RPower gains after strategic pact with Chinese power major

Key benchmark indices edged lower in choppy trade to reach one-week closing lows as investors grew gloomy about the health of the global economy and after a Federal Reserve official threw cold water on the notion that another round of stimulus from the Federal Reserve is on its way. The barometer index, BSE Sensex, lost 67.01 points or 0.38%, off close to 40 points from the day's high and up about 60 points from the day's low. The market breadth was negative. Reliance Power (RPower) edged higher after the company signed an initial agreement with China Datang Corporation to develop and operate power and other energy projects in India and overseas. The Sensex has gained 547.03 points or 3.17% in this month so far (till 24 August 2012). The Sensex has jumped 2,328.29 points or 15.06% in calendar 2012 so far (till 24 August 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,647.35 points or 17.49%. From a 52-week high of 18,523.78 on 22 February 2012, the Sensex has lost 740.57 points or 3.99%. Coming back to today's trade, FMCG stocks rose on reports of revival of monsoon rains this month. Index heavyweight and cigarette maker ITC edged higher. Metal stocks declined after data released on Thursday, 23 August 2012, showed that China's factory activity in August shrank at its fastest pace in nine months. Cairn India slipped along with crude oil prices. Bank stocks fell across the board. Index heavyweight Reliance Industries (RIL) edged lower. Pharma stocks extended their recent gains. Capital goods stocks declined. Shares of tyre makers fell on profit booking after recent strong gains. Realty stocks edged lower on profit booking. Shares of organised retailers fell for the second straight day after Trinamool Congress chief Mamata Banerjee on Thursday, 23 August 2012, reiterated her objection to overseas investment in multi-brand retail, insurance and aviation sector. The market edged lower amid initial volatility on weak Asian stocks. Intraday volatility continued as key benchmark indices trimmed losses after extending initial losses to hit fresh intraday lows in morning trade. The market pared intraday losses in mid-morning trade. Intraday recovery witnessed in mid-morning trade proved short lived as key benchmark indices weakened once again in early afternoon trade. Key benchmark indices hit fresh intraday low in afternoon trade after European market opened lower. The Sensex continued to hover in red in mid-afternoon trade. The market trimmed intraday losses in late trade. The BSE Sensex lost 67.01 points or 0.38% to settle at 17,783.21, its lowest closing level since 17 August 2012. The index declined 124.80 points at the day's low of 17,725.42 in afternoon trade. The index fell 27.72 points at the day's high of 17,822.50 in early trade. The S&P CNX Nifty shed 28.65 points or 0.53% to settle at 5,386.70, its lowest closing level since 17 August 2012. The index hit a low of 5,371 in intraday trade. The Nifty hit high of 5,399.65 in intraday trade. The BSE Mid-Cap index fell 0.58% and the BSE Small-Cap index declined 0.78%. Both these indices underperformed the Sensex. BSE clocked turnover of Rs 1929 crore, a tad lower than Rs 1944 crore on Thursday, 23 August 2012. The market breadth, indicating the overall health of the market, was negative. On BSE, 1,634 shares fell and 1,185 shares rose. A total of 147 shares were unchanged. From the 30-share Sensex pack, 17 stocks fell and rest of them rose. Realty stocks edged lower on profit booking. D B Realty, Unitech, HDIL and Phoenix Mills shed by between 0.85% to 6.41%. Shares of realty major DLF fell 3.04% as the stock turned ex-dividend today, 24 August 2012, for dividend of Rs 2 per share for the year ended 31 March 2012 (FY 2012). 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) was flat at Rs 518.85. The stock pared gains after hitting a record high of Rs 527.75 in intraday trade today. Jyothy Laboratories jumped 9.72% to Rs 158.60. The stock hit a record high of Rs 165.30 in intraday trade today, 24 August 2012. Index heavyweight and cigarette maker ITC rose 0.47% at Rs 265.15. 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) lost 1.55% to Rs 782.10, off the day's low of Rs 778.60. RIL 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 rose 1.95%. Minister of Petroleum and Natural Gas Mr. S. Jaipal Reddy Thursday, 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. Pharma stocks extended their recent gains. Lupin, and Dr Reddy's Laboratories gained by between 0.25% to 0.44%. Cipla rose 0.88% to Rs 366.90. The stock hit a 52-week high of Rs 367.90 in intraday trade today, 24 August 2012. Cadila Healthcare rose 0.24%. The company today, 24 August 2012, announced the closing of a definitive agreement regarding re-launch of Urokinase, a critical care therapy in North America. Earlier, the company had announced on 6 January 2012 that the company and Microbix had reached an agreement to market Urokinase, a critical care therapy in North America. Ranbaxy Laboratories rose 0.49% to Rs 549.80, with the stock gaining for the third straight day. The stock had hit a 52-week high of Rs 554.10 in intraday trade on Wednesday, 23 August 2012. Ranbaxy Laboratories said this week that it 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. Capital goods stocks