Market seen opening higher on positive Asian stocks; July inflation data eyed

The market is likely to open higher tracking mostly positive Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 6.50 points at the opening bell. Hindalco Industries, Reliance Infrastructure and IDFC unveil their Q1 results today, 14 August 2012. Hindalco Industries' US unit -- Novelis Inc. -- also unveils Q1 June 2012 results today, 14 August 2012. Most Asian shares rose on Tuesday ahead of more macro economic data figures from Europe and the United States later in the global day. On the macro front, inflation based on the monthly wholesale price index (WPI) is seen inching up to 7.4% in July 2012 from 7.25% (provisional) for the month of June 2012, as per the median estimate of a poll of economists carried out by Capital Market. The data is due for release at 11:30 IST today, 14 August 2012. Private sector steel major Tata Steel after market hours on Monday, 13 August 2012 said consolidated net profit dropped 88.81% to Rs 597.88 crore on 2.48% rise in total income to Rs 33821.20 crore in Q1 June 2012 over Q1 June 2011. Tata Steel said the Q1 June 2011 net profit was boosted by Rs 3361.92 crore due to profit on sale of non current investments. Tata Steel said the actuarial gains and losses on funds for employee benefits (pension plans) of Tata Steel Europe for the period from 1 April 2008 have been accounted in “Reserves and Surplus” in the consolidated financial statements in accordance with IFRS principles and as permitted by Accounting Standard 21. Had the company recognised changes in actuarial valuations of pension plans of Tata Steel Europe in the profit and loss account, the consolidated profit after taxes, minority interest and share of profit of associates for the Q1 June 2012 would have been lower by Rs 1439.69 crore (lower by Rs 77.99 crore for Q1 June 2011). Tata Steel group EBITDA was Rs 3581 crore in Q1 June 2012 compared to Rs 3419 crore in Q1 June 2011. The group's steel deliveries declined by 6.2% to 5.68 million tonnes in Q1 June 2012 over Q1 June 2011. Net debt at the end of June 2012 increased to Rs 54020 crore compared to Rs 47657 crore at the end of March 2012. Tata Steel Managing Director Mr HM Nerurkar said: “Indian operations posted robust performance against the backdrop of weakening demand and increased competition. Market challenges have made us focus on tightening of costs, improving product-mix and ensuring that the ramp up of our brownfield expansion takes place by the year-end. Downstream linkages of Indian operations are expected to provide the required depth to our business. South East Asian operations are being strengthened on the back of operational and marketing initiatives, leading to better results.” Tata Steel Europe MD & CEO Dr Karl-Ulrich Köhler said: “Our financial performance continued to improve as raw material cost pressure eased further and strategic cost initiatives yielded further benefits. At Port Talbot, the blast furnace rebuild is progressing on schedule and other operational problems that arose early in 2012 were largely resolved. European steel demand is lower than expected and prices have weakened. We continue to seek to mitigate the effects of this with tight cost control and emphasis on increased product differentiation.” Coal India aftermarket hours on Monday said consolidated net profit rose 7.85% to Rs 4469.26 crore on 13.80% rise in net sales to Rs 16500.59 crore in Q1 June 2012 over Q1 June 2011. Grand Slam Management, a minority shareholder of Israel's Taro Pharma on Monday reportedly rejected Sun Pharma's sweetened offer price of $39.5 a share for a buyout, signalling further delay in the Indian company's protracted takeover bid. Sun Pharma's revised offer, made earlier in the day, was 60% higher than the $24.50 it had suggested in October 2011, which was subsequently rejected by Taro's minority shareholders on the ground that it was inadequate considering the improvement in the company's performance. Maruti Suzuki India on Monday reportedly deferred till Friday taking a final call to reopen of its violence-hit Manesar plant following a meeting of the company's top brass. The top management executives of the company had met this afternoon to discuss issues such as the extent of damage at the plant, state of employees injured in the violence and findings on the investigation into the incident. The company had declared a lockout at the Manesar plant on July 21 following violence and arson in which one senior executive was killed and 100 others were injured. DLF after market hours on Monday, 13 August 2012 said it along with its three wholly-owned subsidiaries - DLF Cyber City Developers, DLF Universal and Jawala Real Estate (Jawala) have entered into an agreement with Lodha