IT stocks reboot on expectations of Fed stimulus for US economy

Key benchmark indices eked out marginal gains in volatile trade as world stocks rose amid hope weak Chinese manufacturing data could lead to fresh monetary easing from Beijing. Expectations of a possible further monetary policy easing from the US central bank aided gains on the bourses as minutes from the US Federal Reserve meeting on July 31-Aug. 1 showed that the central bank's policy committee discussed a third round of quantitative easing. US is the world's biggest economy and China is the second biggest. The Indian government's announcement on Wednesday of easing of rules regarding overseas borrowing by local companies also aided gains on the domestic bourses. The barometer index, BSE Sensex, advanced 3.38 points or 0.02%, off about 120 points from the day's high and up close to 60 points from the day's low. The market breadth was negative. The Sensex has gained 614.04 points or 3.56% in this month so far (till 23 August 2012). The Sensex has jumped 2,395.30 points or 15.49% in calendar 2012 so far (till 23 August 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,714.36 points or 17.93%. From a 52-week high of 18,523.78 on 22 February 2012, the Sensex has lost 673.56 points or 3.63%. Coming back to today's trade, index heavyweight Reliance Industries (RIL) lost ground. FMCG stocks rose on reports of revival of monsoon rains this month, with Hindustan Unilever and Marico hitting record high. Index heavyweight and cigarette maker ITC edged higher. Divi's Laboratories hit record high. Shares of organised retailers and airline stocks edged lower as Trinamool Congress chief Mamata Banerjee today, 23 August 2012, reiterated her objection to overseas investment in multi-brand retail, insurance and aviation sector. IT stocks rose after minutes from the US Federal Reserve showed that the central bank's policy committee discussed a third round of quantitative easing at its last meeting. TCS hit a record high. Mahindra Satyam and HCL Technologies hit 52-week highs. Reliance Communications hit a 52-week low. Shree Cement scaled record high after strong quarterly results. The market edged higher in early trade on firm Asian shares. The barometer index, BSE Sensex, hit its highest level in over 23 weeks. The 50-unit S&P CNX Nifty hit its highest level in almost 23 weeks. The market regained strength after trimming initial gains in morning trade. The market extended initial gains to hit fresh intraday high in mid-morning trade. Firmness continued on the bourses in early afternoon trade. A bout of volatility was witnessed as key benchmark indices regained positive terrain after slipping into negative zone from positive zone for a brief period in mid-afternoon trade. Volatility continued in late trade. Data showing that foreign institutional investors (FIIs) remained buyers of Indian stocks on Wednesday, 22 August 2012, boosted sentiment. Foreign institutional investors (FIIs) bought shares worth net Rs 123.90 crore from the secondary equity markets on Wednesday, 22 August 2012, as per data from Securities & Exchange Board of India (Sebi). Their inflow into the secondary equity market totaled Rs 5256.90 crore during 14 trading sessions from 1 to 22 August 2012. The inflow this month comes on the top of substantial purchases last month. FIIs bought shares worth net Rs 9691 crore from the secondary equity markets in July 2012. The BSE Sensex advanced 3.38 points or 0.02% to 17,850.22, its highest closing level since 21 August 2012. The index jumped 125.68 points at the day's high of 17,972.54 in afternoon trade, its highest level since 14 March 2012. The index fell 53.99 points at the day's low of 17,792.87 in late trade, its lowest level since 21 August 2012. The S&P CNX Nifty was up 2.50 points or 0.05% to 5,415.35, its highest closing level since 21 March 2012. The Nifty hit high of 5,448.60 in intraday trade, its highest level since 15 March 2012. The index hit a low of 5,393.85 in intraday trade, its lowest level since 21 August 2012. The BSE Mid-Cap index fell 0.08% and the BSE Small-Cap index dropped 0.12%. Both these indices underperformed the Sensex. BSE clocked turnover of Rs 1944 crore, lower than Rs 2032 crore on Wednesday, 22 August 2012. The market breadth, indicating the overall health of the market, was negative. On BSE, 1,458 shares fell and 1,357 shares rose. A total of 141 shares were unchanged. From the 30-share Sensex pack, 15 stocks fell and rest of them rose. FMCG stocks rose on reports of revival of monsoon rains