Market gains on positive global cues

The market edged higher last week in tandem with global stock markets as investors risk appetite strengthened after the European Central Bank on Thursday, 6 September 2012, unveiled steps to contain the region's debt crisis. The market rose in three out of five trading sessions. The BSE Sensex rose 254.17 points or 1.46% to 17,683.73. The 50-unit S&P CNX Nifty rose 83.60 points or 1.59% to settle at 5,342.10. The BSE Mid-Cap index outperformed the Sensex, rising 1.77%. The BSE Small Cap index underperformed the Sensex, rising 0.95%. From a recent low of 17313.34 on 5 September 2012, the Sensex has gained 370.39 points or 2.13% in two trading sessions. The Sensex has gained 254.17 points or 1.45% in this month so far (till 7 September 2012). The Sensex has jumped 2,228.81 points or 14.42% in calendar 2012 so far (till 7 September 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2547.87 points or 16.83%. From a 52-week high of 18,523.78 on 22 February 2012, the Sensex has lost 840.05 points or 4.53%. Foreign institutional investors (FIIs) bought shares worth net Rs 137 crore into the secondary equity markets on Thursday, 6 September 2012, as per data from Securities & Exchange Board of India (Sebi). FIIs had sold shares worth net Rs 158.90 crore into the secondary equity markets on Wednesday, 5 September 2012. Earlier, FIIs had bought shares worth net Rs 301.60 crore from the secondary equity markets on Tuesday, 4 September 2012. FIIs had sold shares worth Rs 228.80 crore into the secondary equity markets in two sessions on 31 August 2012 and 3 September 2012. The European Central Bank (ECB) on Thursday, 6 September 2012, unveiled an expansive bond-buying plan to lower struggling euro zone countries' borrowing costs and avert any immediate break-up of euro zone currency bloc. ECB President Mario Draghi on Thursday said policy makers agreed to an unlimited bond-purchase program as they try to regain control of interest rates in the euro area. The program will target sovereign bonds with maturities of one to three years in its most ambitious plan yet to save the euro. The central bank also forecast a deeper economic contraction for 2012 than it did three months ago. Euro-area gross domestic product will drop 0.4% this year compared with an earlier 0.1% projection, it said. Back home, Indian private sector services business expanded at the fastest pace in six months in August, driven by the strongest growth in new business since February and increasing optimism about the future, a survey showed on Wednesday, 5 September 2012. The HSBC Purchasing Managers' Index for services business, based on a survey of about 400 private-sector companies, rose to 55 in August from 54.2 in July, marking nearly a year of uninterrupted monthly growth. Services, including government services like railway transport, make up nearly 60% of India's economic output. HSBC manufacturing PMI early this week showed manufacturing activity grew at its slowest pace this year in August due to a second consecutive monthly fall in export orders. HSBC India Composite Output Index was at 54.3 in August, little changed from July's 54.4. A committee appointed by the government to review the controversial general anti-avoidance rules (GAAR) early this month suggested deferring the implementation of anti-avoidance rules by three years. "Where Circular No. 789 of 2000 with respect to Mauritius is applicable, GAAR provisions shall not apply to examine the genuineness of the residency of an entity set up in Mauritius," the committee said. The committee has also recommended that the government should abolish the tax on gains arising from transfer of listed securities, whether in the nature of capital gains or business income, to both residents as well as non-residents. The panel has said the government might consider increasing the rate of Securities Transaction Tax (STT) appropriately to make the proposal tax neutral. At present, short-term capital gains on equities are taxable at the rate of 15%. Holding period of less than one year is considered as short term. There is no long term capital gains tax on sale of shares. Business income is taxed at 30%. Distinguishing capital gains and business income depends on several factors, and disagreements have resulted in numerous litigation cases between the Revenue Department and taxpayers, the committee said in its report. Trading for the week began on a weak note. Key benchmark indices declined on Monday, 3 September 2012, as investors were concerned by the latest data showing growth in manufacturing sector easing to a nine-month low in August 2012. The BSE Sensex fell 45.16 points or 0.26% to 17,384.40. The S&P CNX Nifty fell 4.75 points or 0.09% to 5,253.75. Key benchmark indices snapped two day losing streak on Tuesday, 4 September 2012, as the market sentiment got a boost after a panel appointed by the government to review the proposed General Anti Avoidance Rules (GAAR) recommended in a report submitted to the government on 1 September 2012 that the government should abolish the tax on gains arising from transfer of listed securities, applicable to both residents as well