to raise prices of diesel, cooking gas and kerosene in the near future for fear of opposition across the political spectrum. The Sensex has lost 583.93 points or 3.35% in this month so far (till 25 July 2012). The Sensex has jumped 1,391.13 points or 9% in calendar 2012 so far (till 25 July 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,710.19 points or 11.29%. From a 52-week high of 18,944.60 on 26 July 2011, the Sensex has lost 2,098.55 points or 11.07%. Coming back to today's trade, Marico hit a record high. Jindal Steel & Power hit 52-week low after Q1 results. Sesa Goa declined after weak Q1 results. HCL Technologies jumped after strong Q4 results. Strong Q4 results by HCL Tech helped recovery of other IT stocks. Infosys recovered after hitting a 52-week low. Cement stocks extended recent rally triggered by UltraTech Cement posting better-than-expected Q1 results last week. Foreign institutional investors (FIIs) turned sellers on Tuesday, 24 July 2012. FIIs sold shares worth a net Rs 252.91 crore on Tuesday, 24 July 2012, as per provisional data released by the stock exchanges. Earlier, foreign institutional investors bought shares worth Rs 5580.50 crore from the secondary equity market during 15 trading sessions from 3 July to 23 July 2012 as per Sebi data. The market edged lower in early trade on weak Asian stocks. The market extended initial losses to hit fresh intraday low in morning trade. The market extended losses in mid-morning trade. The Sensex and the 50-unit S&P CNX Nifty hit their lowest level in over five weeks. The market trimmed losses in early afternoon trade. Key benchmark indices trimmed losses in mid-afternoon trade. The market hovered in negative zone in late trade. The market may remain volatile tomorrow, 26 July 2012, as traders roll over positions from the near-month July 2012 series to August 2012 series. The July 2012 derivatives contracts expire tomorrow, 26 July 2012. The BSE Sensex was down 72.03 points or 0.43% to 16,846.05, its lowest level since 18 June 2012. The index declined 181.48 points at the day's low of 16,736.60 in mid-morning trade. The index fell 19.07 points at the day's high of 16,899.01 in opening trade. The S&P CNX Nifty was down 18.60 points or 0.36% to 5,109.60, its lowest closing level since 19 June 2012. The index hit a low of 5,076.60 and a high of 5,121.60 in intraday trade. The BSE Mid-Cap index fell 0.76% and the BSE Small-Cap index declined 0.79%. Both these indices underperformed the Sensex. The turnover on BSE amounted to Rs 1808 crore almost same compared with turnover of Rs 1809 crore clocked on Tuesday, 24 July 2012. The market breadth, indicating the overall health of the market, was weak. On BSE, 1,706 shares fell and 1,083 shares rose. A total of 113 shares were unchanged. From the 30-share Sensex pack, 21 stocks declined and rest of them rose. Index heavyweight Reliance Industries (RIL) dropped 0.81% to Rs 718.70. The stock hit a high of Rs 722.25 and a low of Rs 712.50. The company last week said its net profit fell 21% to Rs 4473 crore on 13.4% growth in turnover to Rs 94926 crore in Q1 June 2012 over Q1 June 2011. The gross refining margin (GRM) stood at $7.6 per barrel in Q1 June 2012, matching the GRM of Q4 March 2012, but sharply lower than GRM of $10.3 a barrel in Q1 June 2011. With regard to oil and gas exploration and production operations, RIL said 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 in a statement. 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. Infotel plans to provide end-to-end solutions that address the complete digital value chain across various digital services in key domains of national interest such as education, healthcare, security, financial services, government-citizen interfaces, entertainment and working on building the requisite parts of this customers' experience which fundamentally change the lives of hundreds of millions of Indians, RIL said. Another index heavyweight and cigarette maker ITC rose 1.64% ahead of its Q1 result tomorrow, 26 July 2012. Marico rose 3.64% to Rs 195.05. The stock hit a record high of Rs 197 in intraday trade today. FMCG major Hindustan Unilever (HUL) fell 2.42% on profit booking after Tuesday's rally triggered after the company announcing strong Q1 results. HUL said after market hours on Monday its