this month. FMCG firms derive substantial revenue from rural sales. FMCG major Hindustan Unilever (HUL) rose 1.45% to Rs 518.95. The stock hit a record high of Rs 521 in intraday trade today. Marico surged 2.78% to Rs 193.80. The stock hit a record high of Rs 201.80 in intraday trade today. Index heavyweight and cigarette maker ITC was up 0.88% at Rs 263.90. The stock had scaled a record high of Rs 269.25 on 14 August 2012. The company reported strong results last month. ITC's 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) was down 1.68% at Rs 794.45. The stock hit a high of Rs 810.90 and a low of Rs 787.70. RIL has bought back 3.88 crore shares for about of Rs 2776.78 crore till 7 August 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in June 2012 that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future. India's largest oil & gas exploration firm by sales ONGC fell 1.59%. Minister of Petroleum and Natural Gas Mr. S. Jaipal Reddy today, 23 August 2012, said that 52 blocks awarded under various rounds of New Exploration Licensing Policy (NELP) bidding are pending clearance by different organizations such as the Ministry of Defence, Ministry of Environment and Forests, Ministry of External Affairs and state governments. Of the 52 blocks awaiting clearances, 22 are operated by ONGC, 15 by Reliance Industries (RIL), five by BHP Billiton, three by Cairn Energy PLC, two by Santos and one each by BG Group PLC, BP PLC and ENI S.p.A. Mr. Reddy said clearances for larger areas from which these blocks are carved out are always obtained from other ministries before offering them for bidding. But for the 52 blocks, the companies will have to seek additional approvals from the related ministries of defence, environment and foreign affairs to start or resume exploratory work. The Indian and foreign companies have already invested $12.4 billion for exploration and development activities in these blocks, he said. Shree Cement jumped 3.84% to Rs 3384.45 after net profit jumped 539.01% to Rs 351.52 crore on 43.77% growth in total income to Rs 1487.43 crore for the quarter ended June 2012 over the quarter ended June 2011. The stock hit a record high of Rs 3430 in intraday trade today, 23 August 2012. Shree Cement's board of directors at a meeting held today, 23 August 2012, recommended final dividend of Rs 8 per share for the fifteen months period ended 30 June 2012. IT stocks rose after minutes from the US Federal Reserve showed that the central bank's policy committee discussed a third round of quantitative easing at its last meeting. US is the biggest outsourcing market for the Indian IT firms. India's second largest software services exporter by revenues Infosys was up 1.73%, with the stock gaining for the third straight day. The company said early this week that a US court has thrown out a case filed by an employee alleging harassment for blowing the whistle on how the Indian outsourcing giant flouted US work visa laws. The court found no basis to support any of the charges filed by Jack Palmer, a principal consultant working at Infosys who sued the company, and dismissed the case entirely, Infosys said in a statement. Mr. Palmer was also ordered to pay the costs for the case, the company said, without elaborating. India's third largest software services exporter by revenues Wipro rose 2.61% India's largest software services exporter by revenues Tata Consultancy Services (TCS) gained 2.25% to Rs 1321.15. The stock hit a record high of Rs 1325 in intraday trade today, 23 August 2012. The company last week said it has entered into a definitive agreement to acquire 100% equity of Computational Research Laboratories (CRL), a wholly owned subsidiary of Tata Sons, for a cash consideration of Rs 188 crore. The acquisition of CRL, a pioneering start-up firm in the arena of High Performance Computing solutions in India, will enable TCS to extend its suite of solutions and offer integrated High Performance Computing (HPC) application and Cloud services to its large base of customers, TCS said in a statement. HPC applications are finding increasing relevance and use among large enterprises, as they look to solve complex business problems like reducing their time-to-market. This is driving an increase in adoption of HPC based applications for modeling, simulations, visualization and big data analysis across the business, TCS said. Mahindra Satyam rose 1.97% to Rs 101.10 which was also its 52-week high. HCL Technologies gained 1.15% to Rs 559.50. The stock hit a 52-week high of Rs 562.05 in intraday