as non-residents. The BSE Sensex advanced 56.47 points or 0.32% to settle at 17,440.87. The S&P CNX Nifty advanced 20.25 points or 0.38% to settle at 5,274. Key benchmark indices edged lower on Wednesday, 5 September 2012, after Finance Minister P. Chidambaram said India is making consistent efforts to check the abuse of a double-taxation-avoidance pact it has with Mauritius as Mauritius has become an attractive route for investments by third-country residents into India through treaty abuse. The BSE Sensex lost 139.64 points or 0.8% to settle at 17,301.23. The S&P CNX Nifty lost 48.30 points or 0.92% to settle at 5,225.70. Key benchmark indices edged higher in choppy trade on Thursday, 6 September 2012, as world stocks rose on hopes that the European Central Bank (ECB) will announce a bond-market intervention at its policy meeting later in the global day. The BSE Sensex advanced 32.93 points or 0.19% to settle at 17,346.27. The S&P CNX Nifty advanced 12.70 points or 0.24% to 5,238.40. Key benchmark indices surged on Friday, 7 September 2012, after the European Central Bank (ECB) on Thursday, 6 September 2012, unveiled an expansive bond-buying plan to lower struggling euro zone countries' borrowing costs and avert any immediate break-up of euro zone currency bloc. The BSE Sensex was up 337.46 points or 1.95% to 17,683.73. The S&P CNX Nifty was up 103.70 points or 1.98% to 5,342.10. Among the 30 Sensex shares, 21 shares rose and the remaining shares declined. India's largest car maker by sales Maruti Suzuki India rose 5.80% to Rs 1204.60. Suzuki Motor Corp. Chairman Osamu Suzuki on Thursday said that daily production at the reopened Manesar factory of Maruti Suzuki India will reach up to 850 units by mid-September. Mr. Suzuki added that production had reached 670 units as of Tuesday, 4 September 2012. Maruti was making 1,700 cars a day on average at Manesar before the violence that left some 100 people injured and the plant damaged. Maruti resumed partial production at the factory in the Manesar unit on 21 August 2012 after it was closed following rioting by some workers. Auto stocks rose after Petroleum Minister Mr. Jaipal Reddy told reporters on Friday, 7 September 2012, that state-run oil companies have no immediate plans to hike fuel prices. Bajaj Auto (up 4.44% to Rs 1687.20), Tata Motors (up 4.09% to Rs 243.30) and Hero MotoCorp (up 0.67% to Rs 1800.05), edged higher. However, utility vehicles and tractor maker Mahindra & Mahindra declined 0.23% to Rs 763.40. Earlier it was speculated that the government may raise fuel prices after the monsoon session of Parliament. However, Petroleum Minister Mr. Jaipal Reddy clarified to reporters on Friday, 7 September 2012, that public sector oil marketing companies (PSU OMCs) do not have an immediate plan to increase the prices of fuel products such as gasoline and diesel despite their mounting revenue losses. IT stocks as euro zone debt worries eased after ECB's expansive bond-buying plan. The US and Europe are the two key outsourcing markets for Indian IT firms. India's second largest software services exporter by revenues Infosys gained 4.62% to Rs 2,483. Tata Consultancy Services (TCS) rose 2.86% to Rs 1,385.90. The stock hit a record high of Rs 1,395 in intraday trade on Friday, 7 September 2012. TCS has re-appointed Mr. S. Mahalingam as the Executive Director and Chief Financial Officer of the company for the period September 6, 2012 to February 9, 2013, subject to the approval of the shareholders. India's third largest software services exporter by revenues Wipro rose 2.76% to Rs 377.75. FMCG major Hindustan Unilever (HUL) gained 3.79% to Rs 537.90. The stock hit a record high of Rs 539.50 in intraday trade on Friday, 7 September 2012. Index heavyweight and cigarette maker ITC fell 1.79% to Rs 262.75. The stock had scaled a record high of Rs 271.50 in intraday trade on 30 August 2012. The company reported strong Q1 June 2012 results. 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) gained 2.47% to Rs 791. RIL has bought back 3.9 crore shares for about of Rs 2793.51 crore till 4 September 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. RIL early last week said it has scheduled a planned maintenance turnaround of one of the diesel hydrotreater units of the DTA refinery at its Jamnagar, Gujarat complex for a period of approximately two and half weeks starting 28 August 2012. This opportunity will also be utilised to carry out other maintenance and inspection jobs during the shutdown period, RIL said in a statement. During the period the other diesel hydrotreating unit of the DTA refinery along with other units including crude processing levels are planned at normal levels, RIL said. Tata Steel jumped 2.26% to Rs 370.70 as euro zone debt worries eased after ECB's expansive bond-buying plan. European operations constitute almost 65% of Tata Steel's sales. Bhel (down 4.43% to Rs 204.85), Tata Power (down 3.61% to Rs 96), Jindal Steel & Power (down 1.36% to Rs 347.50), HDFC Bank (down 0.72% to Rs 590.75), Sun Pharmaceuticals Industries (down 0.63% to Rs 664.35), HDFC (down 0.54% to Rs 729.40) and ONGC (down 0.34% to Rs 275.20), edged lower from the Sensex pack.