net profit rose 112.3% to Rs 1331.19 crore on 13.7% growth in net sales to Rs 6250.15 crore in Q1 June 2012 over Q1 June 2011. The stock had hit a record high of Rs 477.90 in intraday trade on Tuesday, 24 July 2012. HUL's profit before interest and tax (PBIT) grew by 30% with PBIT margin improving 180 basis points (bps). Profit after tax but before exceptional items, PAT (bei), grew by 48% to Rs 855 crores during the quarter. HUL said inflationary pressures during the quarter came primarily from currency depreciation. Cost pressures were managed dynamically through judicious pricing coupled with relentless focus on buying efficiencies and cost savings. Overall media intensity was up and A&P was maintained at competitive levels, higher by Rs 187 crore (+160 bps) in the quarter. HCL Technologies jumped 6.68% as company's consolidated net profit as per US accounting standards surged 28.7% to $156 million on 3% growth in revenue to $1.08 billion in Q4 June 2012 over Q3 March 2012. The result was announced before trading hours today, 25 July 2012. Commenting on the results, Vineet Nayar, CEO and Vice Chairman, HCL Technologies said: "A five-fold increase in 100 million plus clients, a 31% increase in revenues, 54% increase in EBIT and 48% rise in net income year-on-year, establishes that industry leading growth can be achieved profitably. Infrastructure Management Services crossed a billion dollars in revenues this year, demonstrating our ability to incubate blue ocean ideas and build them to be market leaders. Industry leading growth in revenues and profits for Enterprise Applications Services has also demonstrated our ability to successfully scale blue ocean acquisitions". Anil Chanana, CFO, HCL Technologies said: "Our operating cash flows have continued to be in excess of net income. Over the last 5 years, we have returned close to 60% of the free cash flows generated to our shareholders as dividend and this fiscal we achieved 26% return on equity, highest in the last 5 years". Strong Q4 results by HCL Tech helped recovery of other IT stocks. Tata Consultancy Services (TCS) rose 0.31% after the company announced after market hours on Tuesday that TCS BaNCS has signed an agreement with Sawis, a CenturyLink Company and global leader in cloud infrastructure and hosted IT solutions for enterprises, that will allow the TCS BaNCS suite of products to be offered on a cloud-enabled hosted environment in North America. Infosys was down 0.07% to Rs 2,167.80. The stock recovered after hitting a 52-week low of Rs 2,150 in intraday trade today, 25 July 2012. The company on Tuesday said it will expand its presence in the United States with a new delivery center in Milwaukee, Wisconsin. The facility will provide end-to-end technology, consulting and systems integration services, and also will house a training center. Infosys is investing in the Midwest region of the United States to support its clients in the area, including Harley-Davidson. The initiation of a five-year engagement with the world's leading American motorcycle manufacturer was the catalyst for locating the new delivery center in Milwaukee. Harley-Davidson's contract with Infosys provides a range of technology services including applications management, infrastructure support and hosting services. As part of this long-term partnership, Infosys also will establish a training center to facilitate knowledge reuse and to conduct education related to information technology operations and business processes. Infosys revised downwards both earnings and revenue growth guidance for the year ending March 2013 (FY 2013) in dollar terms after reporting disappointing Q1 June 2012 results on 12 July 2012. Weakness in rupee against the dollar also supported IT stocks. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. India's third largest software services exporter by revenues Wipro extended Tuesday's losses triggered by the company issuing a muted revenue growth guidance for Q2 September 2012. The stock was down 2.02%. Wipro on Tuesday said net profit as per International Financial Reporting Standards (IFRS) rose 18% to Rs 1580 crore on 24% rise in total revenue to Rs 10653 crore in Q1 June 2012 over Q1 June 2011. Wipro has projected a between 0.33% growth to 2.31% growth in revenue from IT services business at $1.52 billion to $1.55 billion in Q2 September 2012 over Q1 June 2012. Power Grid Corporation of India fell 0.18%. The company's net profit rose 23.37% to Rs 870.11 crore on 27.28% increase in total income to Rs 2,980.27 crore in Q1 June 2012 over Q1 June 2011. The result was announced during trading hours today, 25 June 2012. PSU OMCs declined on reports the government is unlikely to raise prices of diesel, cooking gas and kerosene in the near future for fear of opposition across the political spectrum. Indian Oil Corporation (IOC), HPCL and BPCL dropped by between 0.94% to 1.75%. Oil marketing companies (PSU OMCs) incur under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol. UltraTech Cement rose 0.11% to Rs 1616.10. The company on Tuesday said it has signed an agreement with the shareholders of Gotan Lime Stone Khanij Udyog (GKUPL), Rajasthan to acquire 100% equity shares of GKUPL. With this acquisition, GKUPL has become a wholly owned subsidiary of the Company. Shares of UltraTech Cement had hit a record high of Rs 1,624 in intraday trade on Tuesday. UltraTech last week reported 13.9% growth in net profit to Rs 778.39 crore on 16.6% growth in net sales to Rs 5074.76 crore in Q1 June 2012 over Q1 June 2011. The combined domestic cement and clinker sales rose 4.85% to 9.94 million tonnes (MnT), while that for white cement and wall care putty rose 16.58% to 2.25 lakh metric tonnes (LmT). The variable cost rose by 10% as compared to Q1 June 2011. This was mainly on account of higher energy and raw material prices which are linked to the last increase in railway freight and increase in diesel prices. Although imported coal prices softened by around 19%, the depreciation in rupee by 21% offset the benefit. UltraTech Cement said the board has further sanctioned capital expenditure (capex) of Rs 1000 crore towards modernization and setting up of ready mix concrete plants across the country. This brings the total capex under implementation to around Rs 12000 crore. With regard to future business outlook, the company said the cement demand is likely to grow over 8% on the back of government's focus on infrastructure development. The surplus cement scenario is expected to continue over the next three years. Any rise in input costs will impact margins, it added. UltraTech Cement's good Q1 results sparked a rally in other cement stocks. India Cements, ACC, and Ambuja Cements rose by between 0.58% to 3.41%. But, Jaiprakash Associates fell 1.88%. Metal stocks fell after the International Monetary Fund said China's economy faces significant downside risks. China is the World's largest consumer of copper and aluminum. Sterlite Industries, Hindustan Zinc, and Hindalco Industries shed by between 0.3% to 1.67%. Sesa Goa declined 1.45% as company's consolidated net profit before associate income tumbled 76% to Rs 199 crore on 18% fall in net sales/income from operations to Rs 1733 crore in Q1 June 2012 over Q1 June 2011. Sesa Goa attributed the steep decline in net profit to lower volumes, higher export duty, higher interest cost, foreign exchange losses, and decline in iron ore price. Consolidated net profit including associate income rose 15% to Rs 964 crore in Q1 June 2012 over Q1 June 2011. Steel stocks tumbled after ArcelorMittal, the world's largest steelmaker by volume, lowered its global apparent steel demand forecast due slower demand growth in China and shrinking demand in the European Union where the sovereign debt crisis continues to take its toll on the regional economy and consumer sentiment. ArcelorMittal expects global apparent steel demand to rise 3.5% to 4% in 2012 compared with its previous forecast in May for a 4% to 4.5% rise. JSW Steel and Tata Steel fell by between 0.08% to 2.41%. Jindal Steel & Power (JSPL) lost 4.33% to Rs 396.75 as consolidated profit after tax declined 58.6% to Rs 385.48 crore on 19% growth in turnover to Rs 4701.47 crore in Q1 June 2012 over Q1 June 2011. The stock hit a 52-week low of Rs 395.50 in intraday trade today, 25 July 2012. JSPL's consolidated net profit before exceptional items rose 3% to Rs 959.60 crore in Q1 June 2012 over Q1 June 2011. Steel Authority of India (Sail) slipped 3.72%, with the stock extending recent losses. The cabinet committee on economic affairs last week approved disinvestment 10.82% government