trade today. Reliance Communications fell 0.28% to Rs 54.15. The stock hit a 52-week low of Rs 52.85 in intraday trade today. The stock turned ex-dividend today, 23 August 2012, for dividend of 25 paise per share for FY 2012. Bharti Airtel was flat at Rs 248.70. The stock recovered after hitting a 52-week low of Rs 243.50 in intraday trade today. Shares of organised retailers edged lower as Trinamool Congress chief Mamata Banerjee today, 23 August 2012, reiterated her objection to overseas investment in multi-brand retail, insurance and aviation sector. Trinamool is the second largest constituent of the Congress-led United Progressive Alliance (UPA) with 19 members in the Lok Sabha. Banerjee said overseas investment would hurt the interest of common people and her party would oppose any such move. Trent, Pantaloon Retail and Shoppers Stop fell by between 2.53% to 2.88%. The Cabinet had cleared the proposal for 51% FDI in multi-brand retail on 24 November 2011. The decision was put on hold later after large scale political opposition. Among airline stocks, Jet Airways, Kingfisher Airlines and SpiceJet shed by between 3.01% to 4.77%. Currently, foreign airlines are not allowed to pick up equity in aviation companies while foreign investors and financial institutions can hold up to a 49% stake. There had been expectations that Banerjee would back the proposal to allow foreign airlines to buy up to 49% equity in Indian carriers. Although a majority of the UPA allies have been supporting the move to allow foreign airlines to buy up to 49% equity in Indian carriers, Trinamool Congress' opposition has been holding up a decision. Shares of tyre companies rose as lower rubber prices will boost profitability. Apollo Tyres and CEAT rose by between 0.91% to 1.57%. JK Tyre & Industries rose 2.06% to Rs 123.75. The stock hit a 52-week high of Rs 125.15 in intraday trade today. Natural rubber is a key raw material in tyre manufacturing. Rubber futures traded in Tokyo have dropped this year as the economy slowed in China, the world's largest auto market, and Europe struggled to contain its debt crisis. PSU OMCs fell as US crude-oil futures rose for a third day in row after stockpiles declined more than analysts projected and speculation mounted that central banks in the US and China will boost economic stimulus. HPCL and Indian Oil Corporation dropped by between 0.06% to 0.96%. Higher crude oil prices could increase under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol. US crude oil futures for October delivery gained 77 cents to $98.03 a barrel in electronic trading after closing at the highest level in more than three months yesterday, 22 August 2012. BPCL rose 0.32% after Brazil's state-led giant Petrobras on Wednesday, 22 August 2012, announced that it has completed drilling the first appraisal well in the area of the Appraisal Plan (PAD) of Barra, in deep waters of the Sergipe-Alagoas Basin. The 3-SES-165 well, informally known as Barra 1, is located some 100 km off the coast of the city of Aracaju, in the State of Sergipe, at a water depth of 2,433 meters and approximately 10 km southeast of the wildcat well 1-SES-158 (Barra). The purposes of the drilling of Barra 1 was to verify the southeast extension of gas accumulation discovered by the wildcat well, in sandstones of the upper section of Calumbi Formation, and to investigate the continuity, in the same direction, of oil saturated sandy reservoirs in the lower section of Calumbi Formation found on 1-SES-158 well. Both purposes were met which resulted in the delimitation of Barra accumulation, as already estimated, and in the verification of the southeast continuity of the oil saturated reservoirs in the lower section. Such reservoirs are distributed in intervals of 5460 to 5500 meters, where the saturation of light oil found with 38 degrees API in the new discovery area, Petrobras said on Wednesday, 22 August 2012. Petrobras is the operator of BM-SEAL-11 concession with 60% participating interest. IBV Brasil holds the remaining 40% participating interest in the concession. IBV Brasil is a joint venture equally owned by the wholly owned subsidiaries of BPCL and Videocon Industries. The consortium will continue the operations in the area in order to confirm the extension of the new discovery and characterize reservoir conditions encountered, Petrobras said on Wednesday, 22 August 2012. Shares of Videocon Industries rose 0.43%. Cairn India rose 3.13% along with crude oil prices. Higher crude oil prices will result in higher realizations from crude