Developers for divesting the entire stake of the company, DLF Cyber City Developers and DLF Universal in 'Jawala' for an enterprise value estimated to be Rs 2700 crore subject to final adjustments at completion. The completion is expected by the end of October 2012. After completion of the divestment, which is subject to fulfillment of certain conditions precedent by the parties and payment of amounts due under the agreement by Lodha, 'Jawala' will cease to be a subsidiary of the company. Further, DLF is disclosing the same to ensure transparency though the completion is expected by the end of October 2012. The above transaction is in line with the company's objective of divesting its non-strategic assets, the company said. Key benchmark indices edged higher on Monday, 13 August 2012, with the market sentiment boosted by data showing continuation of buying of Indian stocks by foreign funds. The BSE Sensex jumped 75.71 points or 0.43% to settle at 17,633.45, its highest closing level since 15 March 2012. Foreign institutional investors (FIIs) bought shares worth net Rs 339.76 crore on Monday, 13 August 2012, as per provisional figures from the stock exchanges. FIIs bought shares worth a net Rs 123.50 crore from the secondary equity markets on Friday, 10 August 2012, as per data from Securities & Exchange Board of India (Sebi). FIIs bought shares worth a net Rs 3828.20 crore from the secondary equity markets in 8 trading sessions from 1 to 10 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 stock market remains closed on Wednesday, 15 August 2012, on account of Independence Day. Prime Minister Dr. Manmohan Singh on Saturday, 11 August 2012, said the fundamentals of the economy remain strong. "We have the highest savings and investments rate in the world," Dr. Singh said. This year we will see better than 6.5% (gross domestic product) growth of last year, he said. Industrial production declined 1.8% in June 2012 compared to the level in the month of June 2011, data released by the Ministry of Statistics & Programme Implementation on Thursday, 9 August 2012, showed. Manufacturing output, which has a 75.5% weight in the index of industrial production, fell 3.2% in June 2012 compared to the level in the month of June 2011. Capital-goods production shrank 27.9% in June 2012 compared to the level in the month of June 2011. Union Finance Minister P. Chidambaram last week said 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 last week. 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 recently 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. Mr. Chidambaram said that the government has received requests to put off plans to implement the General Anti-Avoidance Rules (GAAR) which aim to check tax avoidance. The implementation of GAAR was postponed by one year in order to provide an opportunity of wider consultation before such a legislation is implemented, Mr. Chidambaram said in the lower house of parliament while replying to lawmakers' questions. The provisions of GAAR are directed toward preventing tax avoidance by way of aggressive tax planning, he added. 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. In the next few weeks, the government will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments, Mr. Chidambaram said last week. The Central Statistics Office (CSO) will unveil data on consumer price index (Agricultural Labourers/ Rural Labourers) on Friday, 17 August 2012. The India Meteorological Department (IMD) expects normal rains in August -- a critical month for summer crops. It expects rainfall to be 5-6% below average in September due to the possibility of El Nino. The weather office expects rainfall during August-September to be 91% of the long-term average. The monsoon has been less than average during the current year. Quantitatively, monsoon season rainfall for the country as a whole was deficient by 19% till 3 August 2012. Nineteen out of 35 states/union territories received less than the average rainfall till the end of July 2012. A panel of Indian ministers last week approved steps to contain the impact of a near-drought situation. The steps include providing a diesel-price subsidy to farmers, increasing the subsidy on seed supplies and removal of the import tax on oilmeals. Rice sowing has picked up according to the latest data released by the Ministry of Agriculture. Rice was sown in 264.39 lakh hectares (lh) till Thursday, 9 August 2012, compared with 233.68 lh until 3 August 2012. Rice sowing so far has been below the normal area of 272.58 lh for the summer sown crop by this time of the year. Cumulative sowing of coarse cereals totaled 140.89 lh till 9 August 2012, compared with 135.75 lh until 3 August 2012. Sowing of coarse cereals remains much lower than 181.24 lh of