stake in the state-run steel firm. The cabinet committee on economic affairs (CCEA) on Thursday, 19 July 2012, approved the disinvestment of 10.82% equity of Sail out of Government of India's shareholding of 85.82% through an offer of sale of shares through stock exchanges. After this disinvestment Government of India's shareholding in the company would come down to 75%. Banking stocks were mixed. The country's biggest commercial bank in terms of branch network State Bank of India declined 1.15%. The bank has raised the rate of interest on NRE Rupee Term Deposits for tenor of 3 years to less than 5 years from 8.75% to 9% on deposits of less than Rs 15 lakhs with effect from 17 July 2012. Among other PSU banks, Bank of India, Bank of Baroda and Punjab National Bank fell by between 0.95% to 1.87%. India's largest private sector bank by net profit ICICI Bank rose 0.23%. India's second biggest private sector bank in terms of branch network HDFC Bank gained 0.24%. Yes Bank rose 1.38% after net profit jumped 34.3% to Rs 290.10 crore on 33.3% rise in net interest income to 472.20 crore in Q1 June 2012 over Q1 June 2011. The result was announced during trading hours today, 25 June 2012. Yes Bank said its total advances grew by 16.4% to Rs 38,533.9 crore as at 30 June 2012 from Rs 33,104.2 crore as at 30 June 2011. Customer Assets (Loans & Credit Substitutes) grew by 32.4% y-o-y to Rs 49,338.7 crore as at 30 June 2012. Current and Savings Account (CASA) deposits grew by 71.5% y-o-y to Rs 8,170.2 crore taking the CASA ratio to 16.3% as at 30 June 2012 up from 10.9% as of 30 June 2011. Retail Banking Liabilities (CASA + Retail Banking term deposits) improved from 27.2% of Total Deposits as of 30 June , 2011 to 37.3% as of 30 June 2012. Canara Bank fell 2.47%, with the stock declining for the second straight day as the state-run bank's ratio of net non-performing assets rose to 1.66% of net advances as on 30 June 2012 from 1.46% as on 31 March 2012 and 1.33% as on 30 June 2011. The ratio of gross non-performing assets (NPA) stood at 1.98% of gross advances as on 30 June 2012, higher than 1.73% as on 31 March 2012 and 1.69% as on 30 June 2011. Canara Bank's net profit rose 6.8% to Rs 775.24 crore on 18.91% growth in total income to Rs 9165.47 crore in Q1 June 2012 over Q1 June 2011. Canara Bank's Capital Adequacy Ratio (CAR) stood at 13.22% as on 30 June 2012, lower than 13.76% as on 31 March 2012 and 13.37% as on 30 June 2011. Auto stocks declined across the board. India's largest car maker by sales Maruti Suzuki India was down 0.2%. Maruti last week declared lockout at its Manesar, Haryana plant after labour unrest. India's largest commercial vehicle maker by sales Tata Motors declined 1.41%. Tata Motors' British unit Jaguar Land Rover (JLR) today, 25 July 2012, said it will expand its workforce at its advanced manufacturing facility in Castle Bromwich in UK to support the launch of new Jaguar models. Dr Ralf Speth, CEO, Jaguar Land Rover said: "Innovation in design, engineering and technology is at the core of our business and for the UK, this means we will continue to invest in new products, develop new technologies and enhance the skills of our employees. The launch of our latest Jaguar models, including the new XF Sportbrake later this year, means it is a very exciting time for Jaguar. These new models will attract new customers to the brand as we look to expand our global reach and further enhance our position in the market." As part of JLR's ambition to deliver 40 significant product actions over the next five years, the Castle Bromwich plant will this year manufacture the new 2013 Model Year XF and XJ ranges which -- through the introduction of new powertrains and transmissions -- offer customers greater efficiency, technology and choice than ever before, JLR said in a statement. The XF range will also see the addition of the XF Sportbrake derivative which, with a load capacity of up to 1675-litres, will be the most versatile Jaguar built to date, it said. M&M declined 0.66%. M&M has suspended its plans to develop a vehicle for the US market due to changes in the US regulatory and market situation. M&M has said that it will continue to monitor the US situation and remain flexible with its approach to this market. Two wheeler makers were mixed. Bajaj