sales for oil exploration firms. Housing finance stocks were mixed after government on Wednesday allowed housing-finance companies to raise overseas loans to fund low-cost housing projects. The decision has been extended to include the state-run National Housing Bank, which refinances housing finance companies. India's largest dedicated housing finance firm by revenue HDFC fell 0.95% to Rs 719.60. The stock had hit a 52-week high of Rs 734.95 in intraday trade on 21 August 2012. Among other housing finance firms, GIC Housing Finance and Dewan Housing gained by between 2.39% to 4.5%. LIC Housing Finance declined 1.52%. Interest rate sensitive banking shares pared intraday gain. India's largest bank by branch network State Bank of India was flat at Rs 1912.45, off the day's high of Rs 1929.85. SBI's net profit surged 136.91% to Rs 3751.56 crore on 16.89% increase in total income to Rs 32415.49 crore in Q1 June 2012 over Q1 June 2011. The surge in net profit was mainly due to a sharp fall in provisions and contingencies in Q1 June 2012. It may be recalled that SBI's provisions and contingencies had risen sharply in Q1 June 2011. The result was announced during trading hours on 10 August 2012. SBI's ratio of net non-performing assets to net assets rose to 2.22% as on 30 June 2012, from 1.82% as on 31 March 2012, and 1.61% as on 30 June 2011. SBI's ratio of gross non-performing assets (NPA) to gross advances stood at 4.99% of gross advances as on 30 June 2012, higher than 4.44% as on 31 March 2012 and 3.52% as on 30 June 2011. India's largest private sector bank by net profit ICICI Bank was flat at Rs 973.15, off the day's high of Rs 988.55. ICICI Bank last week said it has successfully priced an issuance of 5.5 year fixed rate notes in aggregate principal amount of $750 million. The offering had an order book of $5.7 billion with interest from over 312 investors. The 5.5 year fixed rate notes carry a coupon of 4.7% and were offered at an issue price of 99.813%, which is spread of 364 basis points over equivalent London Interbank Offered Rate (Libor). India's second biggest private sector bank in terms of branch network HDFC Bank gained 0.08% to Rs 597.50, off the day's high of Rs 604.30. The stock had struck a record high of Rs 609.70 on 13 August 2012. HDFC Bank last week said it has issued on a private placement basis unsecured, redeemable, non-convertible, subordinated bonds towards Tier-II capital bonds for an amount aggregating Rs 3477 crore. Pharma stocks rose on renewed buying. Lupin, Cadila Healthcare, and Sun Pharmaceutical Industries gained by between 0.28% to 0.47%. Divi's Laboratories advanced 2.52% to Rs 1182. The stock hit a record high of Rs 1201 in intraday trade today. Cipla rose 0.85% to Rs 363.30. The stock hit a 52-week high of Rs 367.75 in intraday trade today, 23 August 2012. Pharmaceutical and biotechnology major Wockhardt rose 0.43% to Rs 1274.90. The company on Wednesday said it has received tentative USFDA approval for marketing a generic version of 20mg, 40mg, 60mg & 80mg capsules containing Ziprasidone hydrochloride, which is used in the treatment of bipolar disorders and schizophrenia. The stock had hit a record high of Rs 1325 in intraday trade on 21 August 2012. Ziprasidone capsule is the generic name for the brand Geodon, marketed in the US by Pfizer. Wockhardt will launch the product on Sept 02, 2012. According to IMS Health, the total market for this product in the US is about $1.3 billion. Ranbaxy Laboratories rose 2.36% to Rs 547.10, with the stock extending Wednesday's 4.11% gains triggered by the firm's clarification on its withdrawal of 27 approved abbreviated new drug applications in the US market. The stock hit a 52-week high of Rs 554.10 in intraday trade today, 23 August 2012. Ranbaxy Laboratories has clarified that the company has determined that certain products with negligible commercial impact should be withdrawn to enable the organization to focus resources on other applications that are of greater importance and value to the US business and healthcare system. Ranbaxy said its withdrawal of 27 approved abbreviated new drug applications (ANDAs) do not pertain to current business and will have negligible impact on its business in US. Glenmark Pharmaceuticals gained 1.72% after company announced that the International Centre for Dispute Resolution (ICDR) has ruled in favor of the company on the arbitration claim it had filed on 8 August 2011 against Napo Pharmaceuticals, Inc. (Napo) seeking, among other things, a ruling that Glenmark's exclusive