declined. Punj Lloyd, BEML, Bhel, L&T and ABB shed by between 0.58% to 4.09%. Shares of tyre companies fell on profit booking after recent strong gains triggered on hopes lower rubber prices will boost profitability. MRF, JK Tyre & Industries and CEAT dropped by between 0.9% to 6.46%. Shares of power generation firms fell. GMR Infrastructure, Lanco Infratech, JSW Energy, Adani Power, Tata Power Company, GVK Power Infrastructure, NTPC and Reliance Infrastructure shed by between 1.09% to 3.9%. Reliance Power rose 2.38% after the company said it has signed a memorandum of understanding to form a strategic partnership with China Datang Corporation (CDT), represented by the China Datang overseas Investment Company (CDTO), for development and operation of power and energy projects in India and overseas markets. This marks first such strategic partnership between India and China in the power sector, Reliance Power said in a statement. CDTO is a wholly-owned subsidiary of CDT and the major platform for CDT to seek a greater international role. CDT, with generating capacity of 1.05 lakh megawatts (MW), is one of the large-scale power generation groups in China. Its generation capacity is more than 50% of India's current generation capacity. CDT is a Fortune 500 company and among the top 50 companies in China. Commenting on the development, Reliance Power said, "This is an important milestone in our progress towards becoming India's largest private sector integrated power and resources company. We will benefit from this partnership in being able to draw from CDTO's vast talent pool of experienced O&M resources. We will also be able to deploy best operating practices for equipment sourced from China and other global suppliers. The two companies share the vision of creating intrinsic value for all stakeholders, including customers, employees and shareholders through long-term relationships". China Datang said that the strategic partnership with Reliance Power provides the group a platform to expand its footprints in emerging markets like India and Indonesia, which hold enormous business opportunity for the group. The Chinese firm said that this development is a key milestone in its journey to become a world renowned company with strong development capability, profitability and international competitiveness. China Datang Corporation (CDT) is a leading state-owned power generation enterprise in China, specialising in power generation and supply, power related coal mine development and production as well as related professional technical services. Metal stocks declined after data released on Thursday, 23 August 2012, showed that China's factory activity in August shrank at its fastest pace in nine months. China is the world's largest consumer of copper and aluminum. Bhushan Steel, Hindalco Industries, Jindal Steel & Power, Hindustan Zinc, Tata Steel and Sail fell by between 0.3% to 2.73%. But, Sterlite Industries rose 0.63%. JSW Steel rose 2.31%, with the stock reversing initial losses. The company said today that its crude steel production rose 13% to 6.76 lakh tonnes in July 2012 over July 2011. Production of flat steel products rose 15% to 4.85 lakh tonnes and that of long products rose 24% to 1.42 lakh tonnes in July 2012 over July 2011. The capacity utilisation at Vijayanagar works was at about 75% in July 2012 due to shortage and non availability of quality iron ore to run the furnaces at full capacity, JSW Steel said in a statement. Cairn India slipped 0.36% along with crude oil prices. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms. US crude oil futures for October 2012 delivery were down 29 cents at $95.65 a barrel in electronic trading today, 24 August 2012. The contract had lost 99 cents or 1.01% to settle at $96.27 a barrel on the New York Mercantile Exchange on Thursday, 23 August 2012, its lowest closing since 20 August 2012 Titan Industries dropped 0.43% on concerns that record high gold price will adversely affect sales growth of the company's jewellery division. Gold price on Thursday, 23 August 2012, surpassed all previous records to touch the Rs 31,035-mark per 10 grams in tune with global prices that touched a 16-week high amid a weak dollar on anticipation of a fresh stimulus by the US to boost economic growth. It may be recalled that Titan Industries had attributed disappointing sales growth its jewellery division in Q1 June 2012 to high gold prices. Titan Industries retails branded gold jewellery under the brand name Tanishq. Bank stocks fell across the board. SBI, HDFC Bank, ICICI Bank, Axis Bank, Bank of India, Bank of Baroda and Punjab National Bank dropped by between 0.25% to 2.65%. The Reserve Bank of India has said that for full implementation of Basel III capital regulation for commercial banks, public sector banks would require common equity to the tune of Rs 1.4 lakh to 1.5 lakh crore on top of internal accruals, in addition to Rs 2.65 lakh to Rs 2.75 lakh crore in form of non-equity capital. Major private sector banks would require common equity to the tune of Rs 20000 crore to Rs 25000 crore on top of internal accruals, in addition to Rs 50000 crore to Rs 60000 crore in form of non-equity capital, the RBI said in its Annual Report for 2011-12 which was released after trading hours on Thursday, 23 August 2012. The RBI has already issued guidelines for