Auto rose 0.15%, with the stock reversing initial losses. The company at the time of Q1 June 2012 results last week said that it has undertaken proactive measures like rationalizing the end-user cost of vehicles in Sri Lanka and with these measures the company expects normalcy in exports to resume by end of Q2 September 2012. Bajaj Auto lost exports of about 20,000 units in Sri Lanka in Q1 June 2012 due to introduction of import barriers by that country. The company also lost export of about 25,000 commercial vehicles in Q1 June 2012 due to restrictions by importing countries and due to political unrest in Egypt, Bajaj Auto said in a statement on Wednesday. Bajaj Auto has said that domestic demand for motorcycles remains subdued. Hero MotoCorp extended recent losses after the company said at the time of announcement of Q1 June 2012 results last week that consumers in rural and upcountry markets could postpone buying of motorcycles if the monsoon remains weak. The stock shed 0.28%. Hero MotoCorp's net profit rose 10.31% to Rs 615.46 crore on 9.95% growth in turnover to a record Rs 6247.28 crore in Q1 June 2012 over Q1 June 2011. Hero MotoCorp also said last week that currency volatility is a point of concern and the rupee depreciation is likely to impact the company's margins. Lupin rose 0.39% to Rs 584.40, with the stock extending Tuesday's 2.07% gains triggered by the company reporting good Q1 earnings. The stock hit a record high of Rs 593.85 in intraday trade today. Lupin's consolidated net profit jumped 33.5% to Rs 280.39 crore on 43.8% growth in net sales to Rs 2219.15 crore in Q1 June 2012 over Q1 June 2011. Zee Entertainment Enterprises rose 3.93% to Rs 160.15. The stock hit a 52-week high of Rs 161.60 in intraday trade today. Zee Entertainment Enterprises on Friday, 20 July 2012, said its consolidated profit after tax rose 21% to Rs 157 crore on 21% growth in operating revenue to Rs 843 crore in Q1 June 2012 over Q1 June 2011. L&T fell 0.94% to Rs 341.75, with the stock sliding for the third straight day on profit booking after the company reported good Q1 results during trading hours on Monday. The company's recurring profit after tax rose 19% to Rs 890 crore on 26% growth in gross revenue to Rs 12078 crore in Q1 June 2012 over Q1 June 2011. The L&T stock had witnessed pre-result rally. The scrip had jumped 22.52% to settle at Rs 1,390.05 on Friday, 20 July 2012, from a recent low of Rs 1,134.50 on 1 June 2012. L&T said the healthy revenue growth in Q1 June 2012 was on the back of a strong order book and good progress in execution of various jobs. International sales constituted 17% of the total revenue in Q1 June 2012, L&T said in a statement. L&T's order inflow jumped 21% to Rs 19594 crore in Q1 June 2012 over Q1 June 2011 despite weak investment sentiment and prevailing global uncertainties, the company said. The major orders came from infrastructure, buildings & factories and power transmission & distribution sectors, L&T said in a statement. L&T's order book stood at Rs 153095 crore as on 30 June 2012. With regard to future business outlook, L&T said that with its enhanced capacities and presence in the diverse sectors, the company is in a good position to harness the opportunities as they emerge. The superior execution capabilities and growing order book provide visibility to sustained revenue growth in the medium term, L&T said in a statement. On the international front, select markets in the Middle East, South East Asia and CIS countries hold promising prospects where the company is strengthening its presence, L&T said in a statement. Among other capital goods stocks, Siemens, Punj Lloyd, BEML and Bhel dropped by between 0.67% to 3.86%. Shares of organised retailers extended recent losses triggered by reports that leaders from Samajwadi Party and leftist parties have opposed foreign direct investment in multi-brand retail outlets. Samajwadi Party chief Mulayam Singh Yadav and top Left leaders have reportedly sent a letter to Prime Minister Manmohan Singh, urging him not to proceed with opening up of the sector as there was no wide-ranging consensus on the issue. Pantaloon Retail India, Shoppers Stop and Trent (shed by between 1.26% to 3.66%. The government was hoping to revive the decision to throw open the sector to foreign investment