rights to develop, commercialize and distribute Crofelemer in 140 countries for treatment of diarrheal diseases includes the exclusive rights to distribute through relief agencies in these countries and an injunction prohibiting Napo from sharing confidential information concerning the manufacture of Crofelemer. The ICDR ruled that Glenmark's exclusive rights to commercialize and distribute Crofelemer include the exclusive right to distribute Crofelemer through relief agencies into the 140 countries that comprise the Glenmark territory. The ICDR also ruled that Glenmark has two years from the time Crofelemer is approved in India (on an indication by indication basis) to file for regulatory approval in the 140 countries in its territory. The ICDR found that Napo breached the Collaboration Agreement by disclosing confidential information concerning the manufacture of Crofelemer to Aptuit Laurus (Aptuit) and enjoined Napo from disclosing such confidential information to third parties and from purchasing or obtaining Crofelemer from Aptuit. The latest ruling by ICDR is an interim award addressing the issues presently before the ICDR. Certain other issues between the parties have been deferred to a second phase, Glenmark Pharmaceuticals said in a statement. Glenmark Pharmaceuticals has an exclusive license from Napo to distribute and commercialize Crofelemer in 140 emerging countries (rest of world, or ROW territories), including India for indications related to HIV, use in acute adult and pediatric diarrhea. Crofelemer is a novel, first-in-class anti-diarrheal agent that has a physiological and different mechanism of action from traditional anti-diarrheal agents. Besides its potential efficacious role in multiple diarrheal indications, Crofelemer controls diarrhea with no drug-drug interactions, minimal systemic adsorption and, unlike current anti-diarrheals, no serious side effects, Glenmark Pharmaceuticals said. Construction stocks edged lower. L&T, Hindustan Construction Company, IVRCL, NCC, Valecha Engineering, Unity Infra, and Gammon India fell by between 0.8% to 3.58%. Metal stocks were mixed. Bhushan Steel, Sterlite Industries, JSW Steel and Sail fell by between 0.05% to 1.46%. Hindalco Industries, Jindal Steel & Power, Hindustan Zinc and Tata Steel rose by between 0.35% to 1.53%. Reliance Infrastructure fell 1.93% as the stock turned ex-dividend today, 23 August 2012, for dividend of Rs 7.30 per share for the year ended 31 March 2012 (FY 2012). Reliance Capital dropped 3.43% as the stock turned ex-dividend today, 23 August 2012, for dividend of Rs 7.50 per share for the year ended 31 March 2012 (FY 2012). Trade Minister Anand Sharma today, 23 August 2012, said that a deadlock in parliament over allegations of irregularities over the allocation of coal blocks is delaying the government's move to push ahead with reforms to stimulate economic growth. Opposition parities led by the Bhartiya Janta Party have been blocking parliament proceedings for the past three days demanding Prime Minister Manmohan Singh's resignation over the alleged irregularities that the Comptroller and Auditor General of India (CAG) has said led to a loss of about Rs 1.85 lakh for the government. Prime Minister Dr. Manmohan Singh was in charge of the coal ministry during the allocations questioned by the CAG. "Any stalemate in parliament is unfortunate. The opposition runs away from discussion of key issues and that is unhealthy," Mr. Sharma said on the sidelines of a conference. "Due to partisan politics, reforms are getting delayed." The Ministry of Coal last week denied the findings made by the controversial report of the Comptroller and Auditor General of India (CAG) on allocation of coal blocks from July 2004 to end-March 2011 to various state-owned and private companies without competitive bidding. The intent of the government behind allocation of coal blocks was to induce rapid development of infrastructure that is so very essential to keep the economy on high growth trajectory, by involving the private sector to invest in identified priority sectors so as to create additional capacities, the Ministry of Coal said in a statement issued on Friday 17 August 2012 - the day when the CAG report was tabled in parliament. The calculation of financial gains to the private parties from allocation of coal blocks by the CAG was flawed on certain basic fundamentals related to the geological sector, it said. Meanwhile, the Indian government on Wednesday, 22 August 2012, eased rules governing overseas borrowing, hoping to ease