implementation of Basel III capital regulation to be completed by banks in a phased manner by 31 March 2018. IFCI slumped 16.31%. The Union Cabinet on Thursday, 23 August 2012, approved the proposal to exercise the option by the Government of India to convert Rs 400 crore and Rs 523 crore optionally convertible debentures (OCDs) held by Government of India in IFCI into equity at par. The conversion option will be exercised immediately, the government said in a statement. Post exercise of conversion option of Rs 923 crore OCDs into equity at par, the holding of Government of India will become 55.57% and by including the holding of banks/financial institutions (FIs), it will be 68.31% thus making it a government company, the government statement said. Shares of organised retailers fell for the second straight day after Trinamool Congress chief Mamata Banerjee on Thursday, 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 0.48% to 3.87%. 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. Shree Cement rose 1.92% to Rs 3450, with the stock extending Thursday's 3.84% triggered by strong quarterly earnings. The stock hit a record high of Rs 3509 in intraday trade today, 24 August 2012. The company's 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. IT stocks were mixed. India's second largest software services exporter by revenues Infosys fell 1.06%, with the stock snapping three-day winning streak on profit taking. 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 largest software services exporter by revenues Tata Consultancy Services (TCS) rose 0.14% to Rs 1323. The stock hit a record high of Rs 1328.50 in intraday trade today, 24 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. HCL Technologies declined 0.18% to Rs 558.50. The stock had hit a 52-week high of Rs 562.05 in intraday trade on Thursday, 23 August 2012. India's third largest software services exporter by revenues Wipro gained 0.43% Mahindra Satyam fell 0.94%. The company has on Wednesday announced the launch of "Oracle Communications Solution Engineering Centre". The new centre developed by Mahindra Satyam and Tech Mahindra together will cater to the telco customer's ever increasing demand for different services and will offer innovative solutions to the telecommunications industry. "The Oracle Communications Solution Engineering Centre will help us build and deliver high value integrated solutions to Telcos and Telecom Equipment Manufacturers leveraging Oracle suite of products. With the increased strength of Tech Mahindra and Mahindra Satyam's Oracle Practice at Kolkata, we are geared up to support Telcos in achieving business excellence and in expanding their business to enterprise customers," said V. Srinivasa Rao (VSR), Senior Vice President and Global Head-Oracle Practice, Mahindra Satyam. Tech Mahindra rose 0.8% to Rs 871.80. The stock hit a 52-week high of Rs 877.80 in intraday trade today, 24 August 2012. Shares of diesel car makers were mixed after the Minister of State for Petroleum and Natural Gas Mr. R.P.N. Singh informed the Lok Sabha in a written reply on Thursday, 23 August 2012, the that Ministry of Petroleum & Natural Gas (MoP&NG) has written to the Ministry of Finance for levying additional excise duty on diesel cars. Maruti Suzuki India and Tata Motors rose by between 0.33% to 0.88%. But, M&M fell 1.19%. Mr. Singh said Petroleum Planning and Analysis Cell (PPAC) in association with the public sector Oil Marketing Companies (OMCs) commissioned an All India Study on sectoral demand of diesel and petrol based on 2011-12 diesel consumption. He emphasized that in view of the uniform pricing of diesel (HSD) except for local levies, subsidy on diesel is available to all sectors of consumption. Mr. Singh also said that the Ministry of Petroleum & Natural Gas (MoP&NG) in its Budget Proposal to the Ministry of Finance had proposed to levy additional excise duty on diesel cars. Subsequently, MoP&NG has also written to the Ministry of Finance for levying additional excise duty on diesel cars, gensets and mobile towers. The Central Statistics Office will unveil Q1 June 2012 GDP data on 31 August 2012. India's GDP growth slowed to a nine-year low of 5.3% in Q4 March 2012 due to high interest rates, sluggish global demand and the government's failure to carry out economic reforms. Markit Economics will unveil HSBC India Manufacturing Managers' Index (PMI) for August 2012 on 3 September 2012. On 5 September 2012, Markit Economics will unveil HSBC India Services PMI for August 2012. The government has rejected the Comptroller and Auditor General of India's (CAG) report on allocation of coal blocks in which it has indicated a Rs.1.85 lakh crore ($37 billion) loss to the exchequer, saying the notion of presumptive loss is flawed. "If the coal is not being mined, there is no question of gain or loss... the notion of this presumptive loss is flawed," Finance Minister P Chidambaram said at a joint press conference in New Delhi with Coal minister Sriprakash Jaiswal. Out of the 57 blocks considered by the CAG, mining was carried out in only block, Mr. Chidambaram said. The finance minister made a fervent appeal to the opposition, especially the Bharatiya Janata Party (BJP), to allow parliament to function. Chidambaram said Prime Minister Dr. Manmohan Singh is ready to make a statement and debate the issue in