after the presidential polls in a move to boost sentiment. On 24 November 2011, the government approved a rule that would allow retailers such as Wal-Mart Stores Inc. to own 51% of an Indian joint venture; they are currently prohibited. But, in the face of a firestorm of protest, including from coalition allies within the Congress party-led government, implementation was put on hold. Lanco Infratech clocked highest volume of 77.14 lakh shares on BSE. Cals Refineries (56.56 lakh shares), HDIL (53.76 lakh shares), SpiceJet (39.67 lakh shares) and Suzlon Energy (36.42 lakh shares) were the other volume toppers in that order. HDFC clocked highest turnover of Rs 75.19 crore on BSE. SBI (Rs 72.46 crore), HCL Tech (Rs 40.91 crore), HDIL (Rs 39 crore) and Tata Steel (Rs 34.77 crore) were the other turnover toppers in that order. Sharad Pawar's Nationalist Congress Party has given the Congress one more day to meet its demands or be prepared for its exit from the UPA government on Thursday, reports said. Late last week, NCP had put the UPA on notice, with Pawar and his colleague Praful Patel suggesting they will resign from the Cabinet due to the treatment being offered to the party by the Congress. The demands by the NCP include a coordination committee for UPA coalition and better treatment of allies. NCP has also gone on to say that if it withdraws support to the Centre, the coalition in Maharashtra will also be affected as the state leaders favour exiting the Congress-led ministry. Patel has strongly refuted speculation that the NCP was putting the Congress in a spot with an eye for the No. 2 slot for Pawar in the Cabinet. The NCP also dismissed speculation that the standoff has been created for the inclusion of Supriya Sule in the Union Cabinet and clarified that the party was not seeking more ministries or departments. Sule is Pawar's daughter and MP from Baramati. The NCP leader said that the allies have no say in the functioning of the government and their role was limited to four walls of their ministries. 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 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns. Sowing of major kharif crops has picked in the last few days. According to data released by the Ministry of Agriculture, rice was sown in 144.59 lakh hectares (lh) till Friday, 20 July 2012, sharply higher than 96.79 lh a week back. It, however, remains lower than 153.37 lh of normal area for this time of the year and 161.27 lh during the corresponding period last year. Cumulative sowing of coarse cereals totaled 95.43 lh as on 20 July 2012, sharply higher than 39.76 lh a week back. It, however, remains lower than 126.20 lh of normal area for this time of the year India Meteorological Department (IMD) on 20 July 2012 said seasonal rainfall during this year's monsoon was 22% below the long period average (LPA) till 18 July 2012. Out of 36 meteorological subdivisions, the rainfall was excess/normal over 11, deficient in 22 and scanty in 3 sub-divisions (Punjab, Haryana, Chandigarh & Delhi and Saurashtra & Kutch). In area-wise distribution, 24% area of the country received excess/normal 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. 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 on Monday, 23 July 2012. 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 on Tuesday 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. 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. ITC, Bhel and Sterlite Industries (India) unveil Q1 results tomorrow, 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. 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. European stocks edged higher on Wednesday after European Central Bank (ECB) policy maker Ewald Nowotny said in a media interview that arguments can be made in favor of giving Europe's future, permanent rescue fund a banking license. Nowotny said he's not aware of specific discussions on the issue. A banking license would give the European Stability Mechanism access to loans via the ECB, boosting its firepower. Key benchmark indices in France, UK and Germany were up by between 0.28% to 0.66%. The Ifo Institute on Wednesday said its German business climate index fell more than expected to 103.3 in July from 105.2 the previous month. The euro crisis is having an increasingly negative