borrowing by local companies and spur capital inflows. In one of the most significant elements of the change, the government raised by 50% the limit on rupee loans that infrastructure and manufacturing companies are allowed to refinance through overseas borrowings. Such companies will be able to refinance these loans by up to 75% of their average foreign-exchange earnings over the past three years, up from the previous limit of 50%, the finance ministry said. Companies importing capital goods for use in the infrastructure sector will also not require government permission to raise overseas loans to refinance existing loans. The measures are designed to boost investment in the country's creaky infrastructure. The government also allowed foreign entities -- primarily lenders -- to guarantee rupee bond issues of all local companies and slashed the minimum maturity period of such bonds to three years from seven. Earlier, foreign lenders were only allowed to guarantee rupee bond issues of infrastructure companies. The government also allowed foreign funds to invest up to $5 billion in these bonds. The investments will still fall within an existing overall cap of $45 billion on foreign institutional investments in local corporate bonds, which remain unchanged. The credit guarantee will allow local companies to attract foreign funds to invest in these issues. The government also allowed housing-finance companies to raise overseas loans to fund low-cost housing projects. The decision has been extended to include the state-run National Housing Bank, which refinances housing finance companies. It also allowed state-run Small Industries Development Bank of India to raise overseas borrowings to finance small and medium-size enterprises. Reserve Bank of India (RBI) deputy governor Subir Gokarn on Sunday, 19 August 2012, said interest rates will come down only when there is a sustained fall in inflation. "We have to balance growth and inflation risks, and when we see the inflation risk being the dominant one, as we have seen now, we cannot afford to ignore that risk, especially since pressure points on food and oil prices are re-emerging," Mr. Gokarn said at a conference of foreign-exchange dealers. The inflation rate for July 2012 at 6.87% was well above RBI's 5% comfort level. Mr. Gokarn said improving overall macroeconomic health would also help stabilize the rupee. The best policy for exchange-rate management is macro stability and concerted domestic policy actions, which will help offset global pressures, he said. While the rate of growth in headline inflation declined in July 201, the core inflation, also known as non-food manufacturing inflation, accelerated, indicating overall price pressures haven't ebbed enough. Core inflation, which strips off volatile food and fuel prices, picked up to 5.5% on year in July from 5% in June. Weak rainfall this year and a possibility that the government may allow local fuel retailers to raise prices could drive up inflation. Due to deficient rainfall this year, total Kharif area sown is 802.09 lakh hectares against the normal of 854.86 lakh hectares as on 8 August 2012, Minister of State for Agriculture and Food Processing Industries Mr. Harish Rawat said early last week. Mr. Rawat on 16 August 2012 said Rajasthan and Karnataka have declared drought in some areas of the respective states and are seeking relief from the central government. Rainfall across the country has been 15% below the long-term average so far this monsoon season, which started June 1. 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 RBI last cut rates by 0.5 percentage point to 8% from 8.5% in April, its first move to reverse a 20-month rate-tightening cycle. It then held rates steady in June and at its last rate-setting meeting on July 31, saying that a cut would exacerbate inflationary pressures. The RBI is scheduled to undertake a mid-quarter review of the monetary policy on 17 September 2012. Union Minister of Commerce, Industry & Textiles Mr. Anand Sharma last week said that the government will come out with announcements pertaining to industrial environment that will address the subdued sentiment in the industry. Speaking after the fourth meeting of the Government-Industry Task Force on 16 August 2012 Mr. Sharma said that there is a shared concern over the declining industrial production, particularly the manufacturing sector. "We have also looked at other concerns of the industry so that steps are taken to improve the investors' confidence as well as the climate of investment.... I