parliament in whatever manner the opposition wanted. Both houses of parliament were repeatedly adjourned for the fourth consecutive day on Friday, 24 August 2012, as BJP kept up its demand for the prime minister's resignation over irregularities in allocation of coal blocks. Prime Minister Dr. Manmohan Singh was in charge of the coal ministry during the allocations questioned by the CAG. Trade Minister Anand Sharma Thursday, 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. The government has very limited time to take economic reform measures given that assembly elections in Gujarat and Himachal Pradesh (HP) are scheduled in December this year. It will difficult for the government to enact controversial measures close to the assembly polls. After elections in Gujarat and HP, assembly elections are planned in a total of 10 states during the period from March 2013 to January 2014. The next general election is due in May 2014. The Union Cabinet on Thursday, 23 August 2012, deferred a decision on changes proposed in a draft land acquisition law that is aimed at streamlining the land acquisition process for projects. Foreign direct investment (FDI) in India slumped 78% to $1.24 billion in June 2012 from $5.65 billion in June 2011, government data showed on Friday 24 August 2012. For the April-June period--the first quarter of the fiscal year--FDI fell 67% to $4.42 billion. The Reserve Bank of India (RBI) said in its Annual Report for 2011-12, a statutory report of the Central Board of RBI, that India's economic growth during 2012-13 is expected to stay below trend at around the same level as in the previous year at 6.5% whereas inflation is likely to remain sticky around 7% with upside risks emanating from a deficient monsoon. While the rate of growth in headline inflation declined in July 2012, 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 14% 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. 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. 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. 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 stock markets edged lower on Friday, led by heavyweight banks and miners, as optimism about further monetary stimulus faded. Key benchmark indices in UK, France and Germany fell by 0.17% to 0.29%. The UK economy shrank less than anticipated in the second quarter as output of the Construction and Manufacturing sectors were revised higher. The Office of National Statistics (ONS) announced that GDP contracted 0.5% in the three months ended June, compared with an initial estimate of a 0.7% decline. A request by the Spanish government for additional financial support from the European Financial Stability Facility/European Stability Mechanism (ESFS/ESM) via purchases of sovereign debt in the primary or secondary market wouldn't necessarily prompt a downgrade, said Fitch Ratings on Friday. Fitch said if sovereign bond buys by the EFSF/ESM were supported by secondary market purchases by the European Central Bank, that would greatly help cut the risk of a self-fulfilling liquidity crisis, help the government keep its access to affordable market financing and ease pressure on Spain's sovereign ratings. But sole reliance on policy conditional external financing would prompt a review of Spain's ratings, said Fitch. It considers this scenario unlikely and expects Spain to make good progress towards addressing macro-financial imbalances, along with finanicial support from the ESM/ESFS and the ECB. Greek Prime Minister Antonis Samaras is set to meet German Chancellor Angela Merkel in Berlin today, 24 August 2012. Mr. Samaras will visit French President François Hollande tomorrow, 25 August 2012. Mr. Samaras earlier in the week said he needs more time to implement the reforms agreed upon as part of the country's second bailout program. Greece is dependent upon receiving outside funds to remain in the 17-nation euro area. European Central Bank (ECB) holds its monthly policy meeting on euro area interest rates on 6 September 2012. UK's central bank -- the Bank of England -- holds its monthly meeting on interest rates on the same day. Asian stocks took a sharp drop on Friday, 24 August 2012, as investors grew gloomy about the health of the global economy and after a Federal Reserve official threw cold water on the notion that another round of stimulus from the Federal Reserve is on its way. Key benchmark indices in China, Taiwan, Japan, Indonesia, Hong Kong, Singapore and South Korea fell by between 0.19% to 1.25%. Trading in US index futures indicated a flat opening of US stocks on Friday, 24 August 2012. US stocks fell on fresh concerns about the Chinese and European economies after weak manufacturing-survey readings. A day after minutes from the last Federal Open Market Committee meeting prompted thoughts of a third round of quantitative easing, Federal Reserve Bank of St. Louis President James Bullard on Thursday, 23 August 2012, said that FOMC release was a bit stale and voiced opposition to additional easing. Bullard isn't a voting member of the rate-setting Federal Open Market Committee this year. Thursday saw mixed US economic reports released, with data showing that jobless claims climbed more than projected last week but new-home sales rose more than estimated in July. 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.