impact on the German economy, said Ifo Institute President Hans-Werner Sinn. The expectations index, which measures participants' outlook for the upcoming six months, fell to 95.6 from 97.2, while the current-conditions index fell to 111.6 from 113.9. The index is based on around 7,000 monthly responses from firms in Germany's manufacturing, construction, wholesale and retail sectors. Growth in the UK dropped more than expected in second quarter, driven by weakness in the construction sector, the production sector and the service sector, data from the Office of National Statistics showed Wednesday. A preliminary estimate of gross domestic product for second quarter showed a 0.7% decline compared with the previous quarter. In the first quarter of 2012, growth slipped 0.3%. Greece Prime Minister Antonis Samaras is scheduled to meet with European Commission President Jose Barroso in Athens this week before seeing the troika of officials representing the euro area, the European Central Bank and the International Monetary Fund on July 27. Spain paid the second highest yield on short-term debt since the birth of the euro at an auction on Tuesday. Ratings agency Moody's has lowered the outlook on the EU's bailout fund from stable to negative, after threatening the triple-A credit ratings of three of the eurozone's major guarantors. Moody's said its yesterday's decision to lower the outlook on the European Financial Stability Facility (EFSF) reflected the changes in outlooks on Germany, the Netherlands and Luxembourg. But it maintained the EFSF's triple-A rating. On Monday, Moody's lowered its assessment of the German, Dutch and Luxembourg economies from stable to negative, in a first step towards a full credit rating downgrade. 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. Asian stocks fell on Wednesday on concern China's economic slowdown and Europe's debt crisis threaten global growth. Key benchmark indices in South Korea, Singapore, Japan, Hong Kong, China and Taiwan fell by between 0.14% to 1.44%. Indonesia's Jakarta Composite rose 0.22%. China's economy is set for a soft landing even as global headwinds increase, the International Monetary Fund said in a report on Wednesday that urged further reform and currency appreciation to rebalance growth and reduce risks. The report said economic reforms so far had substantially reduced external imbalances, but at the cost of significant domestic imbalances fueled by its investment-driven growth model. The IMF report warned of a number of risks to the economy, specifically the question of whether banks or local governments would bear the burden of non-performing loans -- many stemming from China's 2008 stimulus package -- if the economy were to slow sharply. Japan posted an unexpected trade surplus in June as lower oil prices contributed to the first drop in imports since December 2009. Imports fell 2.2% from a year earlier, resulting in a trade surplus of 61.7 billion yen ($789 million), the Finance Ministry said in Tokyo today. Exports dropped 2.3%. South Korean consumer confidence dropped to the lowest level in five months as officials cautioned that a protracted European debt crisis is hurting the growth outlook for Asia's fourth-largest economy. The sentiment index was at 100 in July, down from 101 in June, the Bank of Korea said Trading in US index futures indicated that the Dow could gain 52 points at the opening bell on Wednesday, 25 July 2012. US stocks fell the third day in a row on Tuesday as United Parcel Service Inc. (UPS), the world's largest package-delivery company, lowered its earnings forecast and AT&T Inc., the largest US phone company, reported sluggish sales after signing up fewer wireless customers. Some prominent US firms announce earnings this week. Boeing Co., Caterpillar Inc., Ford Motor and PepsiCo Inc. present their second-quarter results on Wednesday, 25 July 2012. Facebook Inc., which has been under scrutiny over its ability to grow its subscriber base, will report its first results as a public company on Thursday, 26 July 2012. Key US economic data due this week include new home sales on Wednesday, 25 July 2012. Data on weekly jobless claims, durable-goods orders, and pending-home sales data is due on Thursday, 26 July 2012. 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.