have said so earlier that the government will take decisions which are the expectations of the industry and the investors... We hope that in the next three weeks there will be decisions by the government which will bring about a positive improvement," Mr. Sharma said. Prime Minister Dr. Manmohan Singh said in his Independence Day speech on 15 August 2012 that at a time when the global economy is passing through a difficult phase, India must make every effort to resolve the problems inside the country so that the nation's economic growth and the creation of employment opportunities in the country are again speeded up. If we do not increase the pace of the country's economic growth, take steps to encourage new investment in the economy, improve the management of government finances and work for the livelihood security of the common man and energy security of the country, then it most certainly affects our national security, Dr. Singh said. The prime minister said the government has recently taken new measures to accelerate infrastructure development. Ambitious targets have been fixed in roads, airports, railways, electricity generation and coal production. The government will take steps to increase investment for infrastructure development with the help of the private sector, Dr. Singh said. "To attract foreign capital, we will have to create confidence at the international level that there are no barriers to investment in India", Dr. Singh said. Union Finance Minister P. Chidambaram said early this month that a path of financial consolidation will be unveiled shortly. Government finances are under pressure as expenses exceed revenue, mainly because of subsidies doled out for cheaper supplies of food, fuel and fertilizer. Mr. Chidambaram said that the fiscal-deficit target for the current financial year will be reassessed after a mid-year review later this financial year depending on the pace of expenditure and the resource position of the government. The government is aiming to restrict spending on subsidies, the finance minister said. The government has already taken some steps to reduce expenditure. In late May, the finance ministry asked government departments to reduce their non-plan spending -- expenditure that won't create long-term assets -- by 10% this fiscal year as part of its efforts to keep the fiscal deficit under check. The government intends to fine tune policies and procedures that will facilitate capital flows into India, Mr. Chidambaram said early this month. Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary will provide great assurance to investors, Mr. Chidambaram said. The government has appointed two committees -- one to examine anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) legal provisions and guidelines and the other to review taxation of the IT sector and Development Centres. Mr. Chidambaram said he has also directed a review of tax provisions that have a retrospective effect in order to find fair and reasonable solutions to pending as well as likely disputes between the Tax Departments and the Assessees concerned. The implementation of GAAR proposal introduced in the Union Budget 2012-13 in March 2012 by then-finance minister Pranab Mukherjee has been deferred to 1 April 2013. This came after heavy criticism from foreign investors who fear that GAAR would give the authorities arbitrary powers to examine any deal that they feel is designed to avoid tax. Prime Minister Dr. Manmohan Singh last month constituted 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. Dr. Singh last month also decided to refer the issue of implications on FIIs and portfolio investors of the amendment made to the Income Tax Act relating to the taxation of non-resident transfer of assets where the underlying asset is in India to the Expert Committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR). "It is necessary to have clarity on the tax liability of portfolio investors and foreign institutional investors as a result of this amendment particularly when the investment is made through a registered stock exchange in accordance with SEBI guidelines and purely in the form of portfolio investment", the Prime Minister's Office (PMO) said in a statement issued on 30 July 2012. Any clarification needs to be harmonised with the GAAR guidelines and will have to address any residual concerns outside of GAAR, the PMO said. European shares rose on Thursday as fresh signs that the US Federal Reserve may launch new stimulus measures offset persistent worries over the euro zone debt