normal area for the crop this time of the year. Sowing of pulses totaled 74.48 lh till 9 August 2012, compared with 72.79 lh until 3 August 2012. Sowing of pulses remains lower than 92.81 lh of normal area for this time of the year. Sowing of oilseeds totaled 151.82 lh till 9 August 2012, compared with 145.17 lh until 3 August 2012. It is slightly lower than the normal area of 153.39 lh for oilseeds by this time of the year. Sowing of cotton totaled 109.23 lh till 9 August 2012, compared with 100.14 lh until 3 August 2012. The normal cotton sowing area of 99.9 lh by this time of the year has already been surpassed. Sowing of jute and mesta totaled 8.41 lh as on 9 August 2012, exceeding the normal area of 8.23 lk for the crop by this time of the 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. 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. Meanwhile, RBI Governor D Subbarao said on Monday that deficiency of rainfall is a cause for worry as it might put pressure on some commodities. Rain shortfall in parts of Karnataka, interior Gujarat and Rajasthan could put pressure on oil seeds and pluses, Subbarao said. A comprehensive Land Acquisition, Rehabilitation and Resettlement Bill is among the 31 Bills the government has lined up for consideration and passing during the ongoing monsoon on session of Parliament. Among the other bills include those on Forward Contracts, Banking laws, whistle-blowers and women's reservation as also the Prevention of Bribery of Foreign Public Officials bill. The monsoon session of Parliament will conclude on September 7. 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. Most Asian shares rose on Tuesday ahead of more macro economic data figures from Europe and the United States later in the global day. Key benchmark indices in Singapore, Japan, Taiwan, South Korea, Hong Kong and Indonesia were up by between 0.18% to 0.83%. China's Shanghai Composite shed 0.30%. Japan's economy grew at an annualized pace of 1.4% in the second quarter -- lower than analysts' expectations of 2.7% rise -- as exports slowed and a domestic-demand led recovery showed signs of faltering. That marked a steep slowdown from an upwardly revised advance of 5.5% in the first quarter. U.S. stocks ended mostly lower on Monday, with the Standard & Poor's 500-share index snapping a six-session streak of gains, its longest rally since December 2010. The Dow Jones Industrial Average dropped 38.52 points, or 0.3%, to 13169.43. The S&P 500 slipped 1.76 points, or 0.1%, to 1404.11. The Nasdaq Composite Index added 1.66 points, or 0.1% to 3022.52. Data on US retail sales for July 2012 is due for release today, 14 August 2012. The data will be watched closely as an indicator of economic health in the world's biggest economy. US retailer Home Depot Inc. unveils its quarterly results today, 14 August 2012. Data on US July consumer-price index and the August Empire State index will be out tomorrow, 15 August 2012. The NY Empire State Index is a regional economic indicator published by the Federal Reserve Bank of New York. It is considered to be an indicator of economic conditions in one of the most populated states in the US. The National Association of Home Builders will also release its August housing market index -- a measure of home builder confidence tomorrow, 15 August 2012. The July housing starts report and the August Philadelphia Fed index will be released on Thursday, 16 August 2012. Data on initial weekly jobless claims will be released on the same day. US retailer Wal-Mart Stores Inc. unveils its quarterly results on Thursday, 16 August 2012. The University of Michigan will release its preliminary consumer sentiment survey for August on Friday, 17 August 2012. Election for a new president in the United States, the world's biggest economy, is scheduled on 6 November 2012. Senior officials from the Group of 20 largest economies are discussing calling a meeting of an emergency forum to try and coordinate a response to surging food prices due to a severe drought in the US, a leading London based newspaper reported. G20 officials plan to hold talks by the end of the month on setting up the meeting and it could take place in late September or early October, the report said citing four officials familiar with the conversations. Euro zone second quarter GDP data is due for release today, 14 August 2012. Stronger German growth in the first quarter lifted the overall euro-zone GDP reading to 0% quarter-on-quarter, contrary to the forecasts for 0.2% quarter-on-quarter decline. 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. Greece's economy contracted 6.2% in the second quarter, according to the country's statistics agency. Prime Minister Antonis Samaras has forecast a contraction of more than 7% this year.