crisis. Key benchmark indices in UK, France and Germany were up by 0.14% to 0.45%. Private-sector business activity in the 17-nation euro zone contracted for a seventh consecutive month in August 2012 but at a marginally slower pace than in July 2012, the Markit preliminary composite purchasing managers' index for the region indicated on Thursday, 23 August 2012. The index rose to 46.6 in August 2012 from a reading of 46.5 in July 2012. Economists had forecast an unchanged reading. A figure of less than 50 indicates a contraction in activity. The services PMI reading fell to 47.5 from 47.9 in July, while the manufacturing PMI rose to 45.3 from 44. The contraction continued across the euro zone, with national indices for the core countries of Germany and France both signaling shrinking output. "Taken together, the July and August readings would historically be consistent with GDP falling by around 0.5% to 0.6% quarter-on-quarter, so it would take a substantial bounce in September to change this outlook," said Rob Dobson, senior economist at Markit. Greek Prime Minister Antonis Samaras is set to meet German Chancellor Angela Merkel in Berlin tomorrow, 24 August 2012, and will visit French President François Hollande on Saturday, 25 August 2012. Samaras is reportedly prepared to sound out Merkel on his call to stretch the implementation of new austerity measures over four years rather than the two years agreed as part of second bailout for Greece. Greek news reports, however, said Samaras wouldn't formally request an extension until a meeting of European Union leaders in October 2012. Samaras campaigned on that pledge as his center-right New Democracy party eked out a first place finish in June's parliamentary elections over the left-wing Syriza party, which had vowed to tear up the austerity provisions altogether. Most Asian stocks advanced on Thursday on speculation central banks in US and China will ease monetary policy to support the world's biggest economies. Key benchmark indices in China, Taiwan, Japan, Indonesia, Hong Kong, Singapore and South Korea rose by between 0.11% to 1.23%. China's factory activity in August shrank at its fastest pace in nine months as new export orders slumped and inventories rose, a signal that a persistent slowdown in economic growth has extended deeper into the third quarter. The HSBC Flash China manufacturing purchasing managers index (PMI) fell to 47.8 in August, its lowest level since November, from 49.5 in July. People's Bank of China Governor Zhou Xiaochuan on Wednesday said adjustments to interest rates and banks' reserve requirements are still possible after the central bank stepped up temporary cash injections this month. "Use of either tool can't be ruled out," Zhou said to reporters on Wednesday in Beijing when asked whether the recent frequent use of reverse-repurchase transactions means the PBOC will make less use of reserve-ratio and interest-rate tools. He didn't elaborate. Meanwhile, China has cleaned up red tape to quicken investment in the real economy by small firms and the private sector, and allowed the southern province of Guangdong to go ahead with a pilot scheme to further reduce government interference in the economy, the State Council said on Wednesday. The move came after China's powerful economic planner fast-tracked state investment and some cities announced new spending packages in the next few years to bolster growth. Trading in US index futures indicated that the Dow could gain 25 points at the opening bell on Thursday, 23 August 2012. US stocks ended little changed on Wednesday but were off session lows after minutes from the US Federal Reserve showed that the central bank's policy committee discussed a third round of quantitative easing at its last meeting. Federal Reserve Bank of Chicago President Charles Evans urged further monetary-policy easing on Thursday, 23 August 2012, saying the US central bank should take additional actions to bolster the economy, according to reported comments made in Thursday in Beijing. Evans said he saw little evidence of inflation, calling price gains in the US "modest to say the least." The comments followed the release of the minutes from the Federal Reserve's latest policy board meeting, which were seen as signaling the central bank is preparing additional easing moves to help boost the US economy. Federal Reserve Chairman Ben Bernanke is scheduled to talk on 31